Labour should scrap its ban on the sale of new petrol cars by 2030 amid growing concerns over the shift to electric vehicles, the boss of a British engineering giant has said.
Liam Butterworth, the chief executive of London-listed Dowlais, a car parts supplier, has urged Sir Keir Starmer to review the “impossible” target to ensure the UK isn’t out of step with the rest of Europe and America.
He said the Government must relax the ban in response to escalating turmoil across the auto industry, which has recently seen UK car production fall to its lowest level since 1952.
The crisis has largely been prompted by the stuttering shift to electric vehicles (EVs), with motorists reluctant to abandon petrol and diesel cars because of range anxiety and a lack of charging infrastructure.
“Completely phasing out internal combustion engines by 2030 is going to be a very difficult, if not impossible,” said the boss of Dowlais. “I think even 2035 would be incredibly challenging.
“It would be helpful if the Government recognised the environment that the automotive sector is operating in and reviewed the targets based on that.
“I am not suggesting we remove them altogether. Of course, the future is electrification. But we should be thinking longer term, and hybrid technology is one way of managing the transition in a more progressive and economically viable manner.
“There is no point in having targets that the industry is never going to achieve. There needs to be a much more gradual transition that takes into account consumer and infrastructure readiness as well as industry economics.”
Dowlais produces drive trains, components that transmit power from a car’s engine to the wheels. Its products can be found in both EVs and petrol cars.
Mr Butterworth claimed the car industry was facing the “most challenging” period of his 30-year career in the sector, with manufacturers buffeted by the EV transition, supply chain chaos and inflation.
Donald Trump’s tariffs have also unleashed a fresh wave of chaos, forcing many manufacturers to scale back production.
For Dowlais, which supplies more than 90pc of the world’s largest car manufacturers, this barrage of headwinds prompted a $1.55bn (£1.16bn) merger with US-listed rival Axle & Manufacturing Holdings earlier this year.
Having secured shareholder approval last month, the proposed deal with Detroit’s Axle will provide Dowlais with the scale to survive the troubled transition to EVs, while also strengthening its foothold in the vast American car market.
Mr Butterworth, who will leave the business once the deal is finalised, said: “There have been lots of cycles in the industry over the last 20 years. But this is not a cycle; this is a structural shift.
“It’s definitely the most challenging period that I’ve ever experienced. To be a supplier that has significant scale to withstand headwinds is critically important.”
While safeguarding Dowlais’s position in the market, the merger is the latest sign of the challenges facing UK-based engineering firms amid the decline in British manufacturing.
Dowlais, which was formerly known as GKN Automotive, is one of the last remaining car manufacturing companies on the London Stock Exchange, albeit with almost all of its factories now based overseas.
Troubles across the car sector have meant Dowlais’s share price has fallen by more than 40pc over the past five years, taking its market cap to £922m.
The merger will mean the new business is listed primarily on the New York Stock Exchange, with plans for a separate secondary listing in London.
The gradual decline of Britain’s car industry has inevitably meant Dowlais has shifted its focus overseas, shrinking its domestic operations so that it now only counts Aston Martin and Jaguar Land Rover as its UK-based customers.
Annual revenues at Dowlais were just shy of £5bn last year, although it employs fewer than 200 people in the UK. After the closure of its factory in Erdington, Birmingham, four years ago, which cost 500 jobs, Dowlais now has just one small plant in Sutton Coldfield.
“To have plants in the UK doesn’t make economic sense,” said Mr Butterworth, who grew up in Lancashire and has been at the helm of Dowlais since 2018. “We used to have a facility in Birmingham, but we relocated to a bigger facility in Europe.
“Our manufacturing footprint has undergone a significant change over the last six years. A lot of our big customers are no longer in the UK. We will manufacture products wherever our customers need us.”
However, the globalised nature of Dowlais’s business is creating a fresh headache driven by the divided transition to EVs.
“As we move towards electrified mobility, there are four distinct directions taking place around the world in terms of the pace of transition,” said Mr Butterworth. “That’s dependent on how different governments are supporting and investing.
“You’ve got China that is going full speed to EVs. North America has gone in reverse, Europe is somewhere in between the two, and the rest of the world will stay as a non-EV market for quite a long time. And as a supplier, you’re in the middle of all of this.”
Losses hit £106m last year, reflecting the scale of the challenges.
The globally disjointed approach has fuelled scrutiny of Britain’s 2030 ban on the sale of new petrol and diesel cars, which was reinstated after Labour came to power last year.
“The European government is talking about relaxing the 2035 ban and I think there needs to be consistency in terms of policy across Europe,” said Mr Butterworth. “There needs to be more coordination.”
In recognition of the challenges facing UK manufacturers, Sir Keir’s Government recently announced a new subsidy scheme offering discounts of up to £3,750 on EVs.
While the first cars to qualify for the grant were confirmed on Tuesday, there remains a lack of clarity about which vehicles will qualify. Manufacturers must complete extensive paperwork before grants are approved, meaning the confirmation will depend on both how quickly companies and government move.
“The challenge the UK is facing is with the consumer,” Mr Butterworth said. “A car is the second largest purchase in the household, and inflation has put a lot of pressure on their ability to buy a new vehicle.
“They are also reluctant or unclear as to whether to buy an EV, a hybrid of a combustion engine vehicle, because they are waiting for clarity about whether there is a subsidy or support to do that.”
To smooth the transition, Mr Butterworth said Sir Keir should review Labour’s petrol ban altogether.
“It’s not just about switching from one day to the next to EVs,” he said. “There’s a whole infrastructure around it, and that takes time.
“This is an industry that has been heavily focused on combustion engines for many decades. It takes time to transition to an EV world, and the consumer needs to be ready as well.
“There’s a longer tail that needs to happen. The need for clarity and consistency is probably as strong as it’s ever been.”
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