EU and UK must deepen partnership or lose ground in global automotive race, new LSE Consulting report warns
By Google News Motors ·
The UK and European Union must strengthen cooperation on trade, batteries and critical raw materials to protect their automotive industries in the face of geopolitical challenges and reap the opportunity of deeper strategic cooperation, according to a new report from LSE Consulting.
The report, Strategic Cooperation: UK–EU Automotive Value Chains Amid Global Challenges, finds that the global automotive industry’s focus is shifting towards China, while manufacturers in the UK and Europe face mounting pressures from the transition to electric vehicles, geopolitical competition and rising production costs.
The research argues that, although these challenges are driven by global developments, the closely integrated EU-UK automotive relationship remains one of the most important levers available to policymakers to strengthen the industry’s competitiveness and resilience. The two markets are each other’s top automotive trading partners, and the UK is the EU’s largest parts export market, ahead of the US and China.
Deeper cooperation and coordination can turn this relationship into a strategic asset to help both sides secure future investment, jobs and industrial leadership in the transition to electric vehicles.
This report shows why decisions taken on either side of the Channel affect firms, workers and suppliers on the other, and why a more coordinated approach is in both sides’ interests. The policy debate is moving quickly, often faster than the evidence available to inform it.
“Our contribution is to use data to show more clearly the scale and structure of these interdependencies, and the risks of treating the two systems separately. At this point in the evolution of EU–UK relations, stronger evidence is essential to designing policies that support investment, resilience and competitiveness across the wider European automotive sector.
The report identifies dependence on batteries and critical raw materials as one of the most significant shared vulnerabilities. Despite an estimated €72 billion invested in European battery and electric vehicle manufacturing facilities since 2017, the EU still imports around two-thirds of the lithium-ion batteries it uses, while the UK has a smaller domestic battery manufacturing base.
This poses an immediate challenge ahead of changes to the rules of origin under the UK-EU Trade and Cooperation Agreement (TCA), due to take full effect on 1 January 2027. The report warns that neither side can assume it will have sufficient battery supply that meets the requirements to avoid tariffs by 2027.
With the UK the EU’s largest battery electric vehicle (BEV) market, the issue should be treated as a shared challenge for both the EU and UK, with firms warning of potentially substantial additional costs if no mitigation is agreed.
Drawing on firm-level data covering 62 automotive business groups between 2014 and 2024, a survey of businesses across the automotive value chain, and interviews with industry executives and policymakers, the report sets out recommendations for a more coordinated UK-EU response.
The report argues that these measures should support the transition to lower-emission vehicles while giving manufacturers the predictability they need to invest. It also calls for closer regulatory alignment where EU-UK divergence creates additional costs without clear strategic benefits.
The report concludes that a coordinated partnership on trade, critical minerals and batteries is the clearest priority…
Originally published by Google News Motors
