This article first appeared in City AM.
As a proud Brit walking into boardrooms in Tokyo, Chennai, Brussels or California, I was often aware of the preconceptions the natives sat around the table held. The British, of course, are known for being polite, humorous and big tea drinkers.
I always viewed these stereotypes as nothing more than an innocent oversimplification. A little outdated perhaps but harmless, I thought. Though there is one stereotype that has survived the test of time. The perception that Brits play by the rules, do things the “right” way and toe the line.
When other nations bid for major sporting events, any suggestions of bribes or impropriety that surround some countries evade the UK. When this country holds an election, we don’t question whether the vote is “fair and free”. And when corruption is globally ranked, the UK is consistently amongst the top ten least corrupt countries in the world. We should be proud of this component of our national DNA but must also recognise that with other countries less willing to play by the rules, we naturally become less competitive as a result.
We don’t need to look far to see this in action. There is currently an expensive and fiercely competitive global race underway, with multiple economies vying to become the world leader in electric vehicles. It’s obvious to see why. In the ten years since the launch of the Nissan Leaf, the world’s first mass-market electric vehicle, the popularity of electric vehicles has sky rocketed. As motorists become more environmentally-conscious and government’s legislate to protect against climate change, the auto industry is being rapidly shook up and introduced to a new status quo.
For so many countries, the auto business is an economic fulcrum and governments are wising up to the opportunities that leadership in the EV space will bring. In the UK today, around 800,000 jobs are linked to the auto industry. This number of jobs will either disappear or accelerate depending on the decisions made over the next few years.
The key to establishing supremacy in the next iteration of the auto industry is to manufacture battery factories domestically. Business sense dictates that the automotive industry will move to where the batteries are to avoid long logistic chains of heavy and expensive inventory.
Foreign governments are ploughing billions of pounds worth of investment to create so called “gigafactories” to capture the battery market and safeguard their auto industries. The European Union has already announced commitments to provide €6.1 billion in subsidies to develop a project aimed at developing the electric battery industry. Thanks to billions of pounds worth of state investment, China is home to around 65 per cent of gigafactories worldwide. Joe Biden has signalled his intention to make the US an EV superpower by announcing an investment of $174 billion in EV R&D and infrastructure establishment.
Despite this international competition, the UK Government announced it would invest only £500 million in its own efforts, 0.8 per cent of the amount earmarked by the USA.
Many in the industry are left asking what’s behind the UK’s relatively meagre investment in the future of car-making? Judging by political rhetoric, it’s not for lack of ambition, but instead is likely, in part, down to that ingrained British propensity to play by the rules, do things the “right” way and toe the line.
Such huge state investment elsewhere goes against the principles of the free market, of which the UK is a prominent defender and participant. As a businessman and strong believer in the free market myself, I have sympathy for the government’s unease at pumping taxpayer money into a private industry.
However, the UK’s aversion to substantial public investment is clearly not shared by fellow free market economies, the United States and European Union.
With such huge investments from various international governments, it is clear that this new frontier of the auto industry is not abiding to the traditional rules of the free market. In fact, it doesn’t resemble a free market at all.
The Government must now decide its course of action. Does it follow the British stereotype of playing by the rules and preserve its commitment to the free market, or does it roll up its sleeves, throw convention to the wind and go toe-to-toe with its international counterparts? The British auto industry waits with bated breath.