Fast-Tracking EV Production Could Shield UK from Trump’s Auto Tariff Turmoil

The UK’s car manufacturing sector is staring down a crisis. More than 25,000 jobs—primarily at luxury and heritage carmakers like Jaguar Land Rover (JLR)—are at risk, according to a new IPPR report. The culprit? A fresh wave of US tariffs, courtesy of Donald Trump.

On what he dubbed "Liberation Day," Trump slapped a 25% import tax on all UK-made cars and car parts, alongside a 10% blanket tariff on all other UK exports to the United States. The fallout could be severe, particularly for automakers heavily reliant on US sales.

With the US market becoming a high-risk battleground, IPPR suggests two urgent strategies for the UK’s auto sector:

1. Negotiate a trade deal with the US to shield British manufacturers from crushing tariffs.

2. Expand into alternative markets where demand for electric vehicles (EVs) is skyrocketing.

Right now, more than 77% of cars built in the UK are exported. Opportunities exist with the global EV market exploding—its export value surging 740% between 2018 and 2022. Nations worldwide are phasing out petrol and diesel cars, with the EU holding firm on its 2035 ban. The writing is on the wall: go electric or get left behind.

The UK is already pivoting. In 2024, 35% of all cars manufactured in the country were electric or hybrid, and the ZEV Mandate, launched in January, compels automakers to increase zero-emission output. While some manufacturers warn they aren’t ready to meet upcoming targets, IPPR urges the Government to hold the line. One option? Allow struggling automakers to buy compliance credits from more advanced peers.

But surviving this shift requires more than mandates—it demands bold policy moves. IPPR recommends:

• Reducing trade barriers with the EU, such as aligning the UK’s Emissions Trading Scheme with Europe’s Carbon Border Adjustment Mechanism.

• Leveraging the National Wealth Fund (NWF) and British Business Bank to co-invest in EV battery gigafactories and next-gen manufacturing.

• Embedding EV support into the upcoming 10-year Industrial Strategy, due alongside the June Spending Review.

There’s another untapped market—Britain itself. Despite having a thriving auto sector, most cars registered in the UK are imports. Nearly 80% of UK-made vehicles are shipped abroad, leaving a gap that domestic manufacturers could fill.

IPPR proposes reviving the plug-in car grant to boost local sales, slashing VAT on public EV charging (currently 20%, while home charging is just 5%), and introducing targeted incentives for UK-built EVs and lower-income buyers.

Fresh data from New AutoMotive reveals that in Q1 2025, 21% of all new UK car sales were battery-electric—a 38% year-over-year jump. March alone saw nearly 70,000 EVs sold, setting an all-time monthly record.

FairCharge founder Quentin Wilson said: “In a financially strained economy facing some of the worst geopolitical turbulence since World War 2, these are impressive numbers.”

Industry leaders warn that progress could stall without continued government backing. The Electric Vehicle UK Group urges the Labour-led Government to stand firm on its 2030 internal combustion engine (ICE) ban and reconsider higher Vehicle Excise Duty (VED) rates on EVs over £40,000—a price threshold that now includes many mainstream models.