UK well placed to capture green growth benefits from transport transition - report

Thu 03 April 2025 View all news

A new report from the Institute for Public Policy Research (IPPR) finds that the UK is well placed to capture the green growth potential from transport's transition to net zero with existing areas of advantage and specialisation in transport manufacturing. It urges the Government to lean on these strengths and support transport manufacturing clusters across the country. 

However, in a media release accompanying the report launch, the authors say that if 25 per cent tariffs on US car imports continue, this will put extreme pressure on the UK car manufacturing industry, threatening jobs and economic growth.

While the US tariffs are an immediate threat to UK jobs in the automotive sector, the authors say there is only one way to secure transport manufacturing jobs in the UK in the longer term and that is to double down on making sure Britain is competitive in zero or low emission transport products.

The report says that while the global export value of internal combustion engine cars fell by 24 per cent between 2018 and 2022, the sale of electric cars rose 740 per cent. The UK, the report says, has pre-existing strengths to take full advantage of this trend.

Over a third (35 per cent) of cars manufactured in the UK in 2024 were electric or hybrid models, many of which were exported.

The IPPR says the UK currently has 4,938 firms in the UK that manufacture transport products and their components, with 263,000 employees and an annual turnover of £102.1bn. Many of these companies already manufacture green transport products, or have the capacity to.

To compensate for the potential loss of exports to the US, the report authors say that by focusing on capturing the growing international demand for green vehicles, there is also potential to increase domestic sales of UK-manufactured vehicles. 

The IPPR argues that if the Government encourages consumers—both in the UK and internationally—to "buy British and buy green," the UK could boost economic growth, create jobs, and advance key climate goals.

IPPR suggest several measures for the Government to include in its upcoming industrial strategy:

  • Expand UK demand for green transport products, by offering incentives on domestic made electric cars to consumers, cutting VAT on public charging points and providing grants to lower income buyers
  • Leverage the public sector’s purchasing power by electrifying bus fleets and rail lines and ensuring procurement contracts prioritize UK-based producers
  • Attract investment into green transport manufacturing projects by using the National Wealth Fund and British Business Bank to enter joint ventures with private funders and provide finance to promising businesses
  • Capitalise on trade opportunities for green transport products, by reducing customs and regulatory frictions with the EU and introducing well-targeted tariff reductions for crucial inputs, such as battery components, to keep manufacturers’ costs as low as possible

Pranesh Narayanan, research fellow at IPPR and report co-author, said:  “Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government’s growth plans at jeopardy.  

“However, as one door closes another one opens. There is huge untapped potential in manufacturing green planes, trains and automobiles and selling them at home and abroad. If the government use the upcoming industrial strategy to drive investment in these sectors, this could be the spark that leads to thousands of new consumers to start buying British and buying green.”

Related Links

< Back to news list