The UK automotive industry is concerned that the EU’s response to US and Chinese supporting measures will put the UK at a disadvantage, Kallanish reports.

According to Mike Hawes, ceo of the Society of Motor Manufacturers and Traders (SMMT), the UK automotive sector is at a critical point and needs a new round of investment to drive its zero-emission transition.

Last year, nearly a third of all cars manufactured in the UK were either fully electric or hybrid -- worth £10 billion ($12.26 billion) in exports alone, Hawes says on Friday. That record high EV production results from “decades” of investment.

The trade body has long lobbied for measures that enable the industry to increase its competitiveness, such as fiscal support to alleviate high energy costs and a reform to business rates to help growth. However, it’s now highlighting the threat of increasing global protectionism.

“We must avoid an ‘arms race’ that leads to unfair competition and market distortions. Recent measures in China, the US with its Inflation Reduction Act, and now the EU considering its response could put the UK at a disadvantage,” says Hawes. “We need a framework and pitch that allows us to compete and delivers sustainable projects, long-term economic growth, and rapid decarbonisation.”

Carmakers in the US will have access to investment tax credits, $2 billion in grants to revamp existing manufacturing facilities, and $500 million for enhanced use of the Defense Production Act. The EU is soon to announce specifics of its Net-Zero Industry Act and Critical Minerals Act, offering manufacturers the help they need to scale up electrification and decarbonisation.