Jon [00:00:07] Hello and welcome to the loop from RSM in each episode, we bring together a panel of top experts to untangle some of today's biggest business issues, providing practical advice along the way for middle market businesses across the UK. In this edition of The Loop, we're diving or driving into the automotive world. For over a century, society has relied on the internal combustion engine to get us around. But now the environmental impacts of burning carbon based fuels has become impossible to ignore. So what is the future of the car and how will this impact businesses in the UK? Well, here to help us answer these questions, we have a fantastic panel. Richard Bartlett-Rawlings is head of automotive manufacturing at RSM UK. Ben Bilsland is technology and media partner at RSM UK and Alice Seabrook-Martina is a senior manager for the Society of Motor Manufacturers and Traders or the SMMT. Thank you all for being here, and welcome to The Loop.
All speakers [00:01:13] Hi Jon, Thank you very much.
Jon [00:01:14] Now, perhaps you can give us each first a sense of your roles, the sense of your area of focus, a quick introduction as to what you do in the automotive space. So, Richard, let me come to you first. Welcome to the programme.
Richard [00:01:26] Hi, Jon, by trade, I'm an auditor, but by day I spend most of my time speaking with businesses in the automotive manufacturing sector and just trying to understand what's going on with them, their business. What challenges are coming down the road and basically trying to help them as they continue to grow and develop in the UK?
Jon [00:01:46] Fantastic. And Ben also joining us from RSM. Great to have you on the show. Welcome to The Loop. Tell us a little bit about yourself.
Ben [00:01:56] This is really exciting for me because this is an area where two worlds I love collide with technology and media part of RSM. And today we're talking about cars, and I also love cars. So from the start, that's why I'm really excited to be here.
Jon [00:02:11] Well, it's great to have you with us. And finally, Alice, it's fantastic to have you representing the SMMT as well. Welcome to The Loop. Great to find out a bit more about you.
Alice [00:02:21] Thank you, Jon. And it's a pleasure to be joining you all. We're the representative voice of UK automotive, and we have over 9000 individuals who are linked to our membership. And we do our best to be their voice domestically and abroad to ensure that we remain competitive globally.
Jon [00:02:41] Well, it's great to have you all here and welcome Alice as well, we've got a lot to get through. So let's jump in. Let's start thinking about this issue of the future of the car. Hopefully, all agree that the discussion in this area has really picked up over the last few years, even months when we think about the COP summit that's happening now in Glasgow. It's obviously front of mind for so many people. But Richard, let me come to you first. Is it solely the climate emergency that is driving the discussion around electric vehicles or EVs?
Richard [00:03:16] Thank you, Jon. I don't think I would go so far as to say it's the climate emergency that's driving the view on EVs. EVs have been part of the discussion over automotive for a while now, and the current kind of focus on the climate emergency, I think is definitely bringing people's attention to bear. But I don't think it's necessarily the driving factor. The reliance on petrol and diesel in vehicles has always been known to be something that sooner or later we are going to run out of it and therefore an alternative needs to be found, and that means it's always been part of the discussion within the automotive sector. But I think now, though, that consumers are starting to lead the trend rather than the manufacturers, and we're starting to see consumer demand focussing manufacturers on what they want rather than the other way round. You know, when Henry Ford was selling the Model T, he was kind of like 'I'll make this thing and I'll paint it black and that's what they will buy' and he determined exactly what they got when they went to go and buy the Ford. Whereas now I think, manufacturers are having to be far more consumer savvy and consumers are expecting far more focus on environmental trends.
Jon [00:04:29] It's amazing when you think how fast that change has come as well, and it's there is a huge technological feat as well. Ben, what do you think of the driving factors there?
Ben [00:04:40] We get to a point where the infrastructure sustains these cars and there's a long way to go yet. But I think in the vehicles themselves, there are two things. One is they've become cheaper. So the cost the technology has driven to a point where they're becoming more accessible. Now you can look at electric vehicles five or ten years ago, and your options were quite small. You're looking at very luxury cars or Tesla, now you can purchase from a range of manufacturers, which is good. And the second is, I think, actually the electric vehicles are beginning to look a little bit sexier. Now, if you look at an electric vehicle from a few years ago, the design was a little bit, I don't know, beauty is in the eye of the beholder. Now, I think if you were to go and purchase an electric vehicle, you would find it looks the same as its more traditional counterparts and in many cases, I think actually they've begun to look a bit nicer. So there are two factors I would certainly highlight that seem to be driving this trend.
Jon [00:05:35] So more desirable than Ben for the consumer, more in keeping with that desire that often comes with choosing a car.
Ben [00:05:43] I think so. I think that becoming an option where people want one, which is why we're seeing more and more people buying them.
Jon [00:05:50] Well, let's look at some of the fundamentals here then for consumers and for businesses as well, because there are all sorts of issues here aren't there? Particularly around charging points. Let's go through some of the challenges there when it comes to how we deploy those EVs. Let me come to you first on this, Richard.
Richard [00:06:07] So I think there are some significant challenges. And what we're going to need to see is probably some increase in what the government are trying to invest in infrastructure to make this a reality. You know, I'm quite lucky. I live very close to Milton Keynes, where there's almost like a charger for every parking space it feels like. And I do think that, you know, those people living in terraced houses and streets with no off road parking are going to be questioning how they can transition to an electric vehicle and then ensure that they're able to get it charged. And I was looking the other day online at just the sheer range of different cable kind of connectors. And I think there are six or seven different connector types in use at the moment.
Jon [00:06:50] Surely that can't go on, Richard, it must surely eventually come down to one or two at the most. Is that one of those early stage issues that we're encountering?
Richard [00:07:00] You call it early stage but I challenge everybody to think back when they started using a mobile phone. How many chargers did you have in the drawer? Because Ericsson, Nokia, every single phone manufacturer at a completely different connector. You know, it's only just now we're starting to see most phones now move into a USB-C. You know, how long have mobile phones been around? I got my first, and I think it was about 1997. So, that might age me a lot, but you know, this is the point. It kind of getting to that point at which the entire industry says this is their consistent methodology, this is what we're going to do, takes a while. So, you know, I think what consumers want to know is when I turned up at the charger, I can use it and it will have the plug, do I need and it will be able to be compatible with my car and it will be working and it will be in a place that's convenient for me and there won't be six other people waiting to use the same charger all in a nice line where I'm going to spend the rest of my day sat here watching them. So it's I think it's convenience, consistency and ensuring that the infrastructure is there and is solidly built.
Jon [00:08:06] Alice, what's the industry response to this particular challenge? Because it is a fundamental one, isn't it? If you're in a busy terraced streets or you've got, you know, an apartment on the sixth floor of a building and you want to charge your Tesla or your Nissan Leaf or whatever it is, you might have. That at the moment is a particularly difficult quandary, isn't it?
Alice [00:08:29] Yeah, of course. It's a huge challenge and if you look at the registration data, the new EV or plug in cars that have been bought this year, two out of three are fleets, so bought by businesses and obviously you can charge usually at your company. There are options and there are lots of start-ups and new innovative businesses who have solutions to help with the charging infrastructure. But I think the announcement from the government of more money to improve that across the UK, that's great to hear and as much as possible, really in terms of increasing at quite a quick speed, the number of charging stations throughout, not just in cities, but throughout the country is very much needed.
Jon [00:09:24] It does still feel like early days though, doesn't it? Because when I look out on the streets at the moment, I still see plenty of petrol stations. I do see charge points, but they're at the corner of a park or at the end of a street or in places like that. We just feel like we've got some way to go before you reach that bank of chargers that you would feel confident charging your car on. Is that part of the problem, too, Ben?
Ben [00:09:47] Well, I think that's one of the challenges for the consumers is the availability of a charger. And you know, there's a number of places you can go and look at this data. One is a business called Zap Map, which provide an app that allows you to find a charging point, and they are seeing a growth in these things. In 2020, there were 20,000, just over 20,000 charges across the UK. But you are correct, we don't have on every street corner yet.
Richard [00:10:12] I think, Ben, you know that kind of highlights one of the issues you have with electric vehicles and the kind of early adoption and the take up is modern vehicles can now use the rapid chargers and charged, you know, within 20 minutes, up to about 80 percent full. But what if you bought a vehicle a year ago or two years ago? You're still limited to the maximum charge rate that your vehicle will allow. So you'll now plug into a supercharger, whatever you want to call it, a fast charge or rapid charger, but you're still limited at slow charging pace. And the issue is, if you're a consumer, who isn't a fleet and isn't a business, as Alice mentioned earlier, would you really want to buy something knowing that within 12 months, the technology may have moved on so quickly that what you've bought is obsolete? And if you go into the used car market now to go and sell it, all of a sudden nobody wants to really buy it because it can't charge in 20 minutes, it still takes you six hours or whichever it is. And I think this is, you know, for me, one of the real fundamentals on kind of electric vehicles. They are progressing and growing and developing as quickly as a phone. But would you really, you know, when I bought my first Motorola MR30, you know, you could text something like 120 characters or whatever. But if I'd have known the Apple iPhone had been kind of two years down the line, what I really wanted to invest well, maybe because I was only spending a few hundred pounds. But when you're spending £35,000 to £40,000 in a depreciating asset, do you really want to spend £30,000 to £40,000 on something that's going to be worth 20 in 12 months time because the technology is just move that far?
Alice [00:11:42] I think you're right, and it has become a bit of a choice in terms of the wealthier people have been able to to go for the EVs. Perhaps those people who don't have as many options haven't seen it as available to them. And this is where we look at other countries in Europe, incentives from the government have really helped with the fleets again, that's also why it's two out of three have been bought by businesses because of the incentives and because of the tax breaks. We need to get down to the actual cost of these vehicles and making them affordable for the many, not the few.
Jon [00:12:21] I want to get on to the issue more broadly around the the manufacture of batteries and particularly in the UK as well. Do we have in Britain the battery making capacity to compete with other global players and to supply the demand that we're all suggesting is increasingly looking like it's going to be there? Richard, what are your thoughts on that? You know, are we making enough batteries? Do we have the capacity?
Richard [00:12:52] Simple answer is probably no. I honestly think if we want to maintain the level of automotive manufacturing in this country that we have with the internal combustion engine, we need to invest heavily in battery technology and battery, kind of, the new Gigafactory. We've seen a number announced, you know, is one up in the North East, one in Coventry, there's another being proposed in Wales, but we need more. And ultimately we can't be reliant on the rest of the world to build our batteries and ship them over to us to then install in cars because it just won't work like that. You know, I was thinking about this earlier, and I just think, you know, a lot of what we have been doing in the West for years has been offshoring our carbon creation. So you send it over to China trying to make all the carbon emissions for us and then we ship it over and it doesn't generate any because nothing comes out the exhaust. Therefore, the UK is nice and clean, but we're not clean. We're just dirty linen in somebody else's pond. So for me, you know what we need to be doing is thinking about making the whole supply chain far more environmentally aware and being aware of where it's coming from and why, you know, using cheap labour overseas just means you're moving your emissions overseas. And is that really a fair practise?
Jon [00:14:07] But batteries are fiendishly complicated objects to create, especially for cars as well. So Alice, is this not an opportunity for a renaissance in manufacturing in engines particularly and batteries in, particularly in the UK?
Alice [00:14:25] Yes, I think we could do more. We need to attract more investors. And obviously, any support that we can get from the government really helps. We've got a huge car market here. And so there is potential to make batteries here, but how quickly we can move is yet to be seen. I think we've made some good steps already, like a few years ago, who would have thought that we'd be at the level that we are now, which is really great. But yeah, lot's more to do really.
Jon [00:14:57] So just moving on from that then and exploring in a little bit more detail, let's discuss with you around he level of investment required by manufacturers and the government itself in order to drive consumers towards EVs, whether that's in subsidies, whether it's helping to support and nurture the battery construction industry in the UK and indeed the broader manufacturing base for cars in the UK as well. What do we need to do to drive that investment and to drive consumers towards EVs? Ben, what are your thoughts on that?
Ben [00:15:34] We have 8,380 petrol stations in the UK. So when you play that against 6000 rapid chargers, it feels light, albeit the government do make the point they feel 6000 rapid chargers will match the number of vehicles on the road. But just to talk about what's happening in America, we're seeing the manufacturers invest in infrastructure to encourage buying. So General Motors announced recently they're going to deploy 40,000 EV chargers across their dealer network. Each dealership will receive a charger and been told to put it in a rural or low income urban area. So what we're seeing is the manufacturers spending that money, and that's part of a $750 million plan from General Motors. I know America is a much larger country than the United Kingdom but if we start seeing manufacturers making similar investments in the UK, that may help build a much stronger charging infrastructure.
Jon [00:16:32] And Alice, £500 million for rapid chargers, the rapid charge fund from the government, I'm sure it's welcome, but is it enough?
Alice [00:16:41] It's a great start, but now I think there's already been quite a lot of comments to say that we do need more money to be invested, but obviously the manufacturers are willing to invest as well and they have done in previous years. I think we've had some great examples of industry government co-invest partnerships, the Advanced Propulsion Centre, for example, lots of funds ongoing for innovation and new technology. So definitely, we fully support manufacturers investing just as much as government.
Jon [00:17:20] What is the the environmental impact of all of this? You've touched on this Richard already, but when we think about batteries, when we think about EVs, it's designed to make us feel good about our car choices. We're doing our bit for the planet. We're not polluting it in the way the old internal combustion engine did. But there are cons, as well as pros, with EVs. What would you say, Richard are the cons here and how do we deal with those?
Richard [00:17:47] So I think, you know, move towards EV will definitely improve things, especially if the generation of electricity in general is moving to a more environmentally friendly format. If you're using electricity generated by coal power station to charge your car while you're just moving the CO2 further down the pipeline. But I do think you know there's issues with the amount of energy required to create new vehicles in general. So if everybody's still buying lots of lots of new vehicles, you know it's quite energy rich to do. And then you've got the added, you know, the added issues around, you know, rare earth minerals, whilst not rare, are quite difficult to get out of the ground. They can cause quite significant pollution, has been seen over in China in other areas of the world. And also the key kind of parts where they're found, in some cases, you know, it can be quite detrimental to local populations to suddenly have a very large mining facility for lithium or something similar and it can cause quite considerable environmental damage. But then it's also, you know, not just using the car and whether you're putting emissions out the back or not, but then it comes down to what happens when you've finished and when the car then moved towards recycling or being kind of dismantled. And I think at the moment, you know, lithium ion batteries, it's about five percent that are being recycled or repurposed. And you know, that's frankly just not good enough, really. When you think about the energy it takes to make one and then to just kind of throw it away, it's completely wasteful.
Jon [00:19:23] Now I know we've been obviously focussing on electric vehicles, but I want to spend just a short bit of time now before we wrap up thinking beyond EVs as well. What are the choices are there out there when we think about the means to power transport, our cars in the future? There's lots of discussion around, for instance, hydrogen power as a method and that may be even EVs or the battery approach is a stopgap on our journey for a new way of powering ourselves around. What are your thoughts or a view on that about what alternatives that are out there, Richard? Let me come to you first on that.
Richard [00:20:02] I will admit I'm not sold on electric vehicles quite yet. I'm not sure they are necessarily the end kind of game within the whole kind of metamorphosis of all things automotive. My thoughts are hydrogen is a good alternative. It has a similar power delivery to petrol. But if you can generate it and create it in a way that's environmentally efficient and friendly, you can utilise it quite well and it becomes much quicker to refill the car. It becomes much easier to use in the way that we're used to using our cars now. Like electric, though, if you're going to put hydrogen in a car, you need to have a very big, heavy tank in the back, which is pressure tight and also will not suddenly rupture when you have a car accident or anything like that. So again, you're making the car far heavier than a petrol driven car would be due to what it's going to carry around and the dangers around it and know, catching fire is not just limited though to hydrogen vehicles because battery cars do tend to catch fire occasionally when lithium ion cells go out of hand and they normally burn for three to four days in very intense temperatures as well and are quite difficult to deal with. So for me, I think ultimately the end result probably needs to be to get our carbon footprint down to reduce the impact on the globe is probably to reduce the number of cars in general that are being used and start using our cars more efficiently/ Most cars spend over 90 percent of their time parked either in your garage or at your car park where your office is. So you're buying a car that you use for three percent of its life. So, you know, for me to make that more efficient is to make cars used more across their kind of lifecycle to ensure that their journeys are made. That brings you into automation, and it brings you into all sorts of other areas. But you know, there's so many legal areas that need resolving first or regulatory areas that need resolving before that can even start to move forward. I don't think that's a near-term solution.
Alice [00:22:05] I think you're right. Hydrogen can be part of the solution. Fuel cell electric vehicles, some manufacturers are developing them and have been for some years. But we're further down the line with the electric vehicles. So we've already touched on infrastructure and we've been talking about thousands of charging points. If you look at hydrogen stations in comparison, we have 13 in the country, one three. So we would need to increase that hugely for it to be a viable option for consumers. However, if you think of a fuel cell electric vehicle in the range about 400 miles at the moment, then the manufacturers are seriously considering it and developing it for larger vehicles. So SUVs and trucks. We're not there yet in terms of understanding how we can move to an electric motor for all trucks. So hydrogen certainly can play a key role in the road to zero.
Ben [00:23:10] I think I would add to that. I think there is, excuse the pun, a huge gap for hydrogen to drive into. If you look at the US market alone, you know, for Ford and General Motors combined commercial vans, a $12 billion market and then the pickup truck market is $20 billion. So there's a big market to play for in those vehicles. Hydrogen is maybe 10 years behind passenger EV, so we have the incremental advances in technology and reduction in cost to come. And of course, with a big market to go into, a big testing ground. So hydrogen could complement electric vehicles and we could end up with both. Remains to be seen.
Jon [00:23:50] Is that feasible? Ben, the idea that we might have two different method, is it as simple as choosing between diesel and petrol? Whether you go for EV or hydrogen or another synthetically powered vehicle is that realistically an option, do you think?
Ben [00:24:10] I think the nature of all emerging technologies is you end up with lots of different standards and we touched on it just with charging cables. It could be the same here and with the next, you know, with the end of the traditional internal combustion engine, we may see a range of different options and then we settle down on what ultimately becomes the best solution.
Jon [00:24:30] Well, we're very nearly out of time, but I'd just like to ask you each one final question, each same question to you all. The future certainly is going to be a different one from where we are now in terms of how we power vehicles, electric vehicles it seems, at least for now, is the way forward. But there are challenges there and there are potentially alternatives, albeit the technology might not be fully there yet. As experts in the automotive industry, do you feel confident about the future when it comes to how we'll be powering our vehicles? Do you feel confident that the answers are there and that will reach them soon enough? Let me come to you, Alice first on that.
Alice [00:25:12] Yes, I'm definitely confident. I mean, we've constantly reinvented it as an industry. It's a hugely exciting to see how far we have come over the years, and certainly that has sped up hugely over the last few years. We can see the solutions playing out already. I don't think we have all the answers now, but I'm very excited to look forward to more automation, more sustainable vehicles and a healthier planet.
Jon [00:25:45] Ben, do you share that confidence that Alice is expressing there?
Ben [00:25:51] I do. I think it's, there are many exciting things in the future. I think one of the most interesting changes in society is that traditionally driving has been an expression of freedom and something we do for pleasure. I do wonder in the future if it will become something that is very utilitarian. We might see that shift towards self-driving vehicles and road trains and other ideas, which perhaps in the past society's been reticent to move towards that. Not enough time to explore that today, Jon.
Jon [00:26:20] Well, thank you, Ben. Richard, I'll leave the last word on this with you. Do you have confidence in the future there or is it going to be a slightly less interesting and slightly duller future for the for the way that we travel?
Richard [00:26:34] I think it's going to become far more interesting. I think the way that technological advance is going, you know, solid state batteries, all sorts of things are coming along. And you know, I work a lot with really innovative, really exciting businesses in the UK that are already thinking about, well, how do we make cars go further? We'll make them lighter. We use composite technology instead of metal for the chassis and other kind of areas of the of the vehicle. I think, you know, the number of start up businesses I'm looking at who are looking to help people navigate the complex web of how do I get my car charged? Where do I pocket? Can I share it with others? You know pieces like that, it's just what we do here in the UK. We innovate, we adapt, we transform. And automotive has done that for over a century and it's still here and it's still very large and it's still very prominent in a very, very large part of our manufacturing sector within the UK and globally. I think what we're going to see is potentially new entrants, potentially into the market. You know, Tesla came in out of nowhere and really took the electric car market hugely. You know, I've been a massive talisman player within that, and I think, you know, there is the potential for others to join the fray. I think we'll probably see some amalgamations where, you know, we start using single kind of base vehicles with different body shells on the top like we used to do back in the 1920s and 1930s. And I think, you know, there's just so much opportunity here and so many unanswered questions that need those kind of answers that it's just a Pandora's box of opportunity. And I really look forward to seeing what businesses do to drive us forward.
Jon [00:28:11] Well, it seems a fitting note to finish on there as well, Richard. Richard, Ben, Alice, thank you all very much for your contributions, for your thoughts and for your insights and what I think has been an absolutely fascinating discussion, but unfortunately, now we are out of time. If you'd like to find out more about automotive in the UK, then please do look out for Richard's monthly blog post, which can be found at our RSM's ideas and insights pages. We're always keen to hear your views, so please do rate us and leave a review. And to stay in the loop, please subscribe to The Loop and listen to our next episode, where we'll be untangling more of today's big business issues. But for now, thank you very much indeed and goodbye.