THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED SMMT, the ‘S’ symbol and the ‘Driving the motor industry’ brandline are trademarks of SMMT Ltd LOW CARBON VEHICLES Konstanze Scharring, Director of Policy, SMMT Workshop - ‘Green Technology: Do we risk falling behind?’ TUC Climate Change Conference, 21 October 2013

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 2 THE UK AUTOMOTIVE SECTOR UK automotive industry produces 1.5 million vehicles and over 2 million engines annually Automotive is vital to the UK economy –Around £55 billion turnover –Over 700,000 jobs dependent on automotive –Over 80 % of UK produced cars are exported –Invests £1.3 billion in R&D each year –£8bn investment committed to UK since 2010 UK is home to 7 volume car manufacturers, 8 commercial vehicle, 11 bus & coach, more than 10 major premium & sports vehicle manufacturers and over 2,350 component manufacturers UK is 2 nd largest new car market in Europe (ca. 2.1m) & only major growth market in EU

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 3 BUILDING A LOW CARBON FUTURE Expansion of TATA European Technical Centre, Warwickshire £725m investment for LEAF, Invitation & battery plant, Sunderland MIRA £250m facility expansion, Nuneaton Toyota creates first car plant solar array, Burnaston £505m low emissions engine plant, Wolverhampton £24m investment to produce fuel-efficient engines, Bridgend BMW to build engines for its i8 plug-in hybrid sport car, Hams Hall

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 4 GLOBAL REGULATORY DRIVE ON NEW CAR CO 2 Source: ICCT 2013

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 5 UK NEW CAR CO 2 EMISSIONS UK actual new car CO 2 emissions to 2012 and EU targets for 2015 and 2020 Average new car: 133.1g/km in 2012, -3.6% on ‘ % on ‘00 Step change performance since 2008 Challenge ahead to achieve pan-EU target of 95g/km by trend extrapolation 130g/km by 2015

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE % of the market below 130g/km and 8.2% below 100g/km, compared with 0.9% and 0% in 2000 Significant progress, but challenges ahead DRIVING SHIFT TO LOWER CARBON OPTIONS Source: SMMT CO 2 report (2013)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 7 GROWING THE EV MARKET Plug-in Car Grant (PiCG) eligible registrations market share more than doubled in 2012 to 0.11% 3,633 PiCGs and 264 Plug-in Van Grants (PiVGs) issued by March Source: SMMT data

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 8 By 2014, 8/9 car segments will have a plug-in model GROWING CONSUMER CHOICE Broad range of models available and coming to market Nissan LEAFVauxhall AmperaToyota Prius Plug-in HybridBMW i3Mitsubishi Outlander PHEVPorsche 918 Spyder * Anticipated number of EV car models Source: SMMT data

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 9 LOW CARBON NOT LIMITED TO CARS Government supports deployment of low carbon technology across vehicle types: –Plug-in Van Grant – 25% off purchase price up to £8,000 –TSB £11.6m Low Carbon Truck Demonstration Trial (2012) –Green Bus Fund Round 4 announced December 2012 brings total fund spend to £95m – majority manufactured in the UK Low carbon has value across different vehicle types: Optare Versa EV –Electric powered - low running costs –Low vibration - comfortable ride –Three moving parts - low maintenance Optare Versa EV wins 2013 SMMT Award for Innovation

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 10 STRATEGIC PARTNERSHIP - AUTOMOTIVE COUNCIL Automotive Council Strategic industry-government partnership since 2009 Vince Cable MP & Richard Parry-Jones CBE, co-chairs Top level leadership by automotive and government Full Council, Technology Group & Supply Chain Group Priorities Improving the attractiveness of the UK as a place to invest Strengthening the UK supply chain Increasing investment in R&D, esp. low carbon technologies Improving the image of the UK automotive sector

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 11 THE INDUSTRY TECHNOLOGY ROAD MAP Portfolio approach - passenger cars Source: Automotive Council

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 12 Internal Combustion Engines Energy Storage and Energy Mgt Intelligent Mobility Lightweight Vehicle and Powertrain Structures Electric Machines and Power Electronics Strategic Technologies for UK Auto Industry AUTOMOTIVE COUNCIL - 5 STRATEGIC TECHNOLOGIES

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 13 FURTHER INDUSTRY AND GOVERNMENT COLLABORATION ENABLING TECHNOLOGY DEVELOPMENT UKH2Mobility is a collaborative project between industry and government to develop a consensus vision for the roll out of hydrogen in the UK Phase 1 key findings (April 2013): –CO 2 emissions can be 75% lower for FCEVs than conventional diesel vehicles –FCEVs will be at least cost competitive with conventional vehicles –1.6m FCEVs could be on the road by 2030 –The UK would need 1,150 hydrogen refuelling stations to meet potential consumer demand

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 14 AUTOMOTIVE SECTOR STRATEGY – JULY 2013 Four key strategy themes: 1.Technology 2.Supply chain 3.Business environment 4.Skills Key recommendations: –Advanced Propulsion Centre (APC) - Industrialisation of UK technology in collaborative pre-competitive projects, £1bn for 10 years match-funded –Motoring taxation & ULEV strategy – Long term approach to tax & incentives to 2020, £500m OLEV funding till 2020 –Industrial Partnership for skills - Industry framework to create comprehensive talent pipeline –Automotive Investment Organisation (AIO) - New body to attract target list of key Tier 1 investors & secure existing OEM investment –Tooling Finance - Framework agreement with BBA on access to tooling finance for suppliers via high street banks –Supply chain competitiveness programme: AMSCI bid £40 million, long term competitiveness improvement across UK supply chain, match-funded

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 15 ‘DRIVING THE FUTURE TODAY’ OLEV strategy – September 2013 Keeping the existing plug-in vehicle grants until at least May 2015 Launching a call for evidence to inform the £500m package of support Jointly developing a consumer communications campaign with industry Working with industry on an initial network of circa 65 hydrogen refuelling stations Maintaining a strong, clear and lasting set of tax incentives for the purchase of ULEVs Clarifying the tax position for ULEVs with HMRC Source: OLEV

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 16 COMMITMENT & COLLABORATION IN UK £400m OLEV support to 2015: Vehicle, Infrastructure, R&D £500m for Advanced Propulsion Centre + £500m from industry £500m OLEV support to 2020 Fiscal incentives to 2020 H2 UK Mobility – Phase 2 report due ( ‘Go Ultra Low’ - Joint Ultra Low Carbon Communication Campaign in 2014

Society of Motor Manufacturers and Traders Limited 71 Great Peter Street, London SW1P 2BN THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED Thank you