Introduction: How Is the Market-Led Transition Unfolding in the UK Transport Sector?

The decarbonisation of transport is often presented as a transition to electric vehicles, with government policy in the UK centred on the phaseout of new petrol and diesel cars by 2035. There has been some progress towards this so far — battery EVs accounted for 13.1 per cent of new cars registered in 2023, driven mostly by business purchases of electric fleets due to a lack of consumer subsidy.^[6] As of January 2024, vehicle manufacturers are mandated to sell an increasing percentage of battery EVs each year although they can trade their failure to meet targets by purchasing credits from other manufacturers. Beyond this, government has focused much of its transport decarbonisation policy on the separate but connected question of EV manufacturing. With 182,000 jobs in the automotive manufacturing sector which added £15.7 billion to the economy in 2022, the maintenance of the UK’s automotive industrial base carries economic weight.^[7] However, EV manufacturing does not answer the question of decarbonisation given most vehicles made domestically are for export and, as we argue below, a coherent industrial strategy would link domestic production more closely to consumer need.

[.fig][.fig-title]Figure 1: New Battery EV Registrations Are Rising Fast but Petrol Cars Still Dominate[.fig-title][.fig-subtitle]New car registrations by type, January 2023-2024[.fig-subtitle][.fig]

[.notes]Source: SMMT. Notes: BEV: Battery Electric Vehicle; PHEV: Plug-in Hybrid Electric Vehicle. HEV: Hybrid Electric Vehicle.[.notes]

The government’s focus on the automotive sector also elides the fundamental necessity of expanding access to low-carbon public transport while reducing reliance on private vehicles.  As policy and limited public investments have focused on private vehicles, public transport services such as buses that offer the potential for rapid decarbonisation have faced massive funding cuts over the past fifteen years.^[8] Even taken in its own terms, we argue that the present paradigm of market coordination has confined the project of transport decarbonisation to regulations on private vehicles with limited development of either the infrastructure to produce or consume new EVs. As this report evidences, a clear industrial strategy based on the tools of non-market coordination — conscious sectoral planning through public investment and public institutions — is instead necessary to deliver decarbonisation.  

Common Wealth has previously demonstrated why industrial policy must prioritise creating robust institutions of public investment and democratic coordination in key sectors to realise the full decarbonisation and democratisation potential of green industrial policy programmes.^[9] This report first provides analysis on the chosen policy pathway of a transition to an EV-led system, evidencing the risks posed by market coordination’s clumsy path to sectoral transformation. We then assess the IRA’s effects upon the transportation and manufacturing sectors in the US and highlight both the relative efficacy of the turn to sectoral industrial strategy and the limitations of this programme as designed and implemented. We then provide the contours of a sectoral industrial strategy based on three policy lessons founded in deeper public coordination to plan a sectoral shift in transport use and the concurrent development of manufacturing capacity in the bus, rail and micromobility sectors. We argue that this industrial strategy approach will expand the employment base in these sectors and connect with conversion and reskilling programmes to safeguard jobs in transport manufacturing more widely, using existing plant and capacity.

Without green transport, there will be no green economy. As shown through the recent success of the United Auto Workers in securing new EV production as well as expanded bargaining rights, the transition could present an opportunity to democratise control of investment in production and we argue that this is essential for any sectoral plan. However, for the benefits of decarbonisation to be realised, a change in government strategy will also be required.

The three roadblocks

In September 2023, the government veered from its regulatory path and delayed a forthcoming ban on the sale of new petrol and diesel vehicles by five years to 2035.^[10] On the surface, previous regulation had signalled a relative degree of ambition. However, the government’s strategy for transport decarbonisation has long been full of potholes, plagued by a deficiency of the public investment, coordination and planning necessary to deliver sectoral transformation. We define the current strategy as rooted in market coordination because existing investment in shaping production and consumption is premised on profitability concerns — an insufficient mechanism to orchestrate large scale and rapid economic transformation.

As transport is one of the UK’s highest emitting sectors, government’s dependence on regulation to drive decarbonisation without a wider public investment strategy poses a risk to the success of net zero policy overall. The existing plan to decarbonise transport contains two detached core aims:

• the electrification of private vehicles on the road, and
• the maintenance of manufacturing capacity in the automotive industry that produces vehicles for both domestic and export markets.^[11]

While government has focused on these aims, crucial policy areas such as active travel and bus services have been subject to funding cuts. We assess government’s two aims on their own terms before outlining the necessity of a more comprehensive plan to decarbonise transport.  

Preserving manufacturing will require fixed investments as well as divestment from conventional vehicle production. While government has celebrated some recent investment commitments from original equipment manufacturers (OEMs) to produce EVs in the UK, its strategy contains three roadblocks that risk the delivery of both core aims:  

• first, the long-term decline and short-term precarity of automotive manufacturing underpinned by its reliance on the investment decisions of multinational companies;  
• second, the failure of the market to deliver the infrastructure required for either EV production or an accessible electrified transport system which will impinge organic consumer demand;  
• third, the reliance of the market-led transition on private cars and its failure to deliver a multimodal, public-led system of transport infrastructure necessary to secure a zero-carbon economy.  

Overall, the market-led approach to coordination poses a risk to the project of transport decarbonisation as well as the future of one of the UK’s few critical manufacturing sectors — worth ten per cent of exports.^[12] Below, we assess these risks in more detail before examining the US Inflation Reduction Act (IRA) to set out lessons for transport decarbonisation in the UK: primarily that while the IRA signals a greater role for the state in investing in the development of green industries, it also risks the delivery of decarbonisation as a result of its focus on private vehicles. As we detail further, public coordination and planning of transport decarbonisation will be essential to safeguard manufacturing jobs, build the infrastructure required for an electrified transport system and provide new employment bases that can offer high quality alternatives to an industry at risk from the rapid movement of capital.

Ahead of the government’s decision to delay its 2030 ban on new conventional vehicles, some OEMs had already decided to invest in domestic EV production. At first glance, this indicated that the existing policy mix — relatively ambitious regulation for the automotive sector, subsidy to attract private capital and an upcoming mandate for manufacturers to sell EVs (albeit with loopholes) — was succeeding in delivering inward investment and at least on the goal of maintaining manufacturing in the UK.  The policy approach had led to Jaguar Land Rover’s decision to invest in a new battery manufacturing facility in England with the support of £500 million in public subsidy and the technological backing of Envision AESC.^[13] Further, BMW made a £600 million investment to produce one version of the electric Mini in Oxford and Stellantis announced its decision to invest £100 million to continue producing electric vans at Ellesmere Port. Given Jaguar Land Rover’s central role in the supply chains of components manufacturers in the Midlands, its decision to invest in UK production is important to the preservation of the automotive industry.^[14] However, these positive signs conceal fundamental risks — both to the UK’s domestic manufacturing capability and to the delivery of rapid decarbonisation of the transportation sector overall.

The automotive manufacturing sector in the UK is based on the operations of multinational OEMs that are central hubs for component supply chains — most often formed of small and medium-sized businesses that rely on the procurement decisions of larger firms.^[15] In the East and West Midlands, which accounted for 48 per cent of automotive value added in the UK in 2021 and 30 per cent in 2022, components manufacturers are particularly dependent on Jaguar Land Rover.^[16] The future of domestic production is at risk from the investment decisions of OEMs that can move production internationally based on expected returns. With the UK’s automotive sector in consistent decline — car production has fallen by half since 2016 although the industry was hit by the pandemic over this period — its position appears particularly fragile, especially in comparison to states that have deployed far more active coordination strategies.^[17]‍

[.fig][.fig-title]Figure 2: Value Added in Automotive Manufacturing is Concentrated in the Midlands and North West[.fig-title][.fig-subtitle]GVA by region, 2022 (£bn). Hover over a shaded region to see its GVA.[.fig-subtitle][.fig]

[.notes]Source: ONS.[.notes]

China, the leading example, dominates the global EV market with 60 per cent of sales, having grown its industrial base through coordinated policy and high levels of public investment.^[18] China’s development of a world-leading EV manufacturing sector has been led by a sustained industrial strategy that has drawn on a range of policy mechanisms including generous subsidy for both producers and consumers, procurement targeted at the development of local manufacturing and the formation of state-owned enterprises (SOEs) to protect jobs in specific areas.^[19] The Chinese government is estimated to have spent $60 billion on public subsidies to electric vehicle production between 2009-2017 and to have given further policy support to the sector following its inclusion in the 2015 Made in China programme.^[20] These investments and broader industrial policies took place under the auspices of coordinated public subsidy targeting both producers and consumers. Underpinning all of this are large, vertically integrated firms like BYD that control much of the supply chain from mining raw materials to car assembly and sales.^[21] Although BYD itself is not state-owned, both national and devolved governments have developed SOEs in the sector to foster competition and innovation. Moreover, government industrial policies have supported the development of each node of the supply chain now integrated within the BYD firm structure.^[22] The Chinese example supports the necessity of multiple forms and levels of public investment, led by a coordinated industrial strategy to support green transport production.  

In contrast with China, the UK relies on the decisions of private OEMs to retain domestic automotive manufacturing. As a result, the Society for Motor Manufacturers and Traders (SMMT) has called on the government to “derisk private capital investment and reflect[s] the evolving international landscape to deliver a level playing field on which to compete with key markets and trading partners”.^[23] This market-led strategy is inherently insecure: investment and production decision-making power within the transition relies on returns on offer to OEMs and the state is facing similar “derisking” demands across several sectors.^[24]  

With the UK’s market-led approach to coordination creating insecurity, supply chain firms that depend on OEMs already face inherent risk due to the lower component needs of EVs compared to conventional vehicles. If the present approach to the transition remains in place, a pan-European study by the Boston Consulting Group suggests that the reduction in components could result in employment at suppliers falling by 42 per cent.^[25] Even following the SMMT’s derisking approach with sufficient subsidy to entice OEMs to the UK for a sustained period, retaining manufacturing capacity is a difficult task without greater coordination.

While the market-led approach to the transition leaves manufacturing at risk and supply chain firms bear multiple risks regardless, the lack of public coordination of investment has also resulted in a deficit of the infrastructure necessary to support EV manufacturing and use. Battery recycling — essential both to limiting material consumption and to dealing with toxic waste — faces a capacity deficit to meet the growth of the EV sector, for instance. Even using low forecasts of growth in the EV market, there could be 100,000 redundant battery packs or 42000 tonnes of lithium waste in the UK by 2025 as a result of limited recycling infrastructure.^[26] Addressing this infrastructure gap requires coordination: in China a regulatory programme encourages manufacturers to use standardised battery packs that can be easily dismantled.^[27] The SMMT has recognised this issue and encourages public co-investment through grants and tax incentives to develop reuse, recycling and remanufacturing capacity.^[28] The projected lack of essential infrastructure reflects the flaws of the current market-led approach and the risks it poses to the potential of large-scale EV manufacturing with spillover implications for transport decarbonisation.

The infrastructure required to use EVs has also suffered from the market-led approach to the transition. Outside of Scotland and a few local authorities, charging infrastructure has mostly been delivered by the private sector and failed to keep pace with the EV roll out.^[29] Between 2019 and 2021, the number of EVs on the road in the UK rose fourfold in volume (from a low point of just over 100,000), but public charging points only increased by 70 per cent.^[30] More important still is the sharp geographic inequality in charging infrastructure: more than a third of EV charging points are in Greater London (the region in which the highest proportion of UK households do not own a car) while only 5.4 and 4.5 per cent of charging points are in Yorkshire and Humber and the East Midlands respectively — two areas where car usage is currently highest in England and where there is lower urban density.^[31] Not only does this pose a risk to the transition to EVs, but given the lack of public transport in areas currently underserved by charging, it also risks households accessing any form of green transport. The market-led transition has failed to deliver the necessary infrastructure to fulfil its desired aims — many households are barred from accessing EVs by a lack of capital but also by a lack of access to infrastructure. While policy has focused on regulation and a degree of incentive to OEMs, neither has secured the future of the manufacturing sector or delivered a clear pathway towards decarbonisation.  

The market-led approach poses one last additional risk to decarbonisation. Through the policy choice of a transition to private EVs as the means to deliver emissions mitigation, the government has pursued a decarbonisation pathway that requires the replacement of the UK’s 27 million cars like-for-like.^[32] This strategy would require almost three quarters of the lithium currently produced worldwide — even with potential changes to battery technology and increases in lithium production, this is risky.^[33] As research on the like-for-like replacement of cars in the US has shown, private car-led strategies rely on a level of material usage that endangers the ability of all countries to undertake the transition to zero carbon transport and additionally require vast electricity demand, with electricity decarbonisation already behind schedule and grid infrastructure under strain.^[34]  

Private vehicle-led strategies also pose another layer of risk that can slow the transition: imposing the costs and decision-making responsibilities on the public, whereas the expansion of decarbonised public transport enables a shared cost and decision-making responsibility. Low-income households are already less likely to have access to a car and are more likely to rely on public transport services that have been subject to brutal cuts over the past fifteen years: government funding for bus services was cut by 35 per cent in real terms between 2008/9 and 2019/20.^[35] Not only does the market-led replacement of private vehicles risk the mobility of the poorest households, it also presents a barrier to a coordinated, collective strategy for rapid decarbonisation. While the market-led approach to transport decarbonisation has been undermined on its own terms, from a reliance on private investment decisions and a concurrent lack of infrastructure, the incentivisation of market actors to provide EVs is also an irrational strategy to decarbonise the transport sector as a whole.  

These overlapping challenges reveal the risks that market coordination poses to decarbonisation and the future of UK manufacturing. Public coordination and planning are essential to transform the transport system — both in terms of production and use — and to deliver the recomposition of manufacturing industries, the infrastructure required for the transition and the modal shift necessary for genuine decarbonisation. This process of transformation will expand the employment bases necessary for the transition and provide secure alternatives to the investment decisions of OEMs.

Flawed Intervention: The Effects of the IRA on the EV Market

In comparison to the UK’s transport decarbonisation strategy, the IRA represents a turn away from market coordination through the large-scale use of public investment to direct private capital expenditure to transform capital and infrastructure stocks. This turn towards industrial strategy reflects global context of increased state intervention amid the concerning parallel dynamic of geoeconomic competition. Indeed, a structural flaw in the US strategy is doubling down on geoeconomic rivalry through the Biden Administration’s recent tariffs of Chinese imports in the sector, which will do little to affect the competitiveness of US EV exports.^[36] Compared to the UK strategy, the IRA’s approach to the EV market and to transport decarbonisation outlines a greater role for public investment in governing overall green capital expenditure and protecting the development of manufacturing infrastructure. Although this approach illustrates the investment deficiencies of the UK’s current policy mix, the US strategy has produced a similar set of problems. These can be summarised as a reliance on investments that attempt to shape consumption but fail to enable a shift in the type of transport used and disproportionately subsidise resource-intensive electric SUVs over public transport or other forms of EV. The recent success of the United Auto Workers (UAW) in winning disputes at domestic automakers Ford, GM and Stellantis has suggested a more ambitious path for transport decarbonisation, however; while workers have won significant pay increases, they have also exerted democratic pressure on new investment and won recognition at battery factories and investment in EV plants. We first analyse the effects of the IRA on the automotive sector in the US, before turning to the lessons the IRA offers for decarbonisation in the UK.  

The structural design of the IRA in the transport sector

Similarly to the UK approach, the IRA aims to fill roads with EVs and support the US’s domestic automotive manufacturing base. The legislation attempts to stoke consumer demand with a series of tax incentives and to ensure domestic manufacturing through qualifications designed (with deeply worrying Cold War resonance) to crowd out Chinese components and raw materials from the supply chain.^[37] The legislation includes at least $370 billion of spending on climate and clean energy — including EVs, their supply chains and charging infrastructure — though the lack of a cap on subsidies like tax credits means that the total value of the public investment programme could be far higher.^[38] As of October 2023, several key US automakers including Ford, General Motors and Tesla have announced plans to pause EV expansions in the face of slowing consumer demand shaped by high interest rates, which speaks to one structural limit of the IRA’s approach to sectoral transformation.^[39] Despite representing a better funded approach than the UK’s policy paradigm, the IRA in its current form is also limited by a similar ceiling: subsidy is channelled towards large, resource-inefficient EVs at the expense of smaller vehicles or a public and active transportation system — two factors that carry significant climate implications.  

The transport sector is the single greatest contributor to US emissions.^[40] Light duty vehicles (which include all types of car) account for 57 per cent of these emissions, while on-road freight contributes 26 per cent with air, rail and barge making up the rest.^[41] If forecasts are accurate, one of the critical issues with the IRA’s approach is the type of EV likely to form the future market. According to one estimate, IRA tax credits will reduce light-duty EV purchase costs by $3,400 on average from 2023 to 2032. By 2030, light duty EV sales are forecast to take a 48-61 per cent market share, rising to 56-67 per cent in 2032, dependent on the number of states adopting regulations.^[42] In absence of institutional coordination, however, the composition of the future EV market will likely reflect light duty vehicles in 2020: 27 per cent cars, 35 per cent crossovers (or car-based SUVs), 23 per cent SUVs, and 15 per cent pick-up trucks.^[43] Without public coordination, the essential structure of US transportation will rely on vehicles that are both heavy and energy inefficient.  

A closer examination of IRA tax credits further demonstrates that subsidies are misdirected towards larger and more inefficient EVs. Buyers can get a $7,500 point-of-sale tax credit on SUVs, vans and pickup trucks that cost below $80,000 and for cars under $55,000.^[44] In February 2023, after lobbying from GM and other automotive manufacturers, the federal government gave previously ineligible crossover vehicles tax credits by classifying them as SUVs rather than cars — a blessing to GM’s Cadillac Lyriq; Tesla’s five-seat Model Y, Volkswagen’s ID.4 and Ford’s Mustang Mach-E.^[45] By 2025, SUVs and trucks may account for 78 per cent of new vehicle sales, with high lithium requirements for the massive batteries used in their EV variants. Indeed, the IEA predicts a 4,200 per cent demand increase for lithium by 2040.^[46] Heavy SUVs produce further environmental damage as their additional weight increases rubber tyre wear on roads and the emissions of particulate matter.^[47] By following the Tesla model of fast, powerful electric cars with big batteries, manufacturers have sidelined comparatively affordable smaller options.^[48]  

The design of the IRA thus represents a choice to subsidise a resource-intensive private consumption pattern at the expense of attention to climate demands. A public coordination strategy may otherwise choose to promote smaller vehicles, public and active transportation with corresponding infrastructure investments to avoid these costs. A more coherent industrial strategy for green transport would not dedicate such resources to producing inefficient electric vehicles such as SUVs that are demanded by manufacturers who make decisions based on returns on investment rather than emissions mitigation. SUVs are prohibitively expensive for many consumers and — while electrifying such vehicles may still reduce emissions — their climate benefit pales in comparison to decarbonised public transport, walking or cycling, due to both land use requirements and material demand.^[49]  

As vehicle manufacturers seek to build more profitable, larger vehicles and to integrate greater portions of battery supply and production chains, a coordinated approach that focuses on the delivery of public transportation could avoid the waste entailed by a transition based on electrified SUVs or even EVs alone.^[50]  Closing the emissions mitigation gap in the US by 2050 using EVs would require more than 350 million cars — amounting to half of national electricity demand and “excessive amounts of critical materials”.^[51] Some analysts predict a 200 per cent increase in the number of lithium mines (300 new projects) leading to struggles over mining impacts on local communities and environments.^[52] Strict standards and vehicle weight control or developments in battery technology may improve matters, but effective emissions mitigation will require less personal car ownership and usage.^[53] The Climate and Community Project finds that cutting car dependency in the US through public transport, density and walkability planning would reduce lithium demand by 66 per cent; likewise, a reduction in the size of US vehicles and batteries would reduce lithium use by 42 per cent.^[54] Such a strategy is more appropriate to climate targets and would help defuse dangerous geopolitical tensions over the demand for battery raw materials.^[55] Only public coordination is capable of achieving a coherent strategy of public infrastructure development and the changes in consumption that this implies.

The Political Economy of Green Industrial Strategy: Unions and Transport

In the US, trade unions have exerted democratic pressure on investment to secure greater employment in the green transport sector while in the UK and Italy unions have sought to reconfigure existing production as part of the green transition. Together, these three examples suggest that with greater democratic pressure on investment, and support from the state, it is possible to change what is produced to support deep decarbonisation. The UAW, for instance, has successfully negotiated for the inclusion of workers at battery manufacturing plants in their new bargaining agreement with Detroit carmakers, but also for new investments in EV and battery production across several states.^[56] This signals that pressures beyond the profit motive can have a positive effect on green capital allocation but trade unions elsewhere have indicated a pathway that would offer a greater transformation of production.  

In 2021, workers facing a plant closure and job losses at GKN Driveline in Birmingham, UK demonstrated an alternative purpose for their site and argued that through their plan they could produce components for EVs and make operational savings.^[57] However, the workers were unable to prevent the restructuring firm Melrose, which had bought the plant in 2018, from closing production, with the loss of 500 jobs.  This indicates that although investment remains under private control in British manufacturing, a more democratic mode of investment could change which goods are produced for the green transition. Perhaps most ambitiously, GKN workers in Florence have occupied their factory since 2021 in response to job losses and are seeking to convert the plant towards producing goods which they argue are more socially useful than parts for high-end automotive manufacturers, such as solar panels and cargo bikes. While the workers have the technical expertise to produce different goods, and manufacturing capacity has been maintained at the Florence plant, they currently lack the capital required to purchase the factory from Melrose. This is where public equity stakes can play a role in a wider industrial strategy — to support the repurposing of production to expand the green public transport system while safeguarding domestic manufacturing. Such a strategy would build on existing manufacturing specialisms in Britain, for instance in electric rail locomotives, and the relatedness of the conventional industrial base to green transport.^[58] Nonetheless, careful planning would be needed to ensure jobs in new sectors are met with sustainable demand.  

Three Policy Lessons for Green Industrial Strategy in the Transport Sector

The US’s nascent turn to green industrial policy stands as a relative leap in ambition compared the status quo in the UK in its use of public investment to govern capital expenditure. Yet, this is a comparative assessment which leaves significant room for improvement in the UK through future industrial strategy design and implementation.  

The current IRA strategy for EVs assumes that subsidies will be sufficient to reach the market’s destination of decarbonised private vehicles. However, the legislation does not take a crucial step: the overhaul of mobility so that mitigation targets are credibly met and green alternatives avoid perpetuating climate harms. Learning from the IRA would entail embracing a public investment driven programme to provide needed infrastructure and innovation to achieve this, in tandem with minimising the false promise of electric SUVs. Through a coordinated strategy in the UK, investments and policy in the expansion of multi-modal public transportation infrastructure can also support domestic manufacturing. This would require an approach that allows for coherent and effective sectoral planning. From our analysis of the IRA — both its design and the politics of its implementation with regards to labour organising — we present the following three key lessons to guide green industrial strategy design in this sector:  

[.num-list][.num-list-num]1[.num-list-num][.num-list-text]The intentional design of transport decarbonisation through a public coordination approach is a necessity.[.num-list-text][.num-list]

The UK’s strategy for transport decarbonisation suffers from a lack of public investment, coordination and planning necessary to deliver large scale and rapid sectoral transformation. A planned approach between national, devolved and local governments can enable the UK to more directly, effectively and strategically govern capital expenditure and to coordinate transformation than the current transport programme and also the IRA. An approach like this could draw on a green public investment fund or a reformed version of the UK Infrastructure Bank that uses an equity-based investment model.

[.num-list][.num-list-num]2[.num-list-num][.num-list-text]Learn from the IRA: embrace a public investment driven programme but avoid the false promise of relying solely on consumer subsidy for private EVs.[.num-list-text][.num-list]

Compared to the UK’s current strategy, the IRA’s approach to transport decarbonisation includes a greater role for public investment in governing green capital expenditure and protecting the development of manufacturing infrastructure. In this regard, the UK should take a similar path. However, as argued below, the IRA fails to enable a shift towards a greater systemic role for public transport and disproportionately subsidises resource-intensive electric SUVs. Through a coordinated strategy of investment and procurement that balances local needs for rail, bus, trams and micromobility (such as e-bikes and scooters), the expansion of public transport infrastructure offers a pathway to decarbonisation while also supporting domestic manufacturing.^[59] For instance, in the bus sector this strategy should include new funding for the expansion of public transport services delivered through the Department for Transport with matched funding for devolved administrations. Public investment through local authorities in municipally-owned bus and micromobility services could then be supported through targeted local procurement policies that expand domestic green manufacturing.^[60]  

[.num-list][.num-list-num]3[.num-list-num][.num-list-text]Work with trade unions to coordinate and democratise investment and secure a flourishing green manufacturing sector.[.num-list-text][.num-list]

As shown through the recent success of the United Auto Workers in securing investments in new EV production as well as expanded bargaining rights, the transition presents an opportunity to democratise the control of new investment. Trade unions should have a role in the governance of green manufacturing firms that receive public equity investment and in the design of local and regional investment in public transport and procurement policies.

Conclusion

As our analysis of the market-led approach to transport decarbonisation demonstrates, sectoral net zero targets and the automotive manufacturing base both face severe risks due to a lack of public coordination of investment. At present, the UK’s strategy for the decarbonisation of transport is fragile — multinational OEMs hold investment power in transport manufacturing and can choose to direct capital anywhere in a global market already faced with overcapacity. The failure to deliver the infrastructure needed to either manufacture or use zero carbon transport has created additional risks while government policy has not yet prioritised the expansion of public transport essential to decarbonisation. Although the IRA has allocated a greater degree of public investment in the transition to EVs, it contains two significant flaws — a focus on private vehicles and the poor coordination of consumer subsidy — that present lessons for other countries. The UK has an opportunity to learn from this and develop a robust strategy to democratically coordinate the transition to zero carbon transportation.