This report examines how the European Union (EU) and the United Kingdom (UK) can respond together to the technological and geopolitical forces reshaping their automotive sectors, from the transition to electric vehicles to tariffs, subsidies and competition for critical raw materials. Produced by LSE Consulting’s Trade Policy Hub (TPH), the study was commissioned by the European Automobile Manufacturers’ Association (ACEA) and the Society of Motor Manufacturers and Traders (SMMT).
Drawing on firm-level ownership and accounts data for 62 automotive business groups, which together account for at least 95% of vehicle registrations in the EU, the European Free Trade Association (EFTA) and the UK, the report traces how employment, trade, ownership, investment and innovation shifted across the EU–UK automotive system between 2014 and 2024. The analysis is built around 10 empirical facts and is complemented by an industry survey and in-depth interviews with senior executives at vehicle manufacturers and with officials in EU and UK institutions.
The findings show that the EU and the UK remain each other’s most important automotive partner, but the value chain between them has thinned and both now rely more on imported, and increasingly Chinese, inputs. Between 2015–2016 and 2023–2024, the groups studied lost more than 300,000 vehicle-manufacturing jobs across Europe and the UK, while China gained roughly 350,000. Cross-Channel ownership ties have adapted to the new relationship, with UK and EU firms now more often linked through shorter ownership chains than in 2015. Firms identify US trade policy and Chinese competition as the most immediate threats, and they converge on a single request: a coordinated EU–UK partnership on trade, critical minerals and batteries, supported by predictable multi-year frameworks.