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UK’s Rishi Sunak counters Biden subsidies with $648 mln package for Jaguar


Britain’s car industry has been on the decline for some time, with production falling to a 66-year low last year and rival governments pledging vast amounts of public funds to the development of electric vehicles.

On Wednesday, there was a response. Prime Minister Rishi Sunak flew by helicopter to Warwickshire, in the west Midlands, to hail a new range of electric Jaguar Land Rover vehicles that will be backed by a £4 billion ($5.2 billion) battery factory to be built further south in Somerset.

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The project comes at a cost. While neither the UK government nor Tata Group — JLR’s parent company — said how much public money was being put into the battery plant, the support package is likely to exceed more than £500 million, according to two peo-ple familiar with the situation.

“The reality is that the global battery market is not a free market,” said Andy Palmer, the former chief executive officer of Aston Martin who now chairs Slovak battery maker InoBat, which is not involved in this plant. “It is distorted by huge state subsidies and we either recognize that and respond, or see our auto industry slowly deplete.”

The UK came close to missing out on the new battery plant, with executives at Tata considering Spain as an alternative location.

Nine months ago, in the wake of Liz Truss’s resignation, financial markets were still reeling from her disastrous mini-Budget and the country had just welcomed its third prime minister in two months.

Grant Shapps, who was Business Secretary at the time, received a call from Tata executives to say they wouldn’t be choosing Britain for the plant.

That phone call triggered a series of conversations between UK ministers, officials and senior representatives from Tata including its Chairman Natarajan Chandrasekaran, according to people familiar with the discussions. In March, Shapps flew to Mumbai, India, for a crunch meeting with Chandrasekaran.
At that point, UK officials were still concerned Spain would win out and the authorities in Madrid were confident they’d clinched the investment, Bloomberg reported at the time. Shapps described Tata’s decision as being on “a knife edge.”

After Shapps’s return, his successor — Kemi Badenoch — sent Chandrasekaran a text message which began months of correspondence between the two over the shape of a possible deal. By May, the wheels were in motion. Investment Minister Dominic Johnson met Tata executives while on an unrelated trip to India and returned with something close to a final settlement. The deal was finalized after Tata’s Chief Procurement Officer Tom Flack visited Number 10 Downing Street to meet Badenoch and Shapps.

Numbers game

Electric vehicle manufacturing requires large scale plants to provide millions of batteries. America is offering state support for clean technologies such as electric vehicles — and the batteries needed to power them — as part of President Joe Biden’s Inflation Reduction Act. The European Union, meanwhile, has proposed a relaxation of state aid rules when it comes to green technology.

Sales of electric cars are soaring across the world. Tesla is on track to produce 1.8 million vehicles this year, and said on Wednesday that revenues reached nearly $25 billion in the second quarter.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, told Bloomberg Radio that other countries and political blocs had been “incredibly generous in what they were offering.”

However, he said the announcement from Tata “demonstrated the UK can win on the international stage.” It was “turning around some of those perceptions that have been around the UK for the past seven or eight years,” he said.

The UK needs more battery factories, like Tata’s, if its automotive sector is to thrive. Plans for a large plant in the northeast of England faced a setback earlier this year when Britishvolt Ltd. collapsed.

Elsewhere in the region, £100 million of public funds have been put toward an electric car hub under construction near Sunderland, which is being primarily financed by Nissan and Japanese battery maker Envision AESC. That site, which will employ 1,000 people and begin operating in 2025, will make batteries for Nissan’s latest generation of vehicles.

Much larger plants are required, however. “We’re always in dialog with lots of different companies around the world on ways that they can invest in the UK,” Sunak said during Wednesday’s visit to Warwickshire.

Johnson, the Investment Secretary, told Bloomberg Radio on Wednesday that Tata’s commitment “really will have a domino effect and attract other businesses.” He said that when Tesla decided to build a battery factory in Germany in 2019, with Elon Musk citing Brexit as a disadvantage for the UK, ministers “decided we weren’t going to let that happen again.”

Brexit

Efforts to recharge Britain’s car industry are complicated by its relationship with the EU after Brexit. The EU is the largest single destination for cars manufactured in the UK, accounting for 58 percent of the domestic industry’s exports in 2022.

However, as of next year, at least 45 percent of the value of an electric vehicle must be sourced in the UK or the EU if it is to be sold on the other side of the Channel without a 10 percent export tariff under new rules of origin requirements. From 2027, the threshold will rise to 65 percent. UK officials have not yet persuaded Brussels to delay the deadline.

Touring the JLR plant on Wednesday, Sunak said negotiations are still taking place with the EU.

“It’s not just affecting UK manufacturers, it’s important to remember that that also affects European manufacturers as well,” he said, adding that companies across the continent are lobbying on the issue.

JLR and Tata will be the anchor customers for the site in Somerset, which will be capable of providing 40 gigawatt hours worth of batteries with supplies starting from 2026. The gigafactory could supply roughly half a million vehicles a year and will be one of the largest in Europe. It will create 4,000 jobs and more in the wider supply chain.

Not all industry experts are enthused, however. Former Aston boss Palmer says the UK is still playing catch-up. “We need more,” he said. “And there is a risk that because of a lack of urgency to build gigafactories to date, this Tata plant is too little too late.”

Read more:

India’s Tata Group picks Britain for new $5.2 bln EV battery plant

Global carmakers now target $515 billion for EVs, batteries

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Abu Dhabi Overtakes Oslo for Sovereign Wealth Fund Capital in Global SWF’s First City Ranking

Today, industry specialist Global SWF published a special report announcing a new global ranking of cities according to the capital managed by their Sovereign Wealth Funds (SWFs). The findings show that Abu Dhabi is the leading city that manages the most SWF capital globally, thanks to the US$ 1.7 trillion in assets managed by its various SWFs headquartered in the capital of the UAE. These include the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company (MIC), Abu Dhabi Developmental
Holding Company (ADQ), and the Emirates Investment Authority (EIA). Abu Dhabi now ranks slightly above Oslo, home to the world’s largest SWF, the Government Pension Fund (GPF), which manages over US$ 1.6 trillion in assets. Abu Dhabi and Oslo are followed by Beijing (headquarters of the China Investment Corporation), Singapore (with GIC Private and Temasek Holdings), Riyadh (home to the
Public Investment Fund), and Hong Kong (where China’s second SWF, SAFE
Investment Corporation, operates from). Together, these six cities represent two thirds
of the capital managed by SWFs globally, i.e., US$ 12.5 trillion as of October 1, 2024.
For the past few decades, Abu Dhabi has grown an impressive portfolio of institutional
investors, which are among the world’s largest and most active dealmakers. In addition
to its SWFs, the emirate is home to several other asset owners, including central banks,
pension funds, and family offices linked to member of the Royal Family. Altogether, Abu
Dhabi’s public capital is estimated at US$ 2.3 trillion and is projected to reach US$ 3.4
trillion by 2030, according to Global SWF estimates.
Abu Dhabi, often referred to as the “Capital of Capital,” also leads when it comes to
human capital i.e., the number of personnel employed by SWFs of that jurisdiction, with
3,107 staff working for funds based in the city.
Diego López, Founder and Managing Director of Global SWF, said: “The world ranking
confirms the concentration of Sovereign Wealth Funds in a select number of cities,
underscoring the significance of these financial hubs on the global stage. This report
offers valuable insights into the landscape of SWF-managed capital and shows how it is
shifting and expanding in certain cities in the world.”

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AM Best Briefing in Dubai to Explore State of MENA Insurance Markets; Panel to Feature CEOs From Leading UAE Insurance Companies

AM Best will host a briefing focused on the insurance markets of the Middle East and North Africa (MENA) on 20 November 2024, at Kempinski Central Avenue in Dubai.
At this annual regional market event, senior AM Best analysts and leading executives
from the (re)insurance industry will discuss recent developments in the MENA region’s
markets and anticipate their implications in the short-to-medium term. Included in the
programme will be a panel of chief executive officers at key insurance companies in the
United Arab Emirates: Abdellatif Abuqurah of Dubai Insurance; Jason Light of Emirates
Insurance; Charalampos Mylonas (Haris) of Abu Dhabi National Insurance Company
(ADNIC); and Dr. Ali Abdul Zahra of National General Insurance (NGI).
Shivash Bhagaloo, managing partner of Lux Actuaries & Consultants, will his present
his observations in an additional session regarding implementation of IFRS 17 in the
region. The event also will highlight the state of the global and MENA region
reinsurance sectors, as well as a talk on insurance ramifications stemming from the
major United Arab Emirates floods of April 2024. The programme will be followed by a
networking lunch.
Registration for the market briefing, which will take place in the Diamond Ballroom at the
Kempinski hotel, begins at 9:00 a.m. GST with introductory comments at 9:30 a.m.
Please visit www.ambest.com/conference/IMBMENA2024 for more information or to
register.
AM Best is a global credit rating agency, news publisher and data analytics
provider specialising in the insurance industry. Headquartered in the United
States, the company does business in over 100 countries with regional offices in
London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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Future of Automotive Mobility 2024: UAE Leads the Charge in Embracing Digital Car Purchases and Alternative Drivetrains

-UAE scores show highest percentage among the region in willingness to purchase a car
completely online
– Openness to fully autonomous cars has grown to 60% vs previous 32%.
– More than half of UAE respondents in the survey intend to move to hybrid cars during
next car purchase, while less than 15% intend to move to fully electric car.
– UAE sees strong use of new mobility services such as ride-hailing (Uber, Careem, Hala
Taxi)
– The perceived future importance of having a car is not only increasing in UAE but is
higher than any other major region globally, even China

Arthur D. Little (ADL) has released the fourth edition of its influential Future of Automotive Mobility (FOAM) report, presenting a detailed analysis of current and future trends in the automotive industry. This year’s study, with insights from over 16,000 respondents across 25 countries, includes a comprehensive focus on the United Arab Emirates (UAE). The report examines car ownership, electric vehicles,
autonomous driving, and new mobility services within the UAE.

“The UAE is at the forefront of automotive innovation and consumer readiness for new mobility
solutions,” said Alan Martinovich, Partner and Head of Automotive Practice in the Middle East
and India at Arthur D. Little. “Our findings highlight the UAE’s significant interest in
transitioning to electric vehicles, favorable attitudes towards autonomous driving technologies,
and a strong inclination towards digital transactions in car purchases. These insights are critical
for automotive manufacturers and policymakers navigating the evolving landscape of the UAE
automotive market.”
Key Findings for the UAE:
1. Car Ownership:
o Over half of UAE respondents perceive that the importance of owning a car is
increasing, with the study showing the increase higher than any other major
region, including China.
o Approximately 80% of UAE respondents expressed interest in buying new (as
opposed to used) cars, above Europe and the USA which have mature used
vehicle markets

2. Shift to Electric and Hybrid Vehicles:
o While a high number of UAE respondents currently own internal combustion
engine (ICE) vehicles, more than half intend that their next vehicle have an
alternative powertrain, with significant interest in electric and plug-in hybrid
(PHEV) options. Less than 15% plan to opt for pure battery electric vehicles
(BEVs).

3. Emerging Mobility Trends:

o Ride-hailing services are the most popular new mobility option among UAE
residents, with higher usage rates than traditional car sharing and ride sharing.
The study indicates a strong openness to switching to alternative transport modes
given the quality and service levels available today.

4. Autonomous Vehicles:
o UAE consumers are among the most open globally to adopting autonomous
vehicles, with a significant increase in favorable attitudes from 32% in previous
years to 60% this year versus approximately 30% in mature markets. Safety
concerns, both human and machine-related, remain the primary obstacles to
broader adoption.

5. Car Purchasing Behavior and Sustainability:
o The internet has become a dominant channel for UAE residents throughout the car
buying process, from finding the right vehicle to arranging test drives and closing
deals. UAE car buyers visit dealerships an average of 3.9 times before making a
purchase, higher than any other region in the world, emphasizing the need for
efficient integration of online and offline experiences.
o Upwards of 53% of respondents from the region would prefer to ‘close the deal’
and complete the purchase of their car online, which is the highest for any region
in the world.
o Sustainability is a key factor cited by UAE consumers as influencing car choice.
The UAE scored among the top half of regions, highlighting the importance of
environmental considerations.

“Our study confirms the promising market opportunities for car manufacturers (OEMs) and
distributors in the UAE” commented Philipp Seidel, Principal at Arthur D. Little and co-Author
of the Global Study. “Consumers in the Emirates show a great and increasing appetite for cars
while being among the most demanding globally when it comes to latest vehicle technologies
and a seamless purchase and service experience.”
The comprehensive report, “The Future of Automotive Mobility 2024” by Richard Parkin and
Philipp Seidel, delves into global automotive trends and their impact on various regions,
including the UAE. This study is an invaluable tool for industry stakeholders seeking to navigate
and leverage the dynamic changes driving the future of mobility.

 

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