The UK automotive industry gathered at the IET in London in June for the Society of Motor Manufacturers and Traders (SMMT) International Automotive Summit, the sector's flagship policy event bringing together OEMs, suppliers and government.
Published: 8 July 2026
Authors: Jonathan Smart
Shoosmiths was delighted to be moderating a panel on UK Industrial Strategy and the automotive sector, held against the backdrop of the launch of SMMT's State of the Automotive Nation 2026: A Blueprint for 2030 report.
Below are our key takeaways for clients navigating the road ahead.
1. Three headline targets define success by 2030
The Blueprint sets out three measurable outcomes SMMT wants government and industry to work towards by the end of the decade:
- re-establishing the UK among the world's top 15 vehicle manufacturing nations, producing around one million vehicles a year and sustaining high-value jobs across the country.
- growing the domestic new car market to 2.2 million units annually, with decarbonisation and fleet renewal placed on a realistic trajectory toward 2035.
- a globally competitive manufacturing base built on refined industrial policy that currently constrains investment and innovation.
The message from the platform was consistent: one year into the UK's Modern Industrial Strategy 2025, the direction of travel is positive, but conditions have become more volatile, and delivery is now what matters.
2. The ZEV Mandate is said to be the most pressing issue on the table
Reform of the Zero Emission Vehicle (ZEV) Mandate dominated discussion.
Manufacturers have committed significant capital to zero-emission models, but the mandate's annual sales quotas are running ahead of consumer demand. According to SMMT's second Automotive Business Leaders Barometer, every business leader surveyed believes the UK is behind the trajectory needed to meet the 2030 target, with nearly three-quarters describing the shortfall as significant.
The numbers illustrate the scale of the challenge: current battery electric market share stands at nearly a quarter for cars and under 10% for vans, against quotas that step up to 38% and 34% respectively from January 2027, then to 52% and 46% in 2028. Carmakers have reportedly already spent upwards of £12 billion on discounts to bridge the gap between mandated targets and organic demand, spend that industry argues would otherwise support jobs and investment.
Speaking at the Summit, SMMT Chief Executive Mike Hawes was clear that reform should not be mistaken for retreat: the ambition remains net zero, but the pace needs to reflect market reality if investment and residual values are to be protected. The Secretary of State for Business and Trade, Peter Kyle MP, confirmed to delegates that a consultation on the mandate is underway and committed to concluding it as quickly as possible, while stressing it must be balanced and affordable for both industry and the wider economy.
Manufacturers, importers and fleet operators should be reviewing compliance strategies now, not waiting for the consultation outcome particularly around contractual protections with dealers and fleet customers that assume a particular BEV mix.
3. UK-EU trade rules threaten a real tariff cliff-edge in 2027
From January 2027, tightened rules of origin under the EU-UK Trade and Cooperation Agreement are set to trigger a 10% tariff on a large proportion of battery electric and plug-in hybrid models crossing the Channel. SMMT estimates around 70% of relevant models could be affected. Left unresolved, the sector faces a potential tariff bill in the region of £1.4 billion in 2027 alone, putting an estimated £16.4 billion of UK-EU EV and PHEV trade at risk.
This is a live supply chain and contract risk, not a distant one. Businesses with UK-EU vehicle or component flows should be stress-testing supply agreements, pricing mechanisms and force majeure/change-in-law clauses against this looming deadline and engaging early on rules-of-origin compliance and local content sourcing.
4. Cost competitiveness, especially energy, remains a drag on investment
The Blueprint 2030 data presented at the summit painted a stark picture of the domestic cost environment: over 90% of businesses reported worsening employment costs over the past year, and nearly 85% reported higher input costs. UK industrial energy costs remain the highest in Europe, and even with the British Industrial Competitiveness Scheme (BICS) in place, are expected to stay around 60% above the EU average. Seven in 10 automotive leaders said cutting energy costs would have the single biggest positive impact on their business.
5. Supply chains remain vulnerable
One of the clearest messages from this summit is that supply chain resilience can no longer be achieved through efficiency alone. In an increasingly uncertain environment, automotive businesses must balance cost, security and agility by diversifying supply networks, investing in trusted partnerships, strengthening cyber and operational resilience, and building greater visibility across their supply chains.
From a legal and commercial perspective, resilience can be enhanced through more robust contracting arrangements, including dual sourcing strategies, contingency planning obligations, improved audit and information rights, cybersecurity requirements and enhanced force majeure provisions. The organisations best placed to succeed will be those that move beyond reactive risk management and adopt a strategic approach that combines international collaboration and localisation where appropriate. Resilience is no longer a defensive measure; it is a source of competitive advantage and a critical enabler of innovation, investment and the long-term success of the UK's automotive industry.
What this means
For businesses across the automotive and mobility supply chain, the Blueprint is best read as a checklist of near-term legal and commercial risk points: ZEV Mandate compliance and contractual flexibility, UK-EU trade documentation and tariff exposure, and energy/input cost pass-through in supplier and fleet agreements.
With government consultations live on several of these fronts, now is the time to review contractual risk allocation and engage in the policy process before the January 2027 pressure points arrive.
Shoosmiths' Mobility, Logistics & Manufacturing team advises across the automotive value chain on regulatory change, supply chain contracts and cross-border trade risk. Get in touch to discuss how themes from the SMMT Annual Summit or the Blueprint for 2030 affect your business.