About one in 10 cars sold in 2020 was a plug-in electric vehicle © Matt Crossick/Alamy

The UK government needs to attract significantly more investment into battery factories to safeguard the future of Britain’s car plants, the industry’s trade body warned as it reported the worst annual sales slump since the second world war.

The Society of Motor Manufacturers and Traders said the UK needed four times the current number of gigafactory projects planned by 2030, in order to keep British plants supplied with batteries for electric vehicles.

Figures released by the organisation on Wednesday showed new car sales in the UK fell by close to 30 per cent to 1.63m during 2020, the biggest annual fall since 1943.

It was the worst sales year since 1992, and the first time the number of new cars sold fell below 2m since 2009, during the financial crisis.

Securing investment from international players would be crucial “if we want to sustain a domestic manufacturing industry”, said Mike Hawes, SMMT chief executive.

He estimated that 60GWh of battery-making capacity would be needed by 2030 to support the expected shift to electric cars. So far only one project, by BritishVolt in Blyth, has been confirmed, although he said other investors are believed to be in talks.

If BritishVolt’s planned plant is completed successfully by 2024, then, combined with Nissan’s Sunderland battery plant, the UK would have 15GWh of capacity — enough for 250,000 electric cars, the SMMT said.

Manufacturers are facing the twin challenges of pivoting to greater electric car production while also contending with a sharp sales fall and an uncertain recovery from the pandemic.

The imposition of another lockdown means that a previous estimate of 2m sales in 2021 will almost certainly be missed, although the total is expected to be more than in 2020, Mr Hawes added.

“Whatever happens this year, it can’t be as bad as last year,” he said.

The pandemic shutdowns and economic uncertainty last year hammered the industry, which was facing huge uncertainty ahead of the end of the Brexit transition.

Ian Plummer, commercial director at Auto Trader, an online platform, said the figures were “no surprise”.

“The automotive industry had a lot thrown at it last year, with Covid restrictions closing showrooms, trading tariffs in question as Brexit loomed, and with the government changing the goalposts again on the sale of new internal combustion engine vehicles.”

That the trade deal with the EU allows tariff-free access to the EU was a “massive relief to the industry”, Mr Hawes said, but added that “non-tariff barriers” such as additional safety certificates and other paperwork would make doing business in the UK more expensive than before.

The data released on Wednesday showed that diesel sales last year fell to a fifth of the market, their lowest share of car sales since the turn of the millennium, while sales of electric and plug-in hybrid cars rose.

About one in 10 cars sold was a plug-in vehicle, with 6.6 per cent battery electric cars and 4.1 per cent hybrid cars that plug in to charge.

The SMMT has called for significant investment in charging infrastructure to help accelerate sales to meet government targets of phasing out sales of engine-only cars by 2030.

“We have to go from one in 10 to 10 out of 10 in nine years,” Mr Hawes said, something that requires Britain to remain an attractive place to import electric cars.

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