What is the future for volume car manufacturing in the UK? Toyota, BMW (via Mini) and Nissan are in a tricky situation right now.
As in Germany, build costs are high compared with eastern Europe or China, meaning margins are tight. For BMW and Toyota the decision now is whether or not to spend big to adapt the factories to EVs, as Nissan has already done in Sunderland and JLR has in Halewood and Solihull.
Electric is clearly the way forward, but how fast and from where to source is giving planning managers headaches.
The cost to convert Toyota in Derby from hybrid to electric will run into the billions, I've been told. BMW initially planned to switch Mini Oxford to electric but then dumped that to continue to source EVs from China, presumably also due to cost concerns.
Nissan has invested to convert Sunderland to build the new Leaf and related Juke EV, but it has backed away from a planned electric Qashqai and instead is talking to China's Chery to take over factory space it can't fill itself.
The SMMT is pushing for "meaningful" changes to the ZEV mandate to slow the push to electric. Otherwise it warns of "reduced investment in domestic manufacturing". Reading between the lines, this is likely to mean Toyota, BMW and possibly Nissan are hinting they might leave town if they aren't allowed to carry on building combustion-engined models in existing plants until 2035 or beyond.
Labour could heed this warning and carve out a special derogation on selling combustion-engined cars for those makers with established plants in the UK. This would buy time to tackle some of the cost issues, including high prices for energy and batteries.
The aggressive EV timetable the UK has set under the Conservatives and Labour was partly to give manufacturers a head start on a technology that was clearly going to become the dominant propulsion source globally.
But there's only one country setting the pace on EV costs, and that's China. While JLR waited for the new Agratas battery plant in Somerset to come on stream, it was supposed to source batteries for upcoming EVs from AESC in Sunderland. Instead, the batteries are coming from AESC in China, presumably with cost at the core of the decision.
Allowing Toyota et al to carry on building hybrids until EV build costs match those they currently have on ICE models could save UK plants. Or at least give them another 10 years or so before the closure order comes.