Just how British is the UK car industry? That question is crucial as UK leave the European Union (EU) and set up our own trade deals globally, because every country will ask the same thing: exactly what makes that Land Rover, Nissan or Mini British?
First off, this isn't a question of ownership. The fact that the owner of Jaguar Land Rover (JLR), Tata, is Indian or Toyota is Japanese makes not a jot of difference to whether the cars they make in the UK should be regarded as British or not.
No, the question is more fundamental: how much of a car's value in terms of its parts content is British, rather than imported from abroad?
This is key not just to whether countries will allow tariff-free imports of that car (under so-called rules of origin) but also, much more importantly, it's key to the health of the British automotive industry as we begin life outside the EU.
The more British our cars, the easier their entry into other countries and the more investment and revenue is generated here. Each car contains around 30,000 pieces; the greater proportion of those pieces that are made here, the healthier our industry.
So, how British are our cars? We approached all of the major companies that build cars in the UK and... none would tell us. But there are other ways of finding out. The Society of Motor Manufacturers (SMMT) and Traders circulated a figure in 2017 that, on average, 44% of a UK-built car was British. It quoted the same figure today, and that sounds pretty good.
After all, JLR, Nissan, Honda, Toyota and BMW – the top five car makers operating in the UK – build engines here as well. Add up the parts sourced from our 2400 component suppliers and you have a pretty healthy figure, if nothing like the 80-90% British content figure that the industry was hitting back in the 1970s.
However, that doesn't tell the whole story. The 44% figure quoted by the SMMT assumed that every British-sourced part that went into the car was itself 100% British. But the parts suppliers are like the car makers in this global industry: they source bits from everywhere.
So, what's the true figure? That question was put to SMMT boss Mike Hawes at a 2017 parliamentary committee meeting that was tasked with understanding the impact on the car industry of our leaving the EU. "Somewhere between 20% and 25%," he answered.
Hawes pointed out this was a long way from the 55-60% local content threshold that most countries require under rules of origin. That means UK-built cars could be disqualified from tariff-free entry by any countries the UK is now signing free-trade deals with. They will ask: 'if your British car is really only a quarter British, who exactly is this deal helping?'.
However, that 20-25% figure probably isn't correct either, because it doesn't take manufacturing into account.
"All the value the UK vehicle makers put in themselves to turn a bag of parts into a vehicle is quite considerable," said Phil Davies, a consultant and former automotive industry analyst for the government.
How much value we add to imported raw materials and parts may be up for debate, but it's clear that the value it brings to our economy is huge.
For example, JLR spent £3.3 billion on investment in 12 months to the end of March 2020, of which £1.8bn was on research and development. It also spent £2.6bn on salaries for its 36,531 workers. JLR is a global company now, with manufacturing facilities in China and Slovakia, but much of that money goes to the UK. In its most recent company report, JLR declared that £12.0bn of its £13.6bn assets globally were situated here.
Of the 1.3 million cars the UK made last year, 81% were exported, earning the country £42.4bn – equal to 13% of the UK's total exported goods. The automotive business indirectly employs 864,300 and helps pay the pensions of many more.
Agreeing a deal with the EU is crucial, because it's likely to agree that EU parts can be counted as UK parts. Given that 81% of all automotive parts coming into the UK are imported from the EU, this would mean that most car makers could easily hit the threshold to qualify for tariff-free car entry into the EU. It gets trickier when it includes batteries, however.
What we don't know is how the UK automotive industry will be affected. That 1.3 million total built last year is a long way off the 1.9 million record set in 1972 and a steep decline from previous years. And Honda will leave Swindon next year, wiping off another 100,000.
Prior to the Brexit vote, Davies helped the government to devise a plan to entice firms to fill the gaps left by the UK's decline in industrialisation.
Brexit won't necessarily scupper that, Davies said, but our dwindling manufacturing numbers will scare suppliers.
"Our target was that by 2020 we would be producing about two million vehicles [per year], but actually we will just do under a million this year," said Davies.
"We have a business-friendly environment, but it's all about volume and whether there's enough demand in the UK for a global supplier to put their forging facility or alloy wheel facility in the UK."
The lack of a UK electronics supply is a big concern. "As the vehicles get more high-tech and advanced, the likelihood is that UK content will decline further," said another analyst, who asked to stay anonymous.
If the UK were to declare which of its car makers were more British in terms of content, low-volume luxury brands would probably have the greatest claim.
Bentley reckons that it has the most British content of any car maker, despite its bodies coming from Germany. The sheer number of hours adding value to a sheet of wood to turn it into a polished veneer, for example, all adds to a car's Britishness.
But that Britishness is mostly valued outside Britain. Last year, 89% of the cars bought in this country were imported – a new record. So if we want our car industry to remain healthy, it's crucial that we have the best possible trading relationships with our main customers.
Why Britain needs its own car batteries
The UK desperately wants batteries to be included as UK content as part of any trade deal with the EU, and it's easy to see why. The batteries in hybrid and electric cars form such a huge part of their cost that much of the value of cars built here could suddenly be marked as Chinese or Korean. We want leniency while we rush to gain our own supply.
However, because we will never match China on the price of existing lithium ion formulations, we're kidding ourselves if we think we will persuade a car maker like Jaguar Land Rover to buy a more expensive battery that uses the same chemistry.
"The challenge the UK has got is that the existing formulations are being knocked out of China at a very low price, so we've got to come up with new formulations and develop them," said Colin Herron, who directs consultantcy Zero Carbon Future and, while at Nissan, set up the battery facility in Sunderland (now Chinese-owned, ironically).
We can import the raw materials and add enough value that the batteries will be seen as British. It's easy to imagine; we invented lithium ion batteries, after all.
Herron likens the race to develop new and improved lithium ion formulations to the one to create a Covid-19 vaccine. Then it's a long four-year slog to develop it for automotive use.
The government needs to steer the direction of travel for batteries post-Brexit to help make it happen. "We lost control of making cars, trains, aeroplanes and motorbikes," said Herron. "What do we want to do as a nation? Do we want to be generators of brilliant stuff then lose interest in it? Or do we want to do what Germany and Italy are doing: develop new things, be recognised for it and create wealth from it?"
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