
Industry Insights
2025 industry outlook: automotive
31st January 2025
The automotive sector is going through a period of rapid change – and North East England is playing a major part in this. So as we drive into 2025, who better to provide us with an insight into the sector than Paul Butler, Chief Executive of the North East Automotive Alliance (NEAA).
What does the automotive sector look like at the start of 2025?
2025 will continue to be a period of transition as we move forward to an electrified future. It’s fair to say the road to electrification has not been as smooth as some would have hoped, whilst the automotive manufacturers have moved at pace, the sales have not followed due to confusion in the market place and uncertain economic times. Our electric future will happen, OEMs are 100% behind that transition and have already invested billions in future models and electrification.
The Government is currently in consultation with the sector around the zero-emission vehicles. The consultation seeks views on delivering the commitment to end the sale of new cars powered solely by internal combustion engines by 2030 and supporting the UK’s transition to zero emissions vehicles. It will cover options to end the sale of new cars with internal combustion engines from 2030, demand measures to support the uptake of zero emission vehicles, existing flexibility within the ZEV mandate, and consideration of further flexibilities and other technical updates to the ZEV mandate to ensure its efficiency. Following the consultation manufacturers and consumers will have more certainty which can only be positive for the sector and result in a much smoother transition.
The changes in Government in July last year will also shape 2025 and beyond. The new Government is setting out a new industrial strategy, Invest 35, to provide a credible, 10-year plan to deliver the certainty and stability businesses need to invest in the high growth sectors and drive growth. They have launched Skills England to support people to get better jobs and improve their standard of living, whilst providing employers with the skills to deliver growth, and are undertaking a comprehensive spending review. This is a really important process as it sets out the budgets for future years for all Government departments, determining how the government will invest in research, energy security and infrastructure to drive economic growth and deliver the everyday services to the public. Whilst this is going on the Government has awarded departments transitional funding until the new programmes are launched in 2026. As such it’s going to be a challenging year, but one that I’m sure as a sector, we’ll come through and will be well positioned in, once the direction is clear.
What about the regional picture in 2025?
2025 will be a period of growth. We will see Nissan launch the new Leaf, the new AESC battery plant in Sunderland become operational and in January, we also saw the fantastic announcement that JATCO is coming to the International Advanced Manufacturing Park to support that transition to electrification, which is great for North East England and reaffirms our position as the leading location for vehicle electrification in the UK, if not Europe.
At a local government level, we’ve seen the transition to a new Mayoral North East Combined Authority (NECA), with Kim McGuinness being elected in May 2024. Their purpose is to champion the full potential of our region. Collaborating with our partners and local authorities, to create a better way of life by connecting communities, giving people the skills to succeed, and improving wellbeing for all, so that the North East is recognised as an outstanding place to live, work, visit and invest. To support this, they are developing a new regional Local Growth Plan, setting out the growth opportunities for the region and identifying the key sectors that will deliver growth, and an Employment and Skills strategy as part of its devolution process. The NEAA has been actively involved in those discussions, providing strategic input and representing the needs of the sector.
One of first acts of the new Mayor was to announce Made North East: a project led by Nissan and Education Partnership North East and in partnership with NECA, Sunderland City Council, the North East Automotive Alliance, New College Durham, AESC UK, Vantec Europe, Newcastle University and the Offshore Renewable Energy Catapult. £14.6 million has been allocated to make sure we have the skills required to meet the future growth of the automotive sector.
Skills and workforce development seem to be high on the agenda in 2025…
Skills and the availability of people is the number one challenge faced by businesses, and this is not exclusive to the region’s automotive sector. It is the single biggest risk to achieving our growth objectives both as a region and across the UK. We have to ensure that the sector has access to the right talent at the right time.
Our work on the North East Local Skills Improvement Plan has set about systemic changes we need to ensure business have the skills they require. It informed the development of MADE NE, and has shaped discussions with Skills England and NECA, and led to the development of two pilot programmes funded by UKSPF:
- Training for Growth – a Sunderland based pilot to incentivise SMEs to participate in apprenticeships by helping fund the first year salaries of level 3 apprentices. This is widely recognised as a key barrier to SMEs to take on apprentices.
- Inclusivity Pilot for Advanced Manufacturing – a South Tyneside based pilot to help people transition into the advanced manufacturing sectors from adjacent sectors, whilst also supporting those further from the labour market by addressing the challenges presented by a long-term cycle of unemployment and economic inactivity. We aim to create a more inclusive as a sector, ensuring the right policies and practices are in place to make the sector more attractive and supportive. There is a lot of work to do to make sure people have the right access to training and the right support in place to make sure that when they come into the sector, they can have a rewarding, long-term career.
These two pilots will help shape future activities to ensure we have a bigger pool of talent to support growth, whilst supporting local and national Government objectives to support people to get better jobs and improve their standard of living.
There’s an awful lot of work going on to raise awareness of the automotive sector as a career destination. The opportunities afforded to people working in the sector are second to none, with a huge range of careers and progression routes from those directly involved in the manufacturing process to those in key support functions. It is truly global sector, with lots of opportunities to travel, and as a sector at the forefront of the global transition to a net zero future we are making a difference to the world we live in.
What technological advances can we expect to see in 2025?
The obvious one is the continued transition to electric vehicles, with more models becoming available in the UK and improved charging infrastructure. I have to say as a recent convert to all electric, the everyday driving experience is way beyond my expectations. I now find it difficult to drop back into an ICE vehicle.
The North East has been the leader in the development of connected and autonomous logistic (CAL) technologies having successfully delivered the 5GCAL pilot that demonstrated live load deliveries to Nissan from Vantec in both full autonomous and full teleoperation modes. Our current V-CAL project is scaling up the number of vehicles deployed on the original proof of concept route and introducing a more complex route, taking finished vehicles from end of line at Nissan to its UK car compound.

The CCAV Deployment Competition Announcement event at the Vantec site at Hillthorn Business Park in Washington Picture: DAVID WOOD
We have ambitious plans in CAL and have launched a partnership to provide a National Innovation Centre for Connected and Autonomous Logistics (NICCAL), already part of the CAM Testbed UK network, and we are looking at a new port-centric use case at the Port of Tyne, where we’ll look to deploy an autonomous tractor unit at their container compound. These three environments offer very different environments for the technologies to manage and when combined really do allow us to accelerate the technology development, bringing it much closer to being deployed on the road.
Are there any sector challenges that give you particular cause for concern?
2025 will be a year of transition, we will see growth across the sector at a time when public funds will be limited until the outcomes of the comprehensive spending review is clear. However, our sector has managed many challenging periods such as dieselgate, COVID-19, semi-conductor shortages, supply chain disruptions and the ongoing transition to electrification. We’ve proven we are responsive and adaptable.
There’s a clear light at the end of the tunnel and I’m positive that the North East automotive sector is well placed to maximise its growth potential.
Since its launch in 2015, the NEAA has been driving innovation and growth in the North East automotive sector. As a collaborative industry-led cluster, it is dedicated to fostering a competitive and sustainable environment for businesses.
For more information on the NEAA, visit northeastautomotivealliance.com