Jaguar Land Rover, the biggest manufacturer of cars in the UK, today announced that all of its Jaguar models will be fully electric by 2025.
The move will see the company spend £2.5 billion a year on new technologies (such as hydrogen fuel cells) to prepare itself for the government's plan to ban sales of wholly petrol/diesel cars by 2030. This investment will generate positive externalities by creating jobs in the sector but also improving the quality of electric vehicle production - helping to reduce costs and make EV's more affordable for the average consumer.
Such investment could help to put the UK at the forefront of electric vehicle production and inject some life into the UK's manufacturing sector - which has been hit by cheaper overseas manufacturing and Brexit in recent years. Investment in the UK's productive capacity could help to shift LRAS rightwards and so stimulate economic growth without causing a large increase in inflation.
This announcement was accompanied by reports that Coventry Airport could be the site for a new 'gigafactory' for battery production - with JLR, Aston Martin and BMW Mini all having manufacturing bases in the area. Think about how the multiplier effect will have a role in stimulating aggregate demand if such plans were to go ahead.
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