However, the SMMT does not expect to return to 2021 production levels of one million vehicles by the end of the decade.
Mr Hawes said that the government’s target of 1.3 million vehicles per year by 2035 was “quite some ambition from where we are”, adding that “we clearly require at least one, if not two, new entrants to come into UK production” to hit the target.
Production of electrified vehicles rose 1.8% with battery, hybrid, and plug-in hybrid vehicles accounting for a record of more than two in five of vehicles produced.
Last week the government confirmed it will reintroduce grants of up to £3,750 on some EVs priced at or below £37,000.
Business Secretary Jonathan Reynolds told BBC Breakfast he was “very concerned” about the industry, which he called the “jewel in the crown” of British manufacturing.
“I’m very concerned about automotive, the pressures on the system which come from the US trade agenda, but also an incredible increase in capacity from China.
“It’s why as a government we’ve adopted so many measures specifically around the automotive sector.”
While the SMMT welcomed the return of incentives that were abolished in 2022, there is widespread confusion about which vehicles will qualify for the discounts.
The eligibility and level of discount will be determined by the amount of carbon emitted in the production of the vehicle and its battery. They will only be offered to manufacturers that have verified science-based targets with thresholds the government has not yet defined.
It is expected that Chinese and Korean vehicles will not meet the criteria, but little else is clear.