Cyber risks and EV growth in the aftermarket

Following his insightful, compelling address during last year’s IAAF Conference – where he tackled cybersecurity, the importance of the UK stepping up ahead of “squeezes” from the EU, US and China, and EV manufacturing – David Bailey, professor of business economics at Birmingham Business School, agreed to sit down with PMF to discuss all things related to the automotive aftermarket.

Q. David, what’s your overall view of the automotive aftermarket?

A. I think it’s innovative, entrepreneurial and adaptable. I’ll give you an example: I have an eight-year-old Tesla Model S and had a battery cooling warning light come on. Tesla told me it would be a while before they could see me, so I found an independent specialist in Birmingham. He was excellent; he dropped the battery out, redid the coolant, rebalanced it, checked the software and had it back on the road within two days. The range even improved afterwards!

That demonstrated to me how much the aftermarket has invested in new technology and software. It shows the sector’s strengths: high customer service expectations, strong technical capability and the ability to compete on more than just cost.

Q. The JLR cyberattack made national news and had a significant impact – what lessons should the aftermarket take from that?

A . The key lesson is that cyber resilience is a critical supply chain risk, not just an IT issue. The aftermarket relies on fast data flows for parts availability, pricing, VIN lookups and diagnostics. When that stops, workshops stop.

Businesses need stronger back-up systems, supply diversification and basic cyber hygiene. Even small firms are now part of a much larger digital ecosystem, and an upstream failure can hurt everyone downstream.

Q. Cybersecurity appears complicated and expensive – given the tight margins many workshops are facing, is the industry nervous about investing?

A. Yes, understandably so. The sector is fragmented, cost-pressured and increasingly digital. Some smaller firms may see cybersecurity as optional rather than essential. Larger groups are investing, but preparedness overall is inconsistent. The sector is better at reacting than preventing – and that needs to change.

Q. Do you think this situation will unite or divide the sector – with some businesses investing and others simply winding down?

A. That risk exists, particularly given the ageing profile of many workshop owners; however, a more positive approach would be collaboration. Organisations, like the IAAF, could help establish shared infrastructure or basic cybersecurity standards. Collaboration could help overcome the risks faced by smaller firms.

Q. Where does cybersecurity rank among the biggest threats to the aftermarket?

A. It should be near the top. The JLR attack affected around 200,000 people – that’s huge – but the biggest long-term challenge is probably cost competitiveness. UK firms face higher energy, logistics and compliance costs than many European counterparts, which makes manufacturing and warehousing harder to justify. Cybersecurity is critical, but cost competitiveness remains the primary structural challenge.

Q. Previously, you’ve said the British Industrial Competitiveness Scheme isn’t ambitious enough – why?

A. It addresses symptoms rather than structural problems. Energy price reductions are welcome but still leave UK costs significantly above EU levels – potentially 50% higher, and multiple times US or Chinese costs. The timescale is also too slow. Business needs certainty and multi-year commitment, not short-term sticking plasters.

Our energy pricing system is fundamentally flawed; the most expensive generation source sets the overall electricity price. Until we break that link with global gas prices through greater renewables and nuclear capacity, we won’t fix the problem.

Q. EV uptake has been slower than expected – what’s your view on the 2030 versus 2035 targets?

A. Personally, I think 2035 is the right target. The 2030 target lacked a proper roadmap and created confusion. The government has since relaxed some rules – allowing hybrids to 2035, reducing fines and exempting smaller firms – which is sensible.

The target of 2035 gives manufacturers time while still allowing us to renew the fleet by 2050 to reach net zero. The EU may now be going too slowly, while we initially went too fast.

Q. How important are falling battery costs in driving EV adoption?

A. Very important. Around $100 per kWh is considered the tipping point at which EVs become cost-competitive with petrol cars upfront. China has already reached or gone below that level in some cases, which explains their rapid EV adoption.

However, upfront price is only part of the equation. Residual values, financing, charging infrastructure and consumer confidence also matter. For most people, EV adoption will accelerate via the used market rather than new car purchases.

Q. What about battery degradation in used EVs? Is that still a concern?

A. It’s a key issue for consumer confidence. Two identical-looking cars could have very different battery health depending on usage and charging habits. That’s why battery health certification is critical. We’re beginning to see that emerge, which will help reassure buyers.

Overall, batteries are performing better than expected and often outlast the car if well maintained – but transparency is vital.

Q. Chinese EV brands are growing rapidly in the UK – what does that mean for the market?

A. The speed of penetration is remarkable. Chinese brands will likely exceed 100,000 EV sales in the UK this year, led by MG and BYD. They offer strong value and long warranties.

This adds competitive pressure to Western manufacturers. The UK must decide whether to impose tariffs or instead attract investment by reducing energy costs and encouraging local production — as we did with Japanese manufacturers in the 1980s.

Q. How should the aftermarket adapt to the inevitable growth of EVs?

A. They need to shift from purely mechanical thinking to systems thinking – software, diagnostics, battery health, thermal management and ADAS systems will be as important as brakes and suspension.

Workshops that invest early in training and capability will win long-term customer loyalty. The message is simple: start now. EV growth will be gradual, and ICE vehicles will dominate into the 2030s, but eventually electric will dominate. The aftermarket will be mixed technology for many years, but adaptation is essential for long-term success.