Wayne Beck Speaks to Net Zero Investor About Subsidies and Net Zero Restructuring

In “Legal Heavyweight Warns Against Green Subsidies in Net Zero Battle With U.S.,” Net Zero Investor turned to London finance and restructuring partner Wayne Beck for his commentary on the European Commission’s announcement that subsidies are being offered to EU member states to match ones being offered by U.S. to keep EU companies in vital sectors from moving operations elsewhere.

Beck noted this will impact the already struggling U.K. automotive sector and transition to electric vehicles and may deter investors looking to pump cash into the sector. He added that United Kingdom companies should establish restructuring plans to free up cash flow and prevent potential insolvencies within key sectors.

Beck explained, “Much has been made of recent reports about United States tax breaks and European state aid as forms of support for the seemingly unstoppable transition to electric vehicles, and whether the U.K. government should be providing its own support, with key decisions around major investments in infrastructure seemingly becoming conditional on huge government incentives.”

He added that this is just one of the challenges facing the traditional automotive manufacturers and suppliers, in what is set to be a period of “seismic change with internal combustion engine vehicles at risk of being regulated out of existence whilst the future path to electric, which, given the improvements in the hydrogen and even synthetic fuel sectors, may not even be the final answer.”

“It remains fraught with questions around charging networks and, in particular, potential environmental concerns relating to manufacture and re-use/disposal of batteries to come,” Beck said. “It seems inevitable therefore that the sector will see significant and potentially large-scale restructurings and possibly consolidation over the coming years.”

Beck concluded, “The companies which will fair best are those which have the foresight to work alongside all stakeholders – including financial creditors – to secure the time, liquidity and infrastructure required to stay relevant and maintain their market share, so that they are positioned as best they can for a future which remains difficult to predict.”