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UK potential to be global leader in EV battery production will be lost without urgent investment

A new report by the Green Finance Institute has sent a warning to British policymakers that the country needs to secure billions to remain competitive in the rapidly growing Electric Vehicle battery sector. 

The UK has a very real opportunity to become a major global player in the electric vehicle (EV) battery market, but the window to secure the level of investment needed to make that happen is rapidly closing, creating a very real risk the country will fail to create competitive advantages. 

person holding black and green electronic device

The Green Finance Institute’s Coalition for Decarbonisation of Road Transport has released a new report analysing the opportunities being created by a global car industry well into transition from internal combustion engine (ICE) vehicles to EVs. In the UK, the sale of new diesel and petrol models will end completely in 2030, and this switch could benefit the national economy by £24bn by 2025, according to figures by the government-funded Advanced Propulsion Centre (APC). 

Specifically, due to the availability of raw materials, existing capabilities and skillsets, Britain is well-placed to become a powerhouse in battery cells, power electronics (including magnet and electrical machine assembly), and electric machines like semiconductors and sensors.

Both battery and vehicle production in the UK and EU post-Brexit have new origin requirements, specifying a percentage of each product must be made within the territory or bloc in which it will be sold to secure 0% tariffs. These limits increase over time, meaning failure to prepare for growth in production capacity of either will ultimately lead to higher costs to manufacturers forced to import more than the zero-tariff allowance, which will be passed on to consumers. Greater levels of imports also increase the risk of transportation issues and bottlenecks slowing down the movement of essential goods.

Despite the compelling evidence that now is the time to secure massive investment from global market leaders, the UK is still well behind where it needs to be to remain competitive in the EV battery sector. This essential private investment will supplement notable but limited money poured in from government, with the Automotive Transformation Fund already spending £500m on the nation’s first two gigafactories, and a £350m pot remaining for ongoing work to support the localisation of the EV battery supply chain. Putting this into context, the new Britishvolt gigafactory requires around £3.8bn in capital to open, highlighting how much more investment is needed overall.

‘The window of opportunity to secure investment into the UK is closing fast. Announcements about battery production investments and supply contracts are now time critical for the UK, and all stakeholders, including the finance industry, must collaborate at pace if the existing auto sector is to be maintained and new opportunities exploited,’ said Richard Hill, Head of Automotive & Manufacturing at CDRT member NatWest.

‘The global EV market is racing to scale up the battery supply chain. This demand means new opportunities for investment in the UK, but only if the barriers to realising these opportunities are removed. Cross-sector collaboration has been critical to identifying the solutions that will de-risk investment, and unlock the capital required to build the battery supply chain that will secure the future of the UK’s automotive industry.’ 

In related news, new research shows the range of EVs available in the UK has trebled in the last ten years. 

Image credit: Kumpan Electric

 

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