UK Car Sector’s Reliance on Incentivized EV Battery Production: Ministers
The UK is struggling to keep up with China, Europe, and North America in domestic manufacturing of EV batteries.
Ministers are calling on the government to offer incentives for domestic production of electric vehicle (EV) batteries and to attract investments in gigafactories to bolster the automotive industry.
A report revealed that the UK is lagging behind in domestic manufacturing of EV batteries compared to frontrunner China and other countries in Europe and North America. This is part of the inquiry into the “gigafactory gap” that the UK faces. The government is expected to release its UK Battery Strategy, outlining a ten-year plan to scale up the domestic supply of EV batteries.
“To match our competitors, the UK Government should consider targeting at least 90 percent of the UK’s annual demand for batteries to be met from domestic supplies by 2030,” the ministers emphasized.
The committee stressed that the UK Battery Strategy should outline plans to commercialize new battery technologies, where the UK holds a competitive advantage. This should involve luring established battery manufacturers as well as new battery market entrants to build gigafactories in the UK.
The UK will require 100GWh of battery manufacturing capacity by 2030 to meet the growing demand from the UK’s automotive industry and other sectors, with this demand expected to rise to 200GWh by 2040. The UK’s only gigafactory in Sunderland, which is co-located with Nissan’s assembly plant, has a capacity of just under 2GW/h, according to the report.
The UK has been labeled a “bystander” in the global battery race compared to China, which dominates the sector in terms of raw materials refining and battery components manufacturing, enabling it to lead in battery and electric vehicle production. Meanwhile, the European Union aims to meet 90 percent of annual battery demand from within the union by 2030, with Germany expected to host the largest battery manufacturing capacity in Europe.
To effectively compete, the UK should see increased investments from the government, the ministers stressed. New gigafactories will cater to the rising demand from the UK’s car industry and other sectors such as energy storage.
In July, Tata Group, the owner of Jaguar Land Rover, announced plans to construct a new battery factory in Somerset.
Another setback for the British automotive industry was BMW’s decision in October 2022 to cease production of the electric Mini in Oxford.
The UK requires gigafactories capable of producing a variety of vehicles, including luxury cars, public transport, and commercial vehicles, within the country.
“Retaining niche segments of the automotive market” is strategically significant, the ministers added, noting that Britain could lead in energy storage and military applications, which are expected to see increased battery demand, especially from 2030 onwards.
Mr. Byrne cautioned that unless Britain secures the required levels of domestic production, the industry risks relocating to Europe, the United States, or becoming reliant on imports from China and elsewhere, endangering 160 thousand jobs and the UK’s industrial manufacturing sector.
PA contributed to this report.
