Nearly a decade after being home to Europe’s first mass-produced electric car, the UK risks becoming a footnote in the global auto industry’s shift towards battery-powered vehicles.
The UK lacks the cell and pack factories that carmakers will need to support their transition away from the internal combustion engine. In what could be a further blow to British car manufacturing, the country’s top automaker Jaguar Land Rover is in talks with Northvolt and SVolt Energy Technology over supplying batteries for a range of electric vehicles it could assemble in Slovakia. , according to people familiar with the matter
Unless investment in batteries picks up, automakers can only hasten their exodus from what was once the world’s second-biggest car manufacturing base. In recent years, the UK has been outside the top 15.
“It’s about to be too late to preserve the UK’s role as a major car producer,” said Andy Palmer, the former chief executive of Aston Martin, who also helped spearhead Nissan’s creation of the Sunderland-built Leaf EV, England. “Unless there is a carrot or stick to incentivize battery production in the UK, it is only a matter of time before the car industry here becomes a niche industry catering to brands like Rolls-Royce and Bentley. .
As the move to electric vehicles redefines manufacturing maps, the UK is in jeopardy from raw material shortages, expensive energy, weak government incentives and potential Brexit-related tariffs. While the country has invested hundreds of millions of pounds in battery technology research, this has spurred minimal production.
To date, the UK only has one large plant in operation, owned by China’s Envision Group. The automaker added production of longer-range packages for the Nissan Leaf EV last year and announced expansion plans, though not until 2024 at the earliest.
A spokesman for Jaguar Land Rover, which produced more than 220,000 vehicles in the UK last year, said the manufacturer is continuing to explore all options for the supply of batteries for electric vehicles and no decisions have been made. Representatives for Northvolt and SVolt declined to comment.
Electric vehicles pose a chicken-and-egg dilemma. Automakers are reluctant to build new factories or remodel existing ones to make electric vehicles without a battery facility on-site or nearby. Battery manufacturers, in turn, are generally unwilling to invest billions of dollars to set up a plant without reliable customers anytime soon.
Britishvolt is among a handful of startups that have announced plans to build giant battery plants in the UK, but firm orders and commitments from manufacturers are lacking. That could be a persistent hurdle, given that the industry is primarily home to lower-volume luxury and sports car brands such as McLaren, Bentley, Aston Martin and Lotus.
While Nissan, Stellantis and Volkswagen-owned Bentley have all committed to making electric vehicles in the UK, analysts have warned that much more investment is needed to protect the industry’s position. To preserve the current size of the car sector, the UK needs to increase battery capacity 45 times to more than 90 gigawatt hours, the Green Finance Institute’s Coalition for the Decarbonisation of Road Transport said in a report this month.
“If a UK battery sector does not emerge, there is the lost opportunity cost of the financial gains from batteries being captured elsewhere, and in turn the risk that the existing UK car industry can decrease when moving to be located in the same place. with battery production, the government-backed group said.
There have been some positive developments.
Britishvolt has broken ground on the UK’s first giant battery factory in the north of England, with the aim of producing 30 gigawatt-hours from the end of 2027, enough cells for around 300,000 EV battery packs a year. It has secured preliminary partnerships with Aston Martin, which has scheduled its first all-electric model for 2025, as well as Lotus.
A public-private venture between the owners of Coventry Airport and its council in central England, called the West Midlands Gigafactory, aims to open by 2025 and eventually supply 60 gigawatt-hours per year at full capacity. But it is unclear whether it will succeed without the support of a major automaker.
The window to attract battery makers is narrowing, with European governments lining up big support packages that have made them more attractive for investment. EU countries have collectively committed more than €6 billion in public spending to developing the industry, an investment they say will unlock another €14 billion in private funds.
This month, VW said it was moving ahead with plans for a €10 billion EV vehicle and battery production center at its Seat-branded plants in Martorell and Pamplona, Spain. That followed an announcement by the alliance led by Stellantis and Mercedes-Benz Group AG that they would add a third battery manufacturing site, in Italy, in addition to those already planned for Germany and France.
The trade agreement established between the United Kingdom and the European Union in the wake of Brexit further complicates matters. While initially a relief to automakers because the industry averted disaster with no deal, the pact clouds the way forward. By 2027, half of the parts content going into electric and hybrid vehicles will need to be sourced locally, either from the EU or the UK, to qualify for duty-free trade.
JLR, which announced plans for Jaguar to ditch combustion engines entirely by 2025 and for Land Rover to introduce electrified variants from the previous year, has yet to detail its production plans. The company has a contract manufacturing agreement with Magna Steyr for its only fully electric model, the Jaguar I-Pace, which is built in Austria.
“Unfortunately, there is no level playing field,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, the UK car lobby group. “Governments intervene in Europe. They intervene in the United States. They intervene in Asia. Therefore, the UK government needs to ensure that, at a minimum, it creates the framework for UK manufacturing to be competitive. —Bloomberg