UK is far behind in the race to capture expanding EV market
The TCA mandates that batteries in EVs must be manufactured within the UK or in the EU before 2020, which is the deadline in order for vehicles to be traded between the two countries to be able to avoid tariffs. In the UK, the UK is well in comparison to EU economies in its ability to attract investment for battery production, and the Britshvolt collapse puts this issue in sharp relief.
If there isn’t a significant effort to establish a national supply chain that includes battery manufacturing, UK automobile assembly lines will be left with obsolete internal combustion engine vehicles and dependent on imports of batteries that are imported from the EU to satisfy the rules of origin. This isn’t likely to work for businesses.
Pay attention to the money
In recent times, the majority of the investment into battery factories has been snubbed by the UK due to the uncertainty triggered by Brexit. Tesla chief Elon Musk acknowledged this in the latter part of 2019 when defending the company’s decision to construct its first large European manufacturing facility in Germany.
In addition to Arrival’s decision to shift production of electric vehicles towards the US in addition to Mini cutting the plug on electric vehicle production in Oxford currently at least, the hopes of the government for the UK automotive industry to become an electric powerhouse are stagnant and, if not in reverse. One piece of positive news is that the battery maker Envision has announced plans to build an additional gigfactory located in Sunderland which will go into operation in 2025. This is the only investment confirmed within the UK.
If the UK automobile industry is to remain competitive with other automakers, it must create their own battery on a size. Producing batteries locally will lower the cost of supply chain and reduce logistical issues. It will also assist manufacturers and carmakers in the UK cooperate more closely in areas like battery cell technology as well as technical training, which is crucial for the industry’s competitiveness.
In order to achieve this for this to happen, the government has to come up with a more innovative way to allocate financial assistance for manufacturers of batteries and cars. Additionally, the auto industry will require a more proactive strategic industrial plan and closer collaboration with the government, specifically in relation to shifting the supply chain and skills towards electric vehicles.
It’s not about picking winners, but demand for EVs manufactured in the UK and around the world is expected to be present. Also, the increasing UK market share of EVs show a rising local market to purchase batteries. McKinsey consultants predict in 2040 that the battery demand for electric vehicles in Europe will be 1,200GWh each year, or the output of 80 gigafactories with the capacity of 15GWh on average.
The UK is at risk of not being able to take advantage of new investments in an industry that is growing. If the UK is to keep its massive capacity of automotive assembly in the process of converting to electric vehicles, it will require batteries made from scratch in a massive scale. Only a redesigned industrial strategy will be able to achieve this.