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Incentivise EV battery supply chain investment to prevent decline of the UK car industry, say MPs

21 November 2023

The UK Government is falling behind its competitors and needs to urgently create an attractive environment for electric vehicle (EV) battery production in the UK, according to a report by cross-party Committee of MPs.

The Batteries for electric vehicles report, published today, warns that the UK faces a huge ‘gigafactory gap’, with less battery production capacity than needed for the nation’s future needs. If not addressed, this could see automotive production in the UK decline, potentially putting hundreds of thousands of associated jobs at risk.

Harnessing the UK’s low-carbon energy sources, the report argues that the Government could become an important centre for ‘midstream’ refining processes for critical materials such as lithium. Doing so would establish the UK as a frontrunner in building sustainable and ethical batteries, compared with those from China and European countries. Currently, China accounts for 78% of the world’s cathode production. China’s dominance over large parts of the battery supply chain leaves battery makers exposed should the country choose to restrict exports of battery materials and components.  

The Government informed the Committee that it plans to publish an Advanced Manufacturing Plan at the Autumn Statement tomorrow, and that they are working on a UK Battery Strategy. The UK’s comparative advantage in clean energy and new battery technology should be leveraged in these plans, the report concluded.  

Other recommendations included better Government backing for agreements to set up new gigafactories, prioritising them for infrastructure improvements, and boosting support for domestic critical mineral mining.

Chair's comments

Liam Byrne, Chair of the Business and Trade Committee, said:

“Power was at the heart of the industrial revolution and it will be at the heart of the green industrial revolution. But right now, the UK is on course to secure barely half of the electric battery capacity needed by the domestic car industry alone. Unless we fix this fast, we risk the industry simply relocating to Europe or the US, or becoming reliant on imports from China and elsewhere. That imperils 160,000 jobs and a jewel in the UK’s industrial crown. Now is the time to act.

We are unlikely to be able to compete with Brussels, Bideonomics or Bejing when it comes to subsidies. But we can still take decisive action. We desperately need a 10-year strategy that boosts subsidies, creates secure access to low-cost power, designates key sites for gigafactories, fixes the skills gap, delivers tariff-free trade, de-risks access to critical minerals and offers long-term R&D for the industry.

Our competitors have hit the accelerator on battery investment, and we’ve been left in their wake. The next round of investments by car makers in their factories will be decided by local battery manufacturing capacity. Boosting support for gigafactories is not enough; Government must cultivate a more appealing investment environment for battery producers before it’s too late. We must act urgently if we are to safeguard British automotive jobs and secure this critical industry for the future.”

Also in the report

  • The Committee called for the Government to press the European Union for at least a 3-year extension of the current rules of origin requirements. New rules due to go live at the end of the year, would effectively apply tariffs for electric cars sold in the European Union 

Further information

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