Written evidence from The Trades Union Congress (TUC) – (BEV0003)
Introduction
- The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 48 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living. We welcome the opportunity to comment on the UK’s capability in electric vehicle manufacturing. In formulating this response, we collected input from trade unions representing workers in automotive manufacturing.
Is there enough UK vehicle manufacturing demand in the UK to support gigafactories?
- Decisions around locating future manufacturing supply chains are made largely by OEMs (Original Equipment Manufacturers, i.e. companies that assemble and market cars).[1] If sufficient supply chain capacity and other favourable conditions are in place, there would likely be enough demand.
Is UK-based battery production necessary to support the manufacture of electric vehicles in the UK?
- Likely, yes. According to the Faraday Institution, co-location of OEMs with battery manufacturing is fast becoming the dominant business model in automotive manufacturing.[2]
- But batteries are not the only critical component for automotive manufacturing where there is insufficient UK capacity. In particular, research by Alex Ruyter and colleagues for the British Academy found that automotive supply chain firms in the West Midlands lack the capacity or specialist equipment to produce “high value battery components (especially anodes and cathodes) and key components for electric motors (e.g., severe lack of domestic capacity to produce laminations for electric motors)”.[3]
What are the risks to the UK automotive industry of not establishing sufficient battery manufacturing capacity in the UK?
- Trade Unions are concerned about the lack of UK battery manufacturing capacity and the threat this poses to existing automotive manufacturing. Automotive manufacturing supports over 150,000 jobs, with further jobs indirectly supported in supply chains. Jobs in advanced manufacturing, like automotive, tend to offer better pay and working conditions than average across the economy. These jobs also provide the backbone of local and regional economies, particularly in the West Midlands.
Does the UK have a sufficient supply of critical materials to support vehicle battery production?
- Circular economy approaches (including remanufacturing of equipment and recycling of critical materials) should be investigated in order to reduce the need for dependence on critical materials from outside the UK.
What can the UK learn from investment in other countries in the establishment of gigafactories?
- With an active push for the development of gigafactories, Europe is successfully clawing back the market share of battery production previously dominated by China.[4]
- Since then, through the Inflation Reduction Act (IRA), the US has made significant steps towards securing domestic supply chains for electric vehicles. Since the IRA was passed, there has been a surge of new investment decisions expanding manufacturing and mining capacity by OEMs, battery manufacturers and others in the supply chain.[5] Companies have cited the IRA provisions as reasons for decisions to increase battery manufacturing capacities.[6] We would encourage the Select Committee to seek additional evidence from US officials and experts familiar with the IRA’s provisions to understand how the UK could replicate their approach.
- The UK needs to take a similarly proactive industrial policy approach so that we can protect manufacturing through the climate transition.
Do we have the skills in the workforce required for the production of batteries? If not what needs to be done?
- There is no institution that holds a comprehensive overview of the automotive manufacturing supply chain in the UK, and the skills of its workforce. Co-ordination on transitional business plans and skills, in particular between OEMs and components manufacturers, is crucial to ensuring the smoothness of the transition, that the right skills are available at the right time, and that workers and supply chain firms are not left behind. Social partnership frameworks should be established – with OEMs, supply chain firms, worker representatives, and public sector at the decision-making table – to develop comprehensive plans for the workforce and skills transition.
Will the cost of UK batteries be competitive compared with batteries produced elsewhere?
- In considering options to lower costs, it is important to ensure that costs are not being cut through degrading the quality, pay and conditions of jobs in automotive manufacturing and supply chains.
- One crucial cost component to consider is the cost of electricity. UK industries pay an uncompetitive price for electricity compared to other European countries. A snapshot in December 2022 demonstrates this vividly with UK cost per MWh set at £580 while the same MWh in Germany was €256 (£225), Italy €294 (£259), France €270 (£238) and Sweden €234 (£206).[7] Government should design energy systems reform to ensure a competitive price as well as a balanced energy mix in line with our climate action targets.
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[1] Alex de Ruyter et al (2022) ‘Enabling a Just Transition in Automotive: Evidence from the West Midlands and South Australia’. The British Academy. https://www.thebritishacademy.ac.uk/documents/4205/Just-transitions-automotive-evidence-west-midlands-south-australia.pdf
[2] Stephen Gifford (2022) ‘The Gigafactory Boom: the Demand for Battery Manufacturing in the UK’. The Faraday Institution. https://www.faraday.ac.uk/wp-content/uploads/2022/07/Faraday_Insights_2_update_July_2022_FINAL.pdf
[3] Alex de Ruyter et al (2022) ‘Enabling a Just Transition in Automotive: Evidence from the West Midlands and South Australia’. The British Academy. https://www.thebritishacademy.ac.uk/documents/4205/Just-transitions-automotive-evidence-west-midlands-south-australia.pdf
[4] Stephen Gifford (2022) ‘The Gigafactory Boom: the Demand for Battery Manufacturing in the UK’. The Faraday Institution. https://www.faraday.ac.uk/wp-content/uploads/2022/07/Faraday_Insights_2_update_July_2022_FINAL.pdf
[5] https://www.protocol.com/climate/ira-ev-tax-credits-us
[6] https://www.energy-storage.news/inflation-reduction-act-prompts-turkish-ess-manufacturer-to-double-planned-us-gigafactory-output-to-3gwh/
[7] Research by Unite the Union.