Written evidence from Dr Andy Palmer (BEV0008)

Summary

  1. Having spent more than 40 years in the auto industry, I am deeply concerned at the lack of action from the UK Government to get our domestic manufacturing industry ready for the electric vehicle transition.

 

  1. It is not hyperbole to suggest that without at least seven or eight gigafactories across the UK, the entire domestic auto industry risks decimation. This would be a catastrophe, not only for the 800,000 jobs attached to the industry, but also to Britain’s standing in the world.

 

  1. Given the UK’s rich history and heritage as an automaker, it is unthinkable to imagine our industry simply disappearing due to lack of action from the government. In the words below, I seek to answer some of the questions this inquiry is exploring and hope this is useful to your work.

 

  1. Is there enough UK vehicle manufacturing demand in the UK to support gigafactories?

Without domestic battery manufacturing in the UK – our auto industry will fail to exist. Having a local battery production facility will reduce lead time and transportation costs, improve supply chain security, limit impact on the environment and provide greater control over the quality and performance of the batteries. Furthermore, a local battery production industry will help to create jobs and stimulate economic growth within the UK, as well as signal our position as an automotive leader and innovator.

 

  1. Over the years, multiple car manufacturers have stated commitments to build EVs in the UK – but many have halted these plans due to the lack of domestically-located gigafactories in the UK.

 

a)      Nissan - The Japanese automaker has a factory in Sunderland, England, where it produces the LEAF electric vehicle.

b)      BMW - The German automaker announced plans to produce EVs in the UK at its Mini plant in Oxford.

c)      Jaguar Land Rover - The British luxury car manufacturer had announced plans to produce EVs at its factory in Castle Bromwich.

d)      Tesla – mooted the idea of a factory in the UK, which was abandoned instead for Germany.

 

 

  1. Is UK-based battery production necessary to support the manufacture of electric vehicles in the UK?

e)      There are several statistical arguments that can be made to support the need for a domestic battery manufacturing industry in the UK.

 

  1. Growing demand for batteries: The demand for batteries is growing rapidly due to the increasing use of electric vehicles (EVs) and renewable energy sources. According to the Department for Business, Energy & Industrial Strategy, the number of EVs on the roads in the UK increased from 3,500 in 2013 to over 400,000 in 2020. This trend is expected to continue, leading to an increased demand for batteries.

 

  1. Import dependence and energy security: Currently, the UK imports the majority of its batteries from overseas, leaving the country vulnerable to price fluctuations and supply chain disruptions. Developing a domestic battery manufacturing industry would reduce this dependence and increase the UK's energy security. According to a report by the Department for Business, Energy & Industrial Strategy, the UK imports around 95% of the lithium-ion batteries used in EVs from overseas.

 

  1. Economic benefits: A domestic battery manufacturing industry would bring significant economic benefits to the UK. It would create jobs in manufacturing and related industries, stimulate local economic activity, and provide a source of income for the country. By some estimates, a domestic battery manufacturing industry in the UK could create up to 38,000 direct jobs by 2030.

 

  1. Environmental benefits: Manufacturing batteries domestically would also have environmental benefits. It would reduce the carbon emissions associated with shipping batteries from overseas and help the UK to reach its carbon reduction targets.

 

  1. Technological advantages: Developing a domestic battery manufacturing industry would also allow the UK to build its technological expertise in this area. This could lead to the development of new, innovative battery technologies and position the country as a leader in this field.

 

  1. What other domestic end uses for batteries would provide a market for UK battery production?

f)       The limited amount of public funding that is currently available for battery manufacturing, for example the APC funding, focuses only on the auto industry – which is worryingly myopic. It fails to recognise the needs in commercial vehicles, export, aerospace and energy storage.

 

  1. Battery facilities cover all these needs with a variety of chemicals (NMC, LFP, LTO, SIB, etc) and we must create an environment where these different use cases are able to thrive. As we move towards greener energy sources, battery capabilities will become a vital determiner of economic success and without proper investment in not just battery uses for the automotive sector, but across multiple economically-important industries, we risk a worrying stagnation that will extend across the entire national economy. 

 

  1. What are the risks to the UK automotive industry of not establishing sufficient battery manufacturing capacity in the UK?

g)      If battery factories are not built in the UK, the impact on the automotive industry would likely be significant, verging catastrophic. The demand for electric vehicles (EVs) is growing, and the availability of locally-made batteries is vital for the competitiveness and sustainability of the auto industry.

 

  1. Without local battery production, the UK automotive industry would likely have to rely on imports, which could increase costs and reduce competitiveness. Additionally, the lack of battery production facilities could limit the growth of the domestic EV market, as well as the ability of UK automakers to produce EVs in sufficient quantities to meet demand.

 

  1. Moreover, the absence of battery production could also limit the development of the UK's supply chain and innovation ecosystem, as well as reduce the potential for job creation in the sector. In short, the lack of battery factories in the UK could have a range of negative impacts on the country's automotive industry, from increased costs and reduced competitiveness, to limited growth potential and missed opportunities for innovation and job creation.

 

  1. According to a report by the International Energy Agency (IEA), global EV battery production capacity is expected to reach 474 GWh by 2030, up from 120 GWh in 2019. This growth in battery production is expected to drive the growth of the EV market, as well as the development of related industries such as renewable energy and charging infrastructure.

 

  1. In addition, the development of a local battery industry can also bring benefits in terms of job creation and economic growth. For example, a report by the US Department of Energy estimated that the US could create over 200,000 direct jobs in the battery industry by 2030, as well as hundreds of thousands of indirect jobs in related industries.

 

  1. While these are general trends and projections, they demonstrate the potential benefits that local battery production can bring to an automotive industry and highlight the importance of battery factories in the development and growth of the EV market.

 

  1. What can the UK learn from investment in other countries in the establishment of gigafactories?

h)     The UK must not baulk at the idea of public investment in battery manufacturing. Whilst a proponent of free markets, it is clear the battery manufacturing industry is anything but.

 

  1. The United States has been making significant investments in battery factories in recent years, with a focus on boosting domestic production capacity and reducing dependence on imported batteries. The US government has provided funding and incentives for companies to build new battery production facilities and has supported research and development in the field.

 

i)        Production capacity: According to the US Department of Energy, the US had an estimated battery production capacity of 26 GWh in 2020. This represents a significant increase from previous years and demonstrates the growing investment in the industry.

 

j)        Investment: The US battery industry has attracted significant investment in recent years. In 2020, the industry received over $1 billion in venture capital funding, a significant increase from previous years.

 

k)      Job creation: The US battery industry has created thousands of jobs in recent years, with employment in the industry growing at a fast pace. According to the US Bureau of Labor Statistics, employment in the battery manufacturing industry increased by over 25% between 2016 and 2019.

 

l)        Exports: The US is also a major exporter of batteries, with exports worth over $1 billion in 2020. This highlights the competitiveness of the US battery industry and its ability to meet the demands of global markets.

 

  1. China is making similar inroads:

 

m)   Production capacity: China is the world's largest producer of batteries, with an estimated production capacity of over 120 GWh in 2020. This represents over 50% of the global production capacity, making China a dominant player in the industry.

 

n)      Investment: China has invested heavily in the battery industry in recent years, with the government providing significant funding and incentives for companies to build new production facilities. Private investment in the industry has also been growing, with Chinese companies investing billions of dollars in new production capacity.

 

o)      Exports: China is also a major exporter of batteries, with exports worth over $10 billion in 2020. The country has been able to take advantage of its large production capacity and cost-competitive manufacturing to become a leading supplier of batteries to global markets.

 

p)      Job creation: The battery industry has also been a major source of job creation in China, with employment in the industry growing at a fast pace in recent years. According to the Chinese National Bureau of Statistics, employment in the battery manufacturing industry increased by over 50% between 2016 and 2019.

 

  1. As are the EU:

 

q)      In 2020, the EU had a share of around 20% of the global battery production. The majority of the production was concentrated in a few countries, including Germany, France, and Sweden.

 

r)       To support the growth of the battery manufacturing industry, the EU has launched several initiatives and programs, including the European Battery Innovation (EBI) program, which aims to accelerate the development and commercialization of advanced battery technologies.

 

s)       In 2017, the European Commission launched the European Battery Alliance (EBA), with the goal of establishing a competitive and sustainable battery value chain in Europe. The EBA brings together stakeholders from across the battery value chain, including manufacturers, researchers, and policymakers.

 

t)       In addition, the European Commission has also provided funding for research and innovation in battery technology through various programs, such as Horizon 2020 and the European Battery Innovation program. The exact amount of funding provided through these programs is not publicly disclosed, but it is estimated to be in the hundreds of millions of euros.

 

  1. Multiple countries are ploughing billions of pounds into making their battery manufacturing sector competitive. There is a clear split between private and public investment, that make these locations attractive for companies to invest. Sadly, the UK’s thinking around battery investment is painfully myopic and thus not created optimum conditions for private sector innovators to invest.