Written evidence from The MTC (BEV0029){"HashCode":2125692439,"Height":841.0,"Width":595.0,"Placement":"Header","Index":"Primary","Section":1,"Top":0.0,"Left":0.0}

  1. As part of Perseus, a £7.2M APC funded project with Jaguar Land Rover the MTC has conducted a detailed study of the UK Supply Chain for Electronic Drive Units https://www.apcuk.co.uk/funded-projects/jaguar-land-rover-perseus/.  A recent, internally funded update has also been conducted covering the Battery Systems supply chain.  A few key extracts from the final Perseus report can be seen below.  Although this report specifically focussed on Electric Drive Units, the conclusions are equally applicable to battery systems.  
  2. “The supply chain for electric vehicles is immense, however the UK is not leading nor does it have a large presence in many of the newer technology areas...”
  3. “The UK’s knowledge is high in the older processes of steel and castings, but is significantly lower on the newer (…) technologies.”
  4. “ there appears to be a skills shortage, particularly for electrical or controls engineers, specialist skills roles (such as test technicians) and general operations awareness. A potential focus for future education and training investment.”
  5. “Looking at only a handful of components for electric vehicles for the Perseus project has highlighted that the UK requires significant investment across the board to maintain and enhance its presence within the EV marketplace. This investment should come in many forms, including training of the workforce, support for small businesses and scale-up of product. All of this should be done with the focus of sustainability and protecting the environment for future generations, in-line with the changing attitudes of consumers globally.”
  6. These conclusions support the need for investment into the automotive supply chain to drive modernisation and prevent it almost completely disappearing from the UK.  Giga-factories in the Western World aren’t happening without significant state-aid.  Look at the $2.9Bn the US has just pledged to bolster domestic battery manufacturing and recycling (https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries) or the €525m Germany pumped into Swedish Company North Volt, not even to establish the factory in Germany (it’ll be built in Sweden) but to support home-grown car maker, VW https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/081820-german-government-pledges-525-mil-support-for-northvolts-gigafactory-in-sweden.  Without these types of investments there are is no incentives to setup a giga-factory in the UK.  Without giga-factories, when investment decisions are made for the next generation of vehicles, it will be cheaper and easier to move vehicle manufacturing closer to the existing battery plants. 
  7. The SMMT data supports the UK demand for EV batteries.  Assuming the UK continues to manufacture the same number of vehicles as in 2022 and assuming half transition to EV in the short term, the UK can support at least 1 to 2, 20GWh factories per annum.  Looking back as far as 2016, with 30 year highs of UK car production, the demand would support more than 4 giga-factories.  This completely ignores the potential contribution from electric aircraft.  The UK has many innovators in the electric aviation space, from small unmanned aircraft to passenger aircraft, from small companies like Vertical Aerospace, up to industry stalwarts like Rolls Royce.  Electric flight has high demand on batteries meaning they main only be used until they drop to 80% of their initial capacity.  This is likely to provide a high demand for cells and significantly contribute to manufacturing requirements.   
  8. Battery logistics are more difficult and costly than ICE engine components (more regulation, greater risk).  Local battery supply chains are likely influence the locations of future car plants.  Nissan and Envision are a good example where the two are operating symbiotically.  Without UK battery manufacture there is less incentive to continue to invest in UK car manufacturing.
  9. Raw material supply can be seen as a challenge but it also represents an opportunity.  As the US have done, investing in end-of-life recycling as well as production makes complete sense.  A circular economy approach to the critical raw materials can alleviate many of the problems with materials scarcity and has benefits in the form of supply-chain security as well as the obvious sustainability benefits.  This requires a joined up approach to end-of-life looking holistically, taking a full systems approach to battery manufacture.  There are some opportunities to repurpose end-of-life cells into off-grid storage, smoothing the demand of renewables like solar and wind, however the supply of end-of-life EV batteries is likely to outstrip the demand for these applications.  On-shore recycling and materials reprocessing would allow the UK to retain the value in the materials and support UK based giga-factories. 
  10. There are many developments required to make circular battery materials in the UK a reality, design for end-of-life, part passports, automated disassembly, skills training, regulation, material extraction (pyro/hydrometallurgy) to name a few.  With the proper investment, each of these could form part of a wider supply chain and supply high-skilled jobs in deprived parts of the country.  Establishment of on-the-job skills training targeted at the EV sector should be a priority, not just for battery systems but also EDU, inverters and drive trains.  The UK will not compete with China and India on cost of batteries if they are made using the same materials and methods.  However, by focussing on innovative technology and automation within the manufacturing processes we can improve productivity, improve quality and lower costs.  This type of innovation doesn’t happen in a vacuum.  The regulatory and funding landscapes need to support these efforts.  Without government support we will lose another high value manufacturing industry, along with the associated people and know-how to countries with the foresight to invest in the right technologies.  Battery technology is going to underpin the green revolution, we need government support realise the full benefit to the UK.