By Nick Carey and Kate Holton
BLYTH, England (Reuters) – Britain risks falling behind in the race to create an electric car industry if it cannot build more battery factories – and quickly.
Automakers’ ambitious plans to increase production of battery-powered electric vehicles (EVs) and an impending change to post-Brexit trade rules that will limit options for importing cheap Asian batteries mean there is no no time to waste.
But a shortage of suitable sites for “gigafactories” and the decision of some local manufacturers to import electric vehicle batteries from mainland Europe are creating challenges that leaders and politicians say the government must do more to address.
Without enough battery factories, some fear automakers will leave, hitting an industry that employs around 170,000 people.
“It’s not just about giga-factories, it’s about the whole infrastructure” of local car suppliers, said Jim O’Boyle, a councilor from Coventry in central England, who has approved a site for a potential factory, but has yet to find an investor. “If we don’t get it right, we could lose the whole damn lot.”
The government has allocated up to £1 billion ($1.2 billion) to support Britain’s electric vehicle battery supply chain.
Industry experts predict that the country needs four to six major battery factories to maintain a healthy auto industry. It currently has a small 1.9 gigawatt-hour (GWh) Nissan plant in Sunderland, northeast England, with two larger ones planned.
Start-up Britishvolt is building a 3.8 billion pound ($4.8 billion) 38 GWh plant in Blyth, northern England, with government backing of 100 million pounds. Nissan is building a second 9 GWh plant in Sunderland with its Chinese partner Envision AESC, which could expand to 25 GWh.
“We are on track to reach the number of gigawatt hours needed to host a globally competitive electric vehicle industry … and we are actively working to secure new investment,” said a spokesperson for the UK ministry. business, energy and industry. Strategy.
But across the European Union, dozens of factories are planned or under construction. The EU has allocated 2.9 billion euros ($3.1 billion) specifically to support battery factories, with individual member states providing additional funds.
Benchmark Mineral Intelligence researchers predict that Britain will need at least 175 GWh of battery capacity by 2035 to supply around 3 million electric vehicles.
It currently expects Britain to reach 56.9 GWh by 2030, compared to 821.3 GWh for the rest of Europe. Its forecast shows Britain lagging behind Germany – whose planned seven factories are expected to have almost seven times the UK’s capacity by 2031 – as well as France, Hungary, Sweden, Poland and Norway, each with more production capacity.
To avoid tariffs in their main European market, cars built in the UK must meet “rules of origin” which, from 2027, will include a stipulation that 70% of an EV battery is European or British manufacture.
As electric vehicle batteries are heavy and expensive to transport, local production is seen as crucial for a thriving automotive industry.
A wave of new EV models is coming around 2025. Delivery times for new vehicles are long and EV battery chemistries vary, so production contracts must be made quickly.
Battery factories require a lot of land, large amounts of preferably renewable energy and water, and take years to build.
But Britain currently has few suitable sites.
“In terms of ready land in the UK, there’s no obvious glut of places to go,” said electric vehicle pioneer Andy Palmer, currently CEO of electric vehicle maker Switch Mobility. and president of the Slovak battery startup InoBat. “If the gigafactories don’t come here, the automakers will go where the gigafactories are.”
At the Britishvolt construction site in Blyth, executive chairman Peter Rolton touts the advantages of the location.
Once a heap of coal for a power station, it had plenty of land at low cost, with a proper power grid connection and a seaport next door for materials. An underwater Norwegian hydroelectric line emerges from the ground across the road.
As an industry consultant, Rolton previously screened 150 potential sites in the UK. Only one got a perfect score in his assessment, nowhere else did he come close.
“You’re standing on it,” he said.
Even so, Britishvolt won’t start production until 2024 – four years after selecting the site.
Other potential sites, such as Coventry with planning permission, will take longer because they need investment in their energy network or lack available land.
Only Slovakian startup InoBat publicly checks UK sites, along with others in the western EU. A decision is expected this summer.
Apart from Nissan, the only UK automaker large enough to support its own large local battery factory is Jaguar Land Rover, owned by India’s Tata Motors.
“Obviously we will have to look at supplies from India as well as the UK,” Tata chief financial officer PB Balaji told reporters this month. “The source of this is already being discussed.”
Stellantis will manufacture electric vans in Britain. It will build on its three announced European battery factories and “additional supply contracts”, a spokesperson said.
BMW manufactures batteries in Germany for electric Minis produced in Oxford, southern England. A spokesperson said: ‘All other questions relate to the year 2030 and beyond.
Toyota has not yet committed to making electric vehicles in Britain.
Adrian Hallmark, CEO of Volkswagen’s Bentley UK unit, said a problem for Britain is that it produces a variety of vans, cars, SUVs and luxury models with different battery needs. , while France, for example, produces passenger cars of a similar size that can support battery factories.
“If you have to build six different types of batteries in one gigafactory, it’s never going to be economically viable,” he said.
Exporting batteries to Europe would be difficult as other countries have their own battery plans, he added.
Bentley will get batteries from northern Europe, but if “it was competitive in terms of performance, quality and cost, we would absolutely be open to local sourcing,” Hallmark said.
While luxury automakers can afford to ship batteries from the EU, Switch Mobility’s Palmer said that would be too expensive for the average car destined for the EU over the next decade.
“Inevitably the cheapest place to build will be in mainland Europe, especially since most of our vehicles are destined for mainland Europe,” he said. “So I see this as an existential problem for the UK car industry.”
(Additional reporting by Victoria Waldersee in Berlin and Gilles Guillaume in Paris; Editing by Mark Potter)
Copyright 2022 Thomson Reuters.
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