The UK car industry faces “a gigafactory gap” which the Government must help fill to avoid further industrial decline and the loss of thousands more jobs, MPs have warned.
The Government needs a better way to incentivise the building of electric vehicle (EV) batteries in the UK if it wants to prevent the decline of the UK car industry, according a report by the parliamentary Business and Trade Committee.
Hundreds of thousands of jobs are at risk if the issue is not addressed, the report added. It found that “the UK faces a gigafactory gap because of insufficient domestic manufacturing capacity to satisfy the UK industry’s demand for batteries.
“Satisfying demand from the UK’s automotive industry and other sectors will require 100GWh (gigawatt-hours) of battery manufacturing capacity by 2030. That requirement will increase to 200GWh by 2040.”
The committee found the UK’s only existing gigafactory, near Nissan’s car factory in Sunderland, has less than 2GWh of capacity.
“At best, announced plans satisfy a little over half the capacity the nation needs by 2030,” it added.
Battery supply chains are heavily concentrated in China and UK dependence on such supply chains creates a “strategic vulnerability” for the country, especially if China chooses to restrict exports of materials and components the UK needs.
“The UK Government must continue to collaborate internationally, especially with our allies, to diversify the battery supply chain, safeguard the thousands of tonnes of critical minerals required for future battery production, ensure that batteries are produced to high environmental and social standards and to safeguard UK consumers from the risks of consuming products made in unethical ways,” the report warns.
A UK battery supply chain means they can be made ‘sustainably and ethically’ the MPs said, giving Britain a competitive advantage “especially among the many consumers who demand higher environmental, social and governance standards”
It calls for improved financial incentives including providing companies supplying batteries can access electricity at a comparable cost to competitors in other international markets by guaranteeing long term energy contracts together with support for skills training for workers employed.
MPs say the EU rules of origin which require 45 per cent of the value of an electric vehicle to have originated in the UK or EU – and 60 per cent of the battery pack – ‘seriously underestimates’ the time it takes to create and develop battery chains.
The introduction of the rules, set for this January, should be extended by three years to allow for more time to develop European and British supply chains.
The Government told the committee that it plans to publish both an Advanced Manufacturing Plan and Battery Strategy this week. Labour MP Liam Byrne, the chairperson of the 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.”
A Department for Business and Trade spokesperson said: “In the past few months the Government has secured a £4bn investment from Tata [for] a new gigafactory and £600m to build the next generation of electric Minis.
“This comes on top of a previous £1bn investment in an electric vehicle hub in Sunderland by Nissan and their battery supplier, AESC.”
The spokesperson added: “Taken together, these major investments demonstrate that our plan for the automotive industry is working and continuing to deliver results.”
The Government has said it will unveil its Advanced Manufacturing Plan and the UK’s first Battery Strategy later this week “to ensure the UK’s place at the forefront of global supply chains”.