The UK faces falling behind other markets when it comes to the manufacturing of electric vehicles (EV) due to our heavy reliance on battery imports, a new report has warned.
The nation’s automotive industry is at a critical point where it needs to ‘adapt, innovate and invest’ in order to ‘seize the opportunities the electric vehicle market brings to the UK,’ according to a new report from Aston University’s Centre for Business Prosperity.
The need for immediate policy intervention and reduced reliance on battery importing is fundamental, the report concludes.
Gigawatts needed: The UK has to increase battery production on home turf to make sure we can keep up with the EV revolution, a new report says. Pictured: The EnvisionAESC gigafactory currently under construction to supply batteries to Nissan’s Sunderland car plant
The automotive industry is a structural pillar of the British economy with a £78billion turnover, £3bn investment in R&D and a 10 per cent contribution (£94bn) of all goods exported.
As a sector it employs 208,000 people directly at a 14 per cent higher wage rate than the UK average.
It’s essential then that the UK’s automotive industry is in a position where it can continue to help support domestic manufacturers meet newly-introduced Zero Emission Vehicle Mandate (ZEV) thresholds, which threaten to fine makers if they fail to sell enough EVs each year.
To do this, and to keep competitive in global markets, EV automotive manufacturing needs to be supported by urgent policy intervention, warns Aston Univeristy’s research team, led by Dr Professor Jun Du and Dr Oleksandr Shepotylo.
It has concocted a three-point plan for the automotive to follow if it wants to ‘strengthen the UK’s global position in electric vehicle production’.
Firstly, policy makers must negotiate a new tariff-free trade deal with the EU for EVs.
The EU currently accounts for 72 per cent of the UK’s exports. Swift action is needed to agree a long-term agreement to secure tariff-free access to the EU market.
The UK needs to meet the Rules of Origin (RoO) conditions outlined in the UK-EU Trade Cooperation Agreement (TCA).
The gradual increase in the percentage of UK and/or EU content has been delayed to 2027 but that only acts a short-term plug.
Intervention is needed to ensure UK manufacturers and suppliers are brought fully into the EU supply chain and R&D structures.
National Automotive Innovation Campus (NAIC) at Warwick University is a multi-million pound investment by Tata Motors in automotive R&D in the UK
Another major problem for British manufacturers is the current dependency on battery imports, which presents a huge risk factor for the automotive industry.
Makers are presently only able to meet the ZEV mandates by the importing batteries – imports are exceeding exports 10.5 times right now.
As of November 2023, China led global EV battery capacity with a 54 per cent sector share, followed by the US with 15 per cent, Germany with six per cent and the UK in fourth with four per cent, Adamas Intelligence EV Battery Capacity and Battery Metals Tracker reported.
Britain’s battery imports are more diverse than the rest of the world, with 40 per cent coming from China, and 30 per cent from the rest of the world, but we still need more homegrown production to stop reliance.
Half of an EV’s value is made up by the battery itself.
With massive advances in solid state ultra-rapid charging batteries coming, this is not about to change either.
To build supply chain resilience the UK needs to invest smartly in domestic battery production facilities and turbocharge charging infrastructure by 2030, Aston University’s report said.
China is leading the way with EV production and global battery capacity, and the UK is heavily reliant on its battery imports currently
Finally, it recommends the implementation of a ‘Future-Fit’ framework to measure and assess dependencies and vulnerabilities in order to accelerate advancement and innovation.
This is needed to make the UK auto market an attract place for foreign investment.
In particular the report states its specifically China that Britain needs to woo. Rather than seeing China as a ‘threat’, the team at Aston is pressing for closer collaboration.
Europe is seeing a massive influx in EV imports from Asia: recent exclusive analysis by MailOnline and This is Money’s motoring department found that low-cost premium electric car offerings from China is having a huge impact on the UK car market.
BYD is one of China’s low cost premium EVs that’s undercutting European offerings and taking huge market share
Other emerging brands like GRW (Great Wall Motor) are taking the market and imaginations by storm with unique EVs like the Ora Funky Cat
The likes of MG, GRW (Great Wall Motor) and BYD (Build Your Dreams) are undercutting European offerings, partly due to their leading position as producers of rechargeable batteries.
But Dr Professor Jun Du is confident that ‘the implementation of these recommendations can effectively cement the UK’s leadership position in the realm of electric mobility, ensuring enduring growth, competitiveness, and innovation.’
What’s being done to help the UK’s EV revolution?
The good news is that the Society of Motor Manufacturers and Traders’ (SMMT) is ‘confident in the UK’s manufacturing and innovation capabilities.’
While it still sees global competition and geo-political challenges ahead, ‘a new Advanced Manufacturing Plan, supported by battery, critical minerals and supply chain strategies, will help continue to position the UK as a leader on the global stage’.
Mike Hawes, SMMT Chief Executive, told MailOnline: ‘After a year that saw more than £20 billion of private and public investment committed to UK EV and battery production, we look forward in 2024 with a renewed sense of optimism.
He added that ‘the forthcoming Budget provides another opportunity to introduce further measures to boost the UK’s competitiveness at home and overseas.’
Industry investment
UK automotive is in the transition zone to mass-scale EV battery production. While the Aston report highlights that the sector isn’t there yet, more battery investment is set to come to British shores.
In July 2023, Tata (who own Jaguar Land Rover) confirmed its plans to build one of Europe’s largest gigafactories in Somerset England.
A £4bn injection into the UK’s EV market will secure half of Britain’s supply of EV batteries until 2030, and create 9,000 jobs.
The plant will be one of Europe’s largest gigafactories – as well as the first of Tata’s outside India – and will annually facilitate 40 gigawatt hours capable of supplying other carmakers in the UK and Europe.
Investment in huge billion pound gigafactories took off in 2023 thanks to investment from Tata and Nissan, creating thousands of jobs
Nissan followed suit in November 2023, with a £1.12bn investment in its EV36Zero Sunderland plant to make two new electric models, as well as a third UK battery factory.
In total Nissan will invest £3bn by 2023 in three EV models at three gigafactories alongside its Chinese battery supplier Envision.
Government campaigns
There is already significant campaigning underway to move the UK towards its 2030 and 2035 EV targets.
In November of last year, MPs on a cross-party Committee released a ‘Batteries for Electric Vehicles’ report. It highlighted that a lack of support from government has led to the UK being less attractive for EV battery investment, leading us to fall behind global competitors.
Like Aston University, MPs said the UK ‘has a limited window in the next three years to attract further investment in this sector’, leaving the UK automotive industry to decline.
But MPs have welcomed the investment news from Nissan and Tata, with the Labour Party’s Cllr Jim O’Boyle, cabinet member for jobs, regeneration and climate change at Coventry City Council saying: ‘I’m pleased to report that we are now in advanced discussions with leading Asian battery manufacturers who want to develop a presence in the UK’.
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