The government should incentivise domestic production of electric vehicle (EV) batteries and secure investments in gigafactories to develop the automotive industry, ministers have said.
The UK is falling behind on domestic manufacturing of EV batteries compared to the frontrunner China and other countries in Europe and North America.
The report is part of an inquiry into the “gigafactory gap” the UK faces. The government is expected to publish its UK Battery Strategy, which will set out a ten-year plan for scaling-up domestic supply of EV batteries.
“To match our competitors, the UK Government should consider targeting at least 90 percent of the UK’s annual demand for batteries to be met from domestic supplies by 2030,” the ministers said.
The committee said that the UK Battery Strategy must set out how new battery technologies, where the UK has a competitive advantage, are commercialised domestically.
This should include plans to attract established battery manufacturers as well as new entrants to the battery market to build gigafactories in the UK.
The UK will need 100GWh of battery manufacturing capacity by 2030 to satisfy demand for batteries from the UK’s automotive industry and other sectors. That demand is due to increase to 200GWh by 2040.
The UK’s only gigafactory in Sunderland, which is co-located with Nissan’s assembly plant, has a capacity of just under 2GW/h, the report warned.
Britain has been branded a “bystander” in the global battery race, compared to China, who dominates the sector of raw materials refining and battery components manufacturing. This has enabled China’s lead in the production of batteries and electric vehicles.
Meanwhile, the European Union aims to supply 90 percent of annual battery demand from within the union by 2030. Germany is expected to have the largest amount of battery manufacturing capacity in Europe.
To compete effectively, the UK should see further investments from the government, the minister said. New gigafactories will satisfy increasing demand from the UK’s car industry and other sectors, such as energy storage.
In July, Tata Group, which owns Jaguar Land Rover, announced it will build a new battery factory in Somerset.
“In the past few months, the Government has secured a £4 billion investment from Tata in a new gigafactory, and £600 million to build the next generation of electric Minis,” a Department for Business and Trade spokesperson said.
Another blow for the car industry in Britain was the decision by BMW in October 2022 to end production of the electric Mini in Oxford.
The UK needs gigafactories that can cater for different types of vehicles, the report said. This includes luxury cars, public transport and commercial vehicles, manufactured domestically.
“Retaining niche segments of the automotive market” is strategically important, the ministers said, adding that Britain can lead in energy storage and military applications.
These sectors are expected to see an increased demand for batteries, especially from 2030 onwards, the document said.
Mr. Byrne warned that unless required levels of domestic production are secured, Britain risks the industry “simply relocating to Europe or the United Statess or becoming reliant on imports from China and elsewhere.”
This puts 160 thousand jobs and the UK’s industrial manufacturing sector at risk, he added.
