The UK government needs to develop an industrial strategy and offer more financial support to the battery industry to create a level playing field in the international competition, experts said on Tuesday. Without it, it will lose. Two panels of experts gave evidence to the UK Parliament’s Business and Trade Committee on batteries for electric vehicle (EV) manufacturing. Andrew Draper reports.
Simon Moores, CEO of Benchmark Mineral Intelligence, said the UK is far behind internationally in the “global battery arms race” of lithium-ion batteries for EVs and energy storage.
The battery race began in earnest in 2015 and took off in 2018 outside China in Japan and Korea, he said. The US got its act together with the Inflation Reduction Act in 2022, and began building battery plants and the supply chains to fuel them.
“UK doesn’t have a strategy”
“The UK at the moment doesn’t have a strategy, doesn’t have a runner in the race,” Moores said. “It can talk about electric vehicles and can talk about energy storage, and solar and wind, but unless you’re making batteries here, unless you’ve got the chemical plants to fuel those batteries – the midstream of the supply chain – you’re not involved in this industry, you’re not involved in this energy storage revolution.”
If the government gets its act together and comes up with money to attract investment to build the factories, then the UK can play a part after 2030, he added.
Jeremy Wrathall, chief executive of Cornish Lithium, told the committee there is plentiful lithium in his area of England, but it is unclear how much can be extracted. Raising finance to do that is difficult. And unless there is support for the UK battery industry, there would be a slow and steady decline of the UK automotive industry.
Jeff Townsend, founder of the Critical Minerals Association, said we do not operate in a free market, but a “geopolitical monopolised market”. He referred to legislation passed in China in 2020 allowing it to stop export of critical minerals to companies not in China’s national interest.
It is not just a matter of critical minerals for building EVs, he said, it is the entire Western industrial strategy. “It depends on critical minerals and at the moment we are entirely dependent on China. That seems to me like a very silly position to be in.”
Ten gigafactories needed in the UK
In the second session, Stephen Gifford, chief economist at the Faraday Institution said some estimates are that in order to meet a talked about 200GWh annual target, around 10 gigafactories would be needed in the UK, five of them by 2030.
“You need 2–3 years to develop a gigafactory and 1–2 years’ planning before that. We have one in the pipeline, Envision AESC in Sunderland. We need two or three to be decided in the next 2–3 years to be on track.” There is not much time to catch up, he said.
Alan Hollis, chief executive of Amte Power, said “We shouldn’t be too downbeat about the British battery industry. We have a rich history of developing battery technology.” But battery companies like his need the support of government to help commercialise that technology, he said. It can cost £3 billion ($3.8 billion) to build a 30GWh gigafactory, he added.
He said the attitude of government needs to change to help companies travel through the difficult “valley of death” phase of commercialisation. “Time is against us,” he said, “the time to start building the gigafactories…and have them in production by 2030 at the latest. Time isn’t on our side and we need to take action now.”
Chicken and egg
Ian Constance, chief executive of Advanced Propulsion Centre UK, said “if the UK cannot attract the big gigafactories, we cannot have the discussion with people doing the rest of the supply chain element.” He said the chicken and egg situation of investors and offtake agreements with OEMs needs to be fixed, so one is not waiting on the other.
Faraday’s Gifford said some countries had done well at attracting gigafactory investment. Eastern Europe is attractive partly due to low labour and land costs, he said. There are some 30 gigafactories planned in Europe, compared to one in the UK, plus a smaller one.
A lack of cathode active materials (CAM) will make it “very very difficult” to fully comply with the rules of origin framework, said Hollis. Constance said there will be a massive shortfall of CAM in Europe, and a reliance on imports from Asia. Billions in investment will be needed to improve the situation and he expected a delay in the implementation of the rules of origin deadline. Gifford said 1–2 years on from 2027 would provide the required breathing space.
Ian Lavery, Labour member of parliament for Wansbeck, asked how UK government financial support compared to other countries. Hollis said: “Right now, there’s no comparison between what’s on offer between the IRA and what’s on offer in Europe.”
Investors are looking at what is available and where they will get best returns. The IRA offers 20–30% OPEX cost coverage, and the European Union offers capital grant aid, the session heard.
Hollis said he wanted battery companies to stay in the UK because they believe in UK plc, but the country needs to create and include a supply chain so it has something to be proud about.