Has Britain hit the accelerator too late in race to meet gigafactory demand?

Slow progress on electric vehicle batteries may knock Boris Johnson’s plans for a green revolution

Tesla Berlin factory under construction
Britain will be competing with European plants, including Tesla's new Gigafactory near Berlin, which will have the largest battery production capacity in the world when it opens in 2021, according to Elon Musk  Credit: Getty

Isobel Sheldon has been waiting a long time for this chance. The 51-year-old engineer has spent her career diligently working on batteries, helping develop the use of lithium-ion power units for cars.

In June, she moved from the relative comfort of the publicly funded UK Battery Industrialisation Centre to the riskier world of Britishvolt, a start-up planning to create an 80-hectare electric vehicle battery factory in the UK, possibly in South Wales.

Britishvolt hopes the plant will eventually produce about 35 GWh – enough for up to 500,000 vehicles a year – squaring up to rivals such as electric car pioneer Elon Musk’s Tesla.

“We are building the 16th largest building in the world and fourth largest in the UK – that’s not a small task,” says Sheldon, chief strategy officer. “Certainly, on the tech side, I have been thinking about having this sort of facility in the UK for 20 years, and now is the opportunity. Someone needs to move first, and we have decided to.”

Whether the UK can seize the wider opportunity presented by the shift to electric cars, and fend off its risks, is far from certain, despite the huge consequences at stake.

With the sale of new petrol and diesel cars to be banned within the decade, tens of thousands of jobs could be created in meeting the huge demand for batteries from UK vehicle manufacturers.

But failure to meet that demand risks pushing carmakers abroad, where they could be close to battery suppliers, damaging a vast British industry and jobs that go with it, experts warn.

An electric car is seen at a charging point at Halfords in Rugby, Britain, November 19, 2020 Credit: Reuters

The UK quickly needs to attract billions in investment to develop large-scale battery plants, or “gigafactories”.

“We see the construction of gigafactories in the UK as an essential ingredient in the future health of the UK automotive industry,” says Stephen Gifford, chief economist at the Faraday Institution (FI) for battery research. “We are behind Europe, but the opportunity is not lost.”

The clock is ticking, however. “There is a small window of opportunity before vehicle manufacturers make definitive decisions on where to locate their EV production,” warns Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT) trade group.

“If we want them to choose the UK, we need to charge up our manufacturing capability urgently.”

China currently dominates global lithium-ion battery production, with about 353.8 GWh of capacity compared to Europe’s 26.9 GWh, according to Benchmark Mineral Intelligence.

Based on current plans, China’s dominance is here to stay. The UK produces less than 2 GWh of EV batteries from a plant in Sunderland, which caters for Nissan’s Leaf, sold in 2017 by Nissan to China’s Envision Group.

The SMMT says the UK will need capacity of 120 GWh by 2040 to make 2m electric vehicles a year. If more gigafactories do not materialise, the FI warns that carmakers could wind down operations here, leading to 105,000 fewer jobs in 2040 than could otherwise be expected.

Britishvolt is the only group to have announced firm plans in the UK so far – and they are at an early stage, with a location yet to be fixed and financing yet to be raised.

AESC Envision is considering whether to expand its Sunderland plant, while reports about a possible tie-up between JLR and Chinese company BYD have yet to be confirmed.

Meanwhile, battery manufacturers have been planting a flag in Europe, where giants such as China’s CATL and Svolt, South Korea’s LG Chem, Sweden’s Northvolt, France’s SAFT and America’s Tesla are developing large-scale factories in Germany, Poland, France, Sweden and Hungary.

Strong European demand for electric vehicles has played a role in their plans, as has state support. So have other factors. Musk told Auto Express in November 2019 that “Brexit uncertainty made it too risky to put a gigafactory in the UK”.

Export tariffs would hurt the industry, while rules on “local content” for exports could also increase the need for UK battery supplies. Carmakers have had to take decisions with a deal not yet finalised.

Kai-Uwe Wollenhaupt, president of Svolt Europe, said it looked at 32 locations in Europe between October 2019 and September 2020, and its choice of Saarland, Germany offers, among other things, access to top employees and infrastructure.

Saarland’s ministry of economic affairs “actively entered into the settlement talks”, with plans for implementing the development, and “was able to convince Svolt”, he added.

It is hoped the UK Government is taking an equally proactive approach to luring developers. Skilled labour, strong chemical supply chains and cleaner electricity are among strong factors in its favour. “If there is one perspective that we need to wake up to in the UK, that is resonating in government, we need to be fleet of foot,” says Julian Hetherington from the Advanced Propulsion Centre, a joint industry and government venture to support the automotive sector.

“Business needs to move quickly when it has investment opportunity, and government needs to move at the right pace.”

Last month, the Government announced £500m to support battery manufacturing, and a further £582m in grants to help people buy EVs. Developing gigafactories is part of its “10-point plan for a green industrial revolution”.

A government spokesman said the UK was “leading the global battle against climate change”.

For some, the reality is less impressive. Steve Turner, assistant general secretary of the Unite union, says the Government is “dragging its feet on investment and support”. He adds: “We urgently need gigafactories here in the UK or we lose our edge as a world-leading auto sector.

“If the Government doesn’t work with the sector now so it is ready to meet the challenges ahead, then it will watch it drain away as global corporations opt to invest overseas, where governments do understand the value of investment.”

Whatever the scale of UK support, Sheldon from Britishvolt says developers need to be on a “level playing field” with Europe, where taxpayer money is pouring into the EV sector.

“We don’t want to be at a disadvantage compared to our European competitors,” she says. But she adds: “We have to make sure this is balanced – support is important but you have to have a viable business plan to back that up.”

Prof David Bailey at the University of Birmingham argues government has set a clear target but now needs a detailed plan, with incentives such as tax relief worth considering.

“The danger is we get to 2030 and people are driving EVs but they and the batteries might be made elsewhere. It’s a question of whether or not we are going to have a car industry left to make these vehicles.”

Hetherington is optimistic, noting keen interest from several developers in accessing support: “I am very hopeful some of these parties will be supported and enabled to bring private investment to support manufacturing in the UK. I would be very surprised if we haven’t got four or five large-scale battery factories in the UK by 2030.”