Written by Nick Curry and Kate Holton
BLYTH, England (Reuters) – Britain risks being left behind in the race to create an electric car industry if it cannot build more battery plants — and fast.
Ambitious plans from automakers to ramp up production of battery electric vehicles (EV) and a looming change in post-Brexit trading rules that will limit options to import cheap Asian batteries mean there is no time to lose.
But a shortage of suitable sites for “giant factories,” and a decision by some local manufacturers to import electric car batteries from continental Europe, are creating challenges that executives and politicians say the government should do more to address.
Without enough battery factories, some fear the automakers will leave, hitting an industry that employs about 170,000 people.
“It’s not just about the giant factories, it’s about the whole infrastructure” of local car suppliers, said Jim O’Boyle, a council member in Coventry, central England, who has approved a site for a potential plant but has not yet found an investor. “If we don’t get it right, we may lose all blood.”
The government has allocated up to 1 billion pounds ($1.2 billion) to support Britain’s electric car battery supply chain.
Industry experts predict that the country needs four to six large battery plants to maintain a healthy auto industry. It currently has one small Nissan 1.9 gigawatt-hour (GWh) plant in Sunderland, north-east England, and two larger plants planned.
Startup Britishvolt is building a £3.8 billion ($4.8 billion), 38 gigawatt hour in Blythe, northern England, with a £100 million government support. Nissan is building a second 9 GWh plant in Sunderland with Chinese partner Envision AESC, which could expand to 25 GWh.
A spokesperson for the UK’s Department of Business, Energy and Industry said: “We are on track to achieve the gigawatt-hours needed to host a globally competitive electric vehicle industry… and are actively working to secure further investment.” strategy.
But across the European Union, dozens of factories are planned or under construction. The European Union has earmarked 2.9 billion euros ($3.1 billion) specifically to support battery plants, with individual member states providing additional funds.
Researchers from Benchmark Mineral Intelligence predict that Britain will need at least 175 gigawatt-hours of battery capacity by 2035 to supply about 3 million EVs.
It currently expects Britain to reach 56.9 GWh by 2030, compared to 821.3 GWh for the rest of Europe. Its forecasts show that Britain lags behind Germany – whose planned seven production capacity is expected to be seven times that of the UK by 2031 – as well as France, Hungary, Sweden, Poland and Norway, each with more production capacity.
To avoid tariffs in the main EU market, cars manufactured in the UK must meet “rules of origin” which from 2027 will include a requirement that 70% of an EV battery pack is either EU- or British-made.
Since batteries for electric vehicles are heavy and expensive to transport, domestic production is seen as critical to the thriving auto industry.
A wave of new electric car models is coming around 2025. The lead time of new vehicles is long and the chemistry of electric vehicles’ batteries varies, so production contracts should be concluded soon.
Battery plants require a lot of land and huge amounts of energy and preferably renewable water, and take years to build.
But Britain currently has few suitable sites.
“In terms of the UK’s ready-made land for shovels, there is no clear glut of places to go,” said electric vehicle pioneer Andy Palmer, currently CEO of Switch Mobility, and president of Slovakian battery startup InoBat. “If the giant factories don’t come here, the car companies will go where the giant factories are.”
At the Britishvolt construction site in Blyth, CEO Peter Rolton dismisses the site’s merits.
Formerly a coal pile for a power plant, it contained plenty of low-cost land, with proper grid connection and an adjacent sea port for materials. A Norwegian undersea hydroelectric power line is visible from the ground across the road.
As an industry consultant, Rollton has previously screened 150 potential UK sites. Only one scored perfectly in its rating, and nowhere else came close.
He said, “You stand on it.”
However, Britishvolt won’t start production until 2024 – four years after the site was chosen.
Other potential locations, such as those in Coventry with planning permission, will take longer because they need investments in their power grid or lack available land.
Slovakian startup InoBat is the only one to openly search UK sites, as well as others in the Western European Union. A decision is due this summer.
Aside from Nissan, the only British automaker large enough to support its own large domestic battery factory is Jaguar Land Rover, which is owned by India’s Tata Motors.
“Obviously we will need to look at supplies in India as well as the UK,” Tata Chief Financial Officer BP Balaji told reporters this month. “The source of this is under investigation,” he added.
Stlantis will manufacture electric trucks in Britain. A company spokesperson said it would rely on the three announced European battery factories and “additional supply contracts”.
BMW makes batteries in Germany for electric small cars produced in Oxford, southern England. “All other questions are for 2030 and beyond,” a spokesperson said.
Toyota has not yet committed to making electric cars in Britain.
Adrian Hallmark, chief executive of Volkswagen’s UK unit Bentley, said Britain’s problem is that it produces a variety of pickups, cars, SUVs and luxury models with different needs for batteries, while France, for example, produces similar passenger cars. size which can support battery factories.
“If you had to build six different types of batteries in one giant factory, it wouldn’t be economically viable at all,” he said.
He added that exporting batteries to Europe would be difficult because other countries had their own battery plans.
Hallmark said Bentley would get batteries from northern Europe, but if they were “competitive in terms of performance, quality and cost, we would certainly be open to sourcing locally”.
While luxury carmakers can afford to ship batteries from the EU, Palmer of Switch Mobility said this would be too expensive for a typical car bound for the EU over the next decade.
“It will definitely be the cheapest place to build in continental Europe, especially since most of our cars are destined for continental Europe,” he said. “So I see it as an existential problem for the British car industry.”
(Reporting by Victoria Waldersi in Berlin and Gilles Guillaume in Paris; Editing by Mark Potter)
Copyright 2022 Thomson Reuters.
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