Future of UK EV battery production hangs in balance following Britishvolt collapse

The recent collapse of hopeful UK electric vehicle battery manufacturer Britishvolt has left the future of both the domestic battery and car industries shrouded with doubt

After the collapse of the company on January 17th, leading key industry members are calling on the government for a clear electric vehicle (EV) policy. Britishvolt, which had plans to construct a gigafactory in northern England, was one of four companies planning to construct EV battery manufacturing facilities in the UK.

The Blyth factory planned to produce enough battery cells for over 300,000 EV battery packs per year but its failure to materialize after Britishvolt was unable to secure enough interest and access pledged government funds quickly enough has left experts doubtful over the UK’s future potential of becoming a hub for EV manufacturing.

According to Fastmarkets battery raw materials research and base metals analyst Phoebe O’Hara, BV’s collapse “has done real damage to any potential investor interest in the UK as a location for EV battery investments.”

“I would expect that investor interest, whether that be from OEMs [original equipment manufacturers], battery manufacturers, or the private sector, will be very low after this event, particularly given the fact that Britishvolt was unable to secure buy-in from potential customers who would use their product locally, showing that there isn’t even major demand for the product, which would attract a manufacturer,” O’Hara told EnergyCensus.

Plans on the horizon for EV battery manufacturing facilities

Other UK plants currently under development include the West Midlands Gigafactory, which has a slated 60-megawatt capacity and is due to start up in 2025 as well as the Envision AESC gigafactory, which is being built in collaboration with carmaker Nissan and will have an initial capacity of 12 GWh from the beginning of operations from 2025, ramping up to 25 GWh by 2030 and ultimately 35 GWh.

Production at AMTE Power‘s 2 GWh Coventry facility meanwhile started up last year, with plans in place to scale up operations to 10 GWh, although the company has not yet specified a time frame for the expansion.

However, EnergyCensus understands that while seen as a potential bright spark for UK EV battery production, Coventry City Council and The Rigby Group’s West Midlands Gigafactory has yet to secure enough investment to proceed, while sources say that the failure of Britishvolt could hinder its plans on a combination of weakened sentiment and the lack of backing from a particular OEM or mining company.

Furthermore, sources remain skeptical over the future of battery production in the UK against a backdrop of declining car production and waning interest from carmakers to both keep production in the UK and pledge to switch focus to EV production.

While in 2021 the UK implemented a ban on new sales of petrol and diesel cars to take effect from 2030 and 2035 for trucks, carmakers with a presence in the UK have so far made no firm commitments to make EVs at large scale at the same plants.

“If the carmakers aren’t interested, then why should battery makers be interested?” a source told EnergyCensus, reflecting on the future of the UK battery industry and the fact that Britain’s position outside the EU and lack of established supply chains for batteries appear to have put it at a disadvantage to other locations.

In 2021, Japanese carmaker Honda closed its Swindon factory after 35 years of production, leaving Britain with just four mass manufacturers: Jaguar Land Rover (JLR), Nissan, BMW, and Toyota.

Last year, JLR announced a severe dialing back of its production in the UK, blaming the global semiconductor chip shortage - which has impacted carmaking globally since earlier 2021 - for output reductions, although they are expected to last only until the spring.

Figures released last week by the trade organisation the Society of Motor Manufacturers and Traders (SMMT), showed that UK passenger car production in 2022 fell by 10% year-on-year to 775,014 units.

However, battery electric vehicle (BEV) production simultaneously reached a record of 234,066 units while together with plug-in hybrid (PHEV) and hybrid (HEV) electric vehicles boosted volumes by 4.5% year-on-year to represent almost a third (30.2%) of all car production.

While higher EV production figures were reached last year, O’Hara warns that Britishvolt’s collapse has been a major blow to UK EV production and that it will decline over the next 10 years if more local battery production is not secured in the near term.

“Ensuring a local battery supply has become a basic requirement for EV manufacturers who are seeking to lower EV prices as much as possible in order to capitalise on demand by appealing to a wider array of customers,” she said, adding that producing batteries locally is one such way to achieve that lower EV price (the battery makes up 40-60% of the cost of an EV) and ensure that you have apt supply to meet your production targets.”

The drive towards net zero

Earlier this month, an independent review of the UK government’s Net Zero Strategy outlined several issues facing the country’s EV rollout and called for a swift adoption of the Zero Emission Vehicle mandate, recommending it be applied from 2024 while maintaining regulations and funding to support the uptake of EVs in the UK.

The mandate, which is expected to be published in the coming months, will force automakers to sell a certain proportion of EVs in the lead-up to the ban on the sale of new combustion engine vehicles by 2030.

Meanwhile, on January 30, several industry members published a joint statement, urging the government to act to boost EV production.

“What the government needs to do now is create a clear and present policy that ensures the UK has a thriving domestic battery cell and EV industry,” founder of EV campaign group Quentin Willson said.

Plug Life Consulting’s Euan McTurk maintains that there is a “huge opportunity” for the UK to become a genuine world leader in battery and EV manufacturing, with the opportunity to export these products.

“Naysayers appear to be using the demise of Britishvolt to try to hamper proactive policy, forgetting that any failure to switch British industry to EVs will result in massive imports of EVs built overseas, zero exports of British-built vehicles, and the UK being an industrial irrelevance,” he said.

Industry members have therefore called on the government to “at least match the US’ highly successful Inflation Reduction Act” which it says is directly responsible for a wave of new battery and EV gigafactories planned in the US.

Andy Palmer, chairman of European battery cell developer Inobat, said that while there is noted “push back” in the media surrounding the affordability of EVs, the experience of technological innovation in transistors - where Gordon Moore argued that the number of transistors doubled every two years, while production costs halved.

“Looking at the Moore’s Curve equation, mass production of batteries, and therefore EVs will ultimately drive price points down... This is why we need domestic battery cell production,” Palmer said.

Britishvolt sparks debate over UK subsidy policy

In July last year, Britishvolt announced it was in line to receive £100 million in funding from the UK government’s Automotive Transformation Fund and in July stated it had received an official letter confirming the grant.

However, sources close to the matter told EnergyCensus on November 1 that the company had attempted to access the government funding early, but that they had been unsuccessful and that the grant would not be issued until a due date sometime in 2023.

This has subsequently sparked a debate on the effectiveness of UK subsidy policy and, commenting on a LinkedIn post related to the firm’s collapse, the company’s former chief strategy officer Isobel Sheldon wrote on January 29 that in communications with the UK government she “couldn’t have been more clear there was a window to capitalize on.”

The company, she said, communicated to the government that “the money had to be at the right level (and we requested the right level, but got less than half of that) and if the process was drawn out too long it would cause difficulties not only for BV but the UK as other countries would speed ahead.”

“We were ignored, pushed around, nickel-and-dimed; the bureaucrats’ wish prevailed, and look what happened... A squandered opportunity,” Sheldon wrote.

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