Bright sparks: The case for UK battery production

The government may have softened its stance on the proposed ban of new petrol and diesel passenger cars, but the global automotive industry is still heading rapidly towards electrification. It’s a trend that’s playing out across other industries too, from residential energy storage to aerospace. And it’s one that’s opening up major gaps in the supply chain – particularly in the UK.

The challenge with battery cells is that they’re very difficult to produce at a reasonable cost in anything other than huge volumes. Outsourcing is fraught with risk due to the finely controlled manufacturing processes, where the slightest change in temperature or humidity can result in a batch of bad cells. Meanwhile, setting up your own production line requires huge investment and guaranteed volumes.

Iain Wight - Chief Commercial Officer, InoBat

“When I started working in electronics, a few clever engineers could go a long way. You’d see companies that started in sheds becoming major players, but that’s simply not possible with battery production. The upfront cost is a totally different order of magnitude,” explained Iain Wight, chief commercial officer at InoBat.

Wight is a veteran of the UK’s low-volume automotive industry. He started off as an electronics engineer at BAE Systems, but rapidly transferred to Pi Research, followed by long stints in commercial roles at Ricardo and WAE. His work there with high performance electric powertrains highlighted some of the challenges facing specialist manufacturers.

“It’s incredibly difficult to supply high performance batteries at a commercial rate that’s acceptable to the market.  The cell chemistries required for applications like high performance automotive and aerospace generally aren’t very well served by the industrial giants in China, Japan and Korea,” he commented.

InoBat was set up to plug this gap in the market, but it faces a mammoth challenge. The first issue is that small scale battery production is very much a relative term. By Wight’s estimation, a manufacturer needs to be producing one or two gigawatt-hours of battery production per year to reach the point where its prices become commercially viable – even for premium high-performance applications.

Scaling up

InoBat is based in Slovakia where it already has a 10,000 m² R&D centre and a pilot line. The company plans to scale up by adding another line of 2 to 4 GWh capacity, as well as developing a joint project with a Chinese battery manufacturer for the first gigafactory in Slovakia, which will bring a capacity of 20 GWh in first phase, with the potential to expand further.

The company had previously considered setting up a factory in the UK, but it’s not an easy task, Wight explained: “One of the major challenges is the power going into the factory. If you’ve got plans to scale up to a large factory, say 32 gigawatt hours, you need somewhere in the region of 180 megawatts coming into it, and that needs to be primarily from renewables to make sense. That’s one of the reasons why there’s been a lot of uptake of battery production in Scandinavia, where electricity is perhaps 5 cents per kilowatt hour, whereas in the UK and the rest of Europe it’s more like 20 or 25 cents.”

Other challenges include land costs, logistics for the raw materials and the lack of upfront government subsidies compared to EU states. Nonetheless, Wight and his colleagues are still very keen to establish a facility in the UK.

“We’ve seen three sites in the UK that we think would be suitable for a gigafactory, including one that had the advantage of being a free port. We think the way forward will be a smaller size of factory – perhaps in the region of 3 or 4 GWh – probably with a number of different lines, producing different formats but to a similar chemistry,” he commented.

This comparatively compact size would be large enough to take advantage of the economies of scale attached to cell manufacturing, but small enough to keep the power demands relatively low.

Part of the challenge is finding the right customers. Tata is aiming for 40 GWh from its planned factory at the former Royal Ordnance site near Bridgwater in Somerset, but the Indian giant owns Jaguar Land Rover, giving it guaranteed access to a high-value volume manufacturer. Nissan also has its own battery facilities, with further expansion on the way. Both manufacture hundreds of thousands of vehicles in the UK each year, but the remaining British manufacturers are far smaller. Bentley produced 13,560 cars last year, Aston Martin 6,620 and Lotus 6,970. It’s likely that any factory supplying to these markets would need several different customers to be viable.

“We’ve been trying to find a level of commonality that would allow us to pool a number of customers together around similar cell architectures. It’s certainly something that we believe is possible,” commented Wight. “From a funding point of view, we’re confident that there’s enough [external investors] out there to fund the building of a factory once that commitment is present. As long as you have a long-term offtake agreement the level of risk associated with building a battery factory is actually quite low.”

Raw materials

It’s not uncommon for battery manufacturers to work in close partnership with materials suppliers or even own their own mining operation. One of InoBat’s partners is a major mining company, which is currently seeking to open a large lithium mine in mainland Europe. Elsewhere, Imerys British Lithium (IBL) has set up a pilot plant for lithium extraction near Roche in Cornwall, with plans for a full-scale operation capable of extracting up to 20,000 tonnes of lithium carbonate per year.

In general, though, it’s unlikely that we’ll see a sudden shift in sources for the raw materials, explained InoBat’s senior commercial manager, Kathryn Cranfield.

“Mining is a long-term project, so I don’t think we’ll see a big change during this decade in the raw materials extraction. That’s likely to remain in China, Australia and South America, but it’s the refining and processing that might be brought closer to Europe,” she said.

Part of the reason for this shift is that manufacturers are preparing for the introduction of the EU’s Rules of Origin regulations in 2027. These will place a 10 per cent tariff on the value of the vehicle if manufacturers don’t source at least 45 per cent of the battery raw materials from the EU or the UK (moving up to 55 per cent in 2032).

The same year will see the introduction of Battery Passports. Under these regulations, every electric vehicle battery on the EU market with a capacity of over 2 kWh will require a detailed digital record of its specifications, including information on its raw materials, production and recycling.

“We look at battery production from what we term a cradle-to-cradle perspective. So we want to be involved, right from the ground up, and all the way round to the recycling to ensure that we’re producing in a holistic way and that we know what’s happening at each stage. That’s going to become even more important once the Battery Passport regulations come into effect,” said Cranfield.

These regulations could well strengthen the case for UK battery manufacturing, which Wight believes will play a key role in future automotive production.

“There are a lot of challenges around setting up in the UK, but we’re desperately keen to find solutions to those, because otherwise British manufacturers will be dependent on getting perhaps the most critical element of their future vehicles from abroad, which puts them in a precarious position. Currently, the UK produces over 1.5 million engines per year, and 60 per cent of those are exported. That’s a position we need to get to with batteries, and we’ve got the key skills in the country to do it,” he concluded.