MPs call for urgent EV battery investment incentives

The ‘Batteries for electric vehicle manufacturing’ report, published yesterday (November 21, 2023), warns that the UK faces a huge ‘gigafactory gap’, with insufficient battery production capacity for the nation’s future needs.

The report claims that, if not addressed, this could see automotive production in the UK decline, potentially putting hundreds of thousands of associated jobs at risk.

Harnessing the UK’s low-carbon energy sources, the report argues that the government could become an important centre for ‘midstream’ refining processes for critical materials such as lithium. Doing so could establish the UK as a ‘frontrunner’ in building sustainable and ethical batteries, compared with those from China and European countries.

Currently, China accounts for 78 per cent of the world’s cathode production. China’s dominance over large parts of the battery supply chain leaves battery makers exposed should the country choose to restrict exports of battery materials and components, the report claims.

In a statement, Liam Byrne, chair of the Business and Trade Committee, said: “Power was at the heart of the industrial revolution and it will be at the heart of the green industrial revolution. But right now, the UK is on course to secure barely half of the electric battery capacity needed by the domestic car industry alone.

“Unless we fix this fast, we risk the industry simply relocating to Europe or the US, or becoming reliant on imports from China and elsewhere. That imperils 160,000 jobs and a jewel in the UK’s industrial crown. Now is the time to act.”

The government informed the committee that it plans to publish an Advanced Manufacturing Plan at the Autumn Statement, and that they are working on a UK Battery Strategy. The UK’s comparative advantage in clean energy and new battery technology should be leveraged in these plans, the report concluded. 

Other recommendations included better government backing for agreements to set up new gigafactories, prioritising them for infrastructure improvements, and boosting support for domestic critical mineral mining.

“Our competitors have hit the accelerator on battery investment, and we’ve been left in their wake. The next round of investments by car makers in their factories will be decided by local battery manufacturing capacity,” said Byrne.

“Boosting support for gigafactories is not enough; government must cultivate a more appealing investment environment for battery producers before it’s too late. We must act urgently if we are to safeguard British automotive jobs and secure this critical industry for the future.”

The committee also called for the government to ‘press’ the EU for at least a three-year extension of the current rules of origin requirements, as it claims that new rules due to go live at the end of the year would effectively apply tariffs for electric cars sold in the EU.

The full report can be read here.