Comment: We need a more secure supply chain if we are to achieve net zero

In 2030, retailers will have to stop selling new petrol and diesel cars, as part of the UK Government’s ambition to reach net zero by 2050. 

On the industry side, manufacturers have already begun pivoting towards electric vehicles (EVs) as consumer appetite grows and the inevitable ban on new internal combustion engine (ICE) production approaches. 

Unfortunately, pivoting towards EV manufacturing isn’t enough. 

Achieving the net zero target relies on consumers wanting to switch to EVs in greater numbers, which they are only likely to do if they feel it is a low-risk, barrier-free choice. There also needs to be an abundant market supply of EVs, which requires the UK to have a secure, reliable supply of materials, components, and resources from which to manufacture.

This supply is at risk. 

Not because of a specific threat, but a general amalgamation of factors including the potential for geopolitical instability, trade disputes, and disease outbreaks. These risks exist in all sectors but are becoming more prevalent and make our EV supply chain vulnerable to shocks and disruption that would cause serious economic problems and damage the public perception of green technologies, interrupting our path to net zero.

Globalisation vs supply chain security

Globalisation has deepened and widened complex supply chains as countries have developed specialised manufacturing operations. This has led to an uneven distribution of capabilities, with some states becoming dominant suppliers of important resources and parts. 

This is usually a good thing for consumers. Low cost, highly efficient manufacturing of specific components by those best suited to produce them is an excellent way of getting high quality products to consumers, quickly and affordably.

However, EVs have significantly more skewed supply chains because the industry simply isn’t as developed, resulting in thousands of components coming from a limited number of sources.

In the ICE vehicle market, disruption can be mitigated. For example, Taiwan dominates the global semiconductor market, with one of its companies responsible for over 50 per cent of global supply. Recent chip shortages have caused difficulties for many manufacturers, resulting in overall output decreasing by over 23 per cent in the year to date, according to the Society of Motor Manufacturers and Traders. This has led to a revitalisation of the second-hand market as consumers looking for a new vehicle opted to get an older one now, rather than wait for the supply chain to catch up. 

This will not be possible in the same way when it comes to EVs due to a smaller secondary market and the gradual replacement of petrol stations with electric charging points. We will not be able to withstand the same level of interruption unless we diversify or have some sort of back-up plan. 

COVID-19 led to a consensus beginning to form in academic circles that manufacturers would need to reassess supply chain risks and look to increase domestic production - I believe this is especially important now given recent events.

Understanding the specific risks

An EV battery requires up to 60kg of lithium, but also relies on cobalt, copper, nickel, graphite, and other scarce resources. Many of these resources are found in states that suffer from economic, political, and military instability or in states with geopolitical ambitions that conflict with established global norms. 

China’s dominance of lithium production is already ringing alarm bells in Washington and Brussels. The US Government announced plans to use the Defense Production Act to fund the domestic mining of materials critical to battery manufacture and the EU is pursuing legislation to create a green battery supply chain. 

The UK cannot become self-reliant in lithium production, but steps are already being taken to mitigate our vulnerabilities, which hopefully mark the beginning of a wider change. British Lithium, supported by £3m of Innovate UK funding, are exploring lithium mining in Cornwall, and researchers at Strathclyde University are looking into magnesium as an alternative to lithium, with support from the Faraday Institution.

The UK’s vulnerability doesn’t just extend to battery production though. Thermal insulation materials are also vital - any difficulty sourcing solutions for managing thermal propagation could cause serious disruption to the production of safe, efficient vehicles as well. Many of our automotive customers highlight the importance of a secure, reliable UK supply chain to their businesses, which is why I believe this is something that is critical to the wider EV industry.  

Where do we go from here?

There will always be risks to our supply chains. In most cases these can be mitigated, but when it comes to EV manufacturing and supply, we face a unique set of factors that makes mitigation difficult. 

If countries withhold the supply of resources and components, or if conflicts, pandemics and trade disputes cause supply chain disruption, the automotive industry will face severe consequences and damage will be done to the public perception of ‘green’ technologies, compromising our net zero ambitions.

Britain has a proud automotive history and a thriving small component industry that needs to be protected and expanded. We should seek to develop a strong industrial base for these so that the UK can play an important role in the global supply chain, increasing interconnectivity and minimising domestic disruption.

The US and EU are taking steps to secure their supply chains, but the UK needs to set out a clearer strategy. There is a good argument for designating certain components and materials in the same way we designate defence products, for example.

Either way, we need to start thinking hard about where the UK sits in the global supply chain, and where we want it to be if we are serious about delivering on the automotive facet of our net zero strategy.

Kevin Porter, technical director at Tecman Speciality Materials

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