Report: UK must grow EV battery production capacity more than fortyfold by 2030

Many businesses had other immediate issues to deal with aside from transport

In a new report, published today, the Institute’s Coalition for the Decarbonisation of Road Transport (CDRT) argues that the UK Government’s 2030 commitment to end the sale of new petrol and diesel cars and vans is not supported with adequate plans to scale up battery Gigafactorries and the supply chains for key EV battery materials.

Members of the Coalition represent more than 45 organisations, including fleet operators, financial firms and transport operators. Organisations represented include Uber, Triodos Bank, Mitie, Natwest Group, Lloyds Banking Group and Transport for London. Also supporting this report are the Aldersgate Group, the Quadrature Climate Foundation and the Society of Motor Manufacturers and Traders (SMMT)

The report states: “The UK is well-positioned to become a global player in the EV battery revolution. It has a strong automotive sector, with more than 30 manufacturers building more than 70 models of vehicle, a highly competitive chemicals industry, and it is at the forefront of research and development into new low-carbon engine technologies.”

Yet, according to the report, organisations across the battery supply chain are finding it challenging to secure funding in the UK because their investments are considered “high risk” by banks and investors. The report sets out a series of ways in which the UK Government could intervene to address this barrier.

One recommendation is for the allocation of more government funding to de-risk private investment. The CDRT is exploring a ‘Battery Investment Facility’, through which public finance could be used as the cornerstone of investment rounds in major projects. It is also exploring guarantees backed by public funding through a new ‘Offtake Support Mechanism’.

The report additionally floats the creation of a lenders’ handbook, giving investors information about battery technologies of the present and future. The handbook could be published by the Government with the input of the private sector.

Beyond working with the private sector on communications and investment, the report states that the Government could mandate battery producers to provide a value guarantee, guaranteeing to customers that they would retain value to a certain extent until the end of their first working life. This could help support a growing battery reuse and recycling market, the report argues.

Another mandate floated in the report is for battery passports, which would require manufacturers to record and disclose information about the supply chain of their products. The EU is already preparing to mandate battery passports from 2026, so such a mandate in the UK could ease trade. The CDRT’s report states that the UK Government could pay manufacturers a financial incentive to use sustainably sourced materials.

Commenting on the report, NatWest’s head of automotive and manufacturing Richard Hill said:  “The window of opportunity to secure investment into the UK is closing fast. Announcements about battery production investments and supply contracts are now time-critical for the UK, and all stakeholders, including the finance industry, must collaborate at pace if the existing auto sector is to be maintained and new opportunities exploited.”

Growing the Gigafactory pipeline

The SMMT recently published data on car and van sales in April 2021. Registrations for cars were down 15.8% compared to April 2021, with van registrations down 29.1%.

Nonetheless, EVs have weathered the challenging economic environment for automakers far better than their petrol and diesel counterparts. The number of plug-in cars registered in April 2022 was 40% higher than in April 2021. The SMMT is estimating that they will account for more than a quarter of new registrations this year. This is promising news for the net-zero transition.

The UK Government has already been urged several times to set more robust plans for growing the nation’s Gigafactory stock this decade, to avoid relying on imports and therefore missing out on opportunities for green job creation and international battery trade.

A facility in Blyth, Northumberland, is set to become the UK’s first Gigafactory after BritishVolt gained planning permission in July 2021 and began work onsite shortly afterwards. It is expected to begin operations in 2023, with a 10GWh phase, and have two more phases of equal capacity added through to 2027. BritishVolt had originally been planning to build the facility in Wales but changed the location in late 2020.

Other UK Gigafactories in the pipeline include Coventry’s flagship project and a 9GWh facility in Sunderland, operated by Nissan. Neither are expected to begin operations before 2025.

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