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The UK risks losing a vital part of its carmaking industry to Europe and the US if it fails to attract battery investment within the next three years, an influential group of MPs warned on Tuesday.
Britain “lags far behind” competitors in wooing major battery manufacturers, though has the potential to beat European rivals, especially Germany, in making cleaner batteries, the House of Commons business and trade select committee found.
“The UK is on course to secure barely half of the electric battery capacity needed by the domestic car industry alone,” warned Liam Byrne, who chairs the committee.
“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,” he added.
The UK currently has one gigafactory located in Sunderland, which is run by AESC, owned by China’s Envision. JLR owner Tata has committed to build a second factory, which will initially use the Chinese group’s technology.
Britishvolt, which planned to build its own factory in Blyth, is weeks away from its second bankruptcy in the space of a year.
Several carmakers already produce EVs in Britain, with both Nissan and Toyota close to making investment decisions on future UK models, as previously reported by the Financial Times.
The MPs’ report noted “the absence of a clear and visible industrial strategy for the UK’s automotive sector has deterred investment into the UK”, adding many jobs “could be at risk . . . because of a lack of domestic battery manufacturing capacity”.
It said the UK needed a “long-term stable business environment” and to overhaul sector funding to win over investors. The MPs called on the government to produce a “10-year plan for scaling up this capacity and an estimate of the public money required to do so”.
The report also noted that taxpayer funding had spurred investment but was too slow and too “thinly spread”. It also called for special funding models for start-ups compared with established companies.
Jeremy Hunt, chancellor, last week announced £2bn of new funding for the automotive industry over five years from 2025.
Labour had promised £2bn in funding for up to eight new gigafactories but has since reduced this to £1.5bn after the Conservative government committed about £500mn to support the Tata plant.
The MPs cited areas where the UK could take a “competitive advantage”, including in “the refining of raw materials, and the manufacture of cathodes and anodes”.
“The UK has a lot of value to add in these parts of the supply chain, especially given the strength of the UK’s chemical industry and the UK’s research into new cathode technologies,” they said.
Batteries manufactured in Britain would have 12 per cent fewer emissions than those from the EU, and 24 per cent less than those made in Germany, due to the UK’s higher use of green power, it added, while its manufacturing could be “price competitive” with Germany.