The UK’s current trajectory of battery manufacture is insufficient to support the automotive industry’s transition to electric vehicles or to meet our net-zero commitment. Despite recent announcements of UK gigafactories, the pace and scale of building these facilities will not meet demand for batteries, and automotive manufacturing will most likely move overseas.
In the face of this risk, we were astonished by the stark disconnect between the optimism of Ministers and officials that the UK could retain its position in the automotive sector, and the concerns of our other witnesses that the UK is far behind its competitors and faces significant challenges with innovation, supply chains and skills.
The most immediate deadline facing the automotive sector is 2027, when the Rules of Origin agreement with the EU will require that the battery and 55% of a vehicle’s components be manufactured in the EU or the UK. Without the necessary UK supply chains, manufacture will move to the EU. The next pressing deadline is 2030, when the sale of new petrol and diesel cars and vans in the UK will come to an end. Without major expansion in production capacity, the 2030 target will be undeliverable or will have to be achieved using imported batteries and vehicles.
To support the automotive sector’s transition from mechanical to electrical technology, the Government must support training and upskilling, and must ease the limits on recruiting overseas staff for manufacturing and research.
To support the growth in UK supply chains, the Government must urgently develop a strategy for critical raw materials. The UK should utilise its natural resources, develop industrial-scale recycling, and use its expertise in mineral processing to leverage collaboration with countries with larger natural resources. This strategy must address ethical and environmental issues associated with resource extraction, processing and recycling.
In the current international race to manufacture lithium-ion batteries, competitor nations have already invested more heavily than the UK. The UK cannot catch up with the leading manufacturers; it can only try to attract enough investment to supply its automotive industry. However, the UK has a real opportunity to leapfrog to next-generation batteries, and achieve a competitive advantage in future. This would be dependent on the UK retaining its manufacturing capacity and automotive industry, and providing substantial long-term support for research and scale-up.
Heavy transport has received insufficient Government focus, such that a lack of regulations and incentives has severely hindered the use of batteries and fuel cells. The heavy road freight sector needs urgent clarity about which technological options are best suited to its needs, and firm commitments that infrastructure will be deployed at scale. The recent consultation on a ban on the sale of new diesel HGVs by 2040 is welcome, and needs to be supported by concerted research and deployment of alternative technologies. Decarbonisation of the railways is being held back by major delays in the electrification programme. Shipping and aviation will be included in the UK’s carbon budgets from 2033, but technological solutions for these sectors are far from readiness.
The Government must publish its hydrogen strategy as soon as possible, coordinated with strategies for transport and buildings. It should provide support for innovation and scale-up for hydrogen technologies, similar to that afforded to batteries, and should promote the UK’s expertise to achieve a leading global role. Fuel cells would play an integral part in the proposed hydrogen economy, and yet are a ‘Cinderella’ in UK energy policy; that is, they receive less attention than they deserve. Fuel cells offer solutions for heavy transport, heating and power generation, but they receive comparatively little public funding for research, innovation and deployment. The UK has several world-class companies in this sector, and yet the Government is not helping adequately to realise their full potential.
Facilitating these applications of batteries and fuel cells requires significant deployment of new infrastructure. The electricity system will experience at least a doubling of demand by 2050 due to electric transport and heating, requiring increased capacity of generation and networks. These costs can be minimised by the use of smart controls and battery storage, but this will require alignment of regulations and incentives to bring about the necessary investment.
To support battery electric vehicles, there must be ‘charging for all’, at homes, workplaces and public locations. Work on the public charging network is progressing too slowly: the network has to be expanded greatly, with Government providing support for local authorities to deploy and maintain charging points, and ensuring standardisation of technologies and payments methods.
To support the deployment of fuel cell road vehicles, there must be hydrogen fuelling infrastructure at depots and on the strategic road network. Operators of heavy goods vehicles in particular need to be given greater confidence that the facilities will be in place to support their investments in new fleets.
Public confidence in performance and safety underpins the deployment of batteries and hydrogen technologies. The concerns of drivers, local residents and the emergency services must be taken seriously. Action must be taken to mitigate risks, develop effective emergency protocols and provide training to first responders. Regulations and incentives should be used to drive development of safer battery technologies.
The Government needs to align its actions with its rhetoric in order to achieve net zero emissions and to take advantage of the great opportunity presented by batteries and fuel cells for UK research and manufacturing. The UK risks losing not only its existing automotive industry, but also potential global leadership in fuel cells and next-generation batteries. The Government’s ambition is not matched by its actions. It must develop a coherent successor to the industrial strategy and promote its objectives clearly, both domestically and internationally, supported by investments commensurate with those of the UK’s international competitors.