Warning that ‘gigafactory gap’ could hobble UK’s car industry

The UK faces a “gigafactory gap” that could undermine the electric car industry unless the government offers the sector more help, MPs on the business committee have warned. They said the UK has a “limited window in the next three years to attract further investment” into the battery sector, or else face the prospect of a gradual decline in the car industry and the eventual loss of hundreds of thousands of jobs. The global car industry is gradually increasing sales of electric vehicles, and winding down production of petrol and diesel models to reduce climate-heating carbon emissions. The transition has prompted concern across countries with large car industries that they could be left behind, while China’s government in particular has heavily supported its own battery sector as it seeks to win global market share. The UK only has one factory producing batteries at “giga” scale: a plant run by Chinese-owned AESC in Sunderland which supplies Nissan. It is capable of producing batteries with 2 gigawatt hours (GWh) of capacity each year. Two more gigafactories are due to be built. The first is a much larger AESC factory in Sunderland of up to 38GWh – enough to make about 600,000 car batteries. The second is the Indian conglomerate Tata’s plan to build a 40GWh factory in Somerset to supply batteries for Jaguar and Land Rover cars. However, those plans would still leave the UK short of the 100GWh mark by 2030 and 200GWh by 2040, which the government-backed Faraday Institution says is required to prevent the automotive industry shrinking. The MPs’ report, published today, calls for a focus on government investment to support the producers of crucial parts and materials needed for batteries to keep car production in the UK and prevent reliance on imports from China, which dominates the global battery supply chain. Liam Byrne, the Labour MP who chairs the business committee, said: “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.” In tomorrow’s autumn statement, the chancellor will set out £2bn of investment in the automotive industry over the next five years. The government is also due to publish an advanced manufacturing plan and a battery strategy this week. Byrne said the UK has been left in the wake of rivals that have offered direct subsidies, lower energy costs, trained workers and critical minerals. The UK is likely to be dependent on imports of raw materials, but the MPs argued that there were “strategic benefits” to be gained from supporting a “midstream” industry able to refine lithium, a key substance used in electric vehicle batteries, and able to produce the anodes and cathodes within battery cells. David Bailey, a professor of business economics at the University of Birmingham, said the UK needed to do much more to support the automotive industry transition. Building a UK battery supply chain would make it easier for British cars to avoid tariffs when exported to the EU, and would “help anchor battery production in the UK”, Bailey said. Jonathan Reynolds, the shadow business secretary, yesterday told a conference that the government needed to help the automotive industry by simultaneously addressing “battery capacity, energy costs, charging infrastructure, the rules of origin and consumer confidence”. The Department for Business and Trade said: “In the past few months the government has secured a £4bn investment from Tata in a new gigafactory, and £600m to build the next generation of electric Minis. This comes on top of a £1bn investment in an electric vehicle hub in Sunderland by Nissan and their battery supplier AESC.”