Clock is ticking for UK car making unless battery supply chain is urgently established, say experts

Time is running out for the future of UK car manufacturing unless urgent action is taken, a senior automotive industry figure with links to North East manufacturing has said.

Dr Andy Palmer, who helped launch the Leaf while chief operating officer at Nissan, told MPs the UK risks dropping out of the top 20 car producing countries in the world unless the electric vehicle supply chain is swiftly grown. Speaking at an inquiry held by the cross-party Business and Trade Committee, the former Aston Martin chief executive and now chairman of Slovakian batteries firm Inobat, suggested the government may need to look at “carrot and stick” incentives to get car makers to use UK-made batteries if the industry is to get off the ground.

His thoughts were echoed by Jeff Pratt, who leads the UK Battery Industrialisation Centre (UKBIC) and is a former general manager at Nissan’s Sunderland battery plant. Mr Pratt said: “We need to do something to turn investors heads to the UK, because, frankly speaking, they’re not looking at the UK at the moment.”

Read more: Mixed North East jobs picture revealed in latest LEP review

Mr Pratt added: “It’s essential for the supply chain in the UK that we create the draw – which means gigafactories in the UK. One gigafactory isn’t really enough, we need at least another one. That would be enough to incentivise them, negotiate with them and get them into the UK.”

The parliamentary inquiry, which has already received written evidence from North East automotive leaders, is looking at whether the UK has missed the opportunity to develop ‘home-grown’ electric vehicle batteries. Without UK plants, people such as Dr Palmer have said there is likely to be a migration of car manufacturers to elsewhere in Europe where there are more than 30 gigafactories in planning or under construction.

A session this week also heard from representatives of the Society of Motor Manufacturers and Traders, who called for adjustments to the EU-UK Trade and Cooperation Agreement which requires manufacturers to derive at least 60% of vehicle batteries from local producers by 2024. Industry has called for that deadline to be extended until 2027 to allow more breathing space for a UK supply chain to establish itself.

Among the Committee’s MPs is Labour’s Ian Lavery, whose Wansbeck constituency includes the much feted Britishvolt site. In light of a recent interview in which Britishvolt founder Orral Nadjari blamed the Government for the project’s collapse, Mr Lavery asked witnesses for their thoughts.

Dr Palmer, who led Aston Martin prior to its signing of an initial agreement with Britishvolt, said: “Financing a multibillion-dollar investment is impossible unless you’ve got hard orders. That’s the fundamentals. The interesting part is that all of the European start-ups have a similar issue – they’re competing for business versus the Koreans, the Chinese and the Japanese. And, from an OEM point of view, it’s much less risky to take a cell that’s been developed in the Far East and has been localised than it is to take a cell from, say Northvolt as an example, where basically you’re developing a new cell and a manufacturing facility.

“You’ve got to get a certain way down the investment cycle to prove that you’ve got a product that’s good enough, and that’s exactly what Britishvolt was doing and what Inobat is doing. But you’ve got to get passed the OEMs that they’re prepared to take a risk in sourcing locally as opposed to with an Asian manufacturer coming in to Europe.

“Why you should do that as an industry is that you’re locally grown battery manufacturers have the intellectual property and what we so often forget is the importance of intellectual property – that’s what makes manufacturing ‘sticky’ to the UK. So, I think it’s very unfortunate that Britishvolt went because they were creating that intellectual property, but I suspect we’ll see others go as well for exactly the same reason.”

Mr Pratt said Britishvolt had worked with the UKBIC to validate its technology, which he said was in the top tier of battery cells according to his organisation’s analysis but that a “perfect storm” of tumultuous UK investment markets and a lack of customers caused the start-up’s demise.

READ NEXT: