UK warned against being ‘overly reliant’ on Chinese EV batteries

Britain must avoid becoming “overly reliant” on Chinese battery technology for electric vehicles, the business secretary Kemi Badenoch said on Monday.

The warning came as the government is involved in finalising an expected deal between China’s Envision and Jaguar Land Rover owner Tata Motors to build what be only the UK’s second significant factory for electric car batteries in Somerset.

The deal with India’s Tata, which is expected within weeks, would provide a big boost to the UK’s car industry, which is struggling to attract investments from battery manufacturers, but would also leave the sector heavily reliant on Envision.

The Chinese company also built the UK’s first battery plant in Sunderland, which supplies Nissan’s car factory and is expanding it as part of a £1bn investment. 

Badenoch said Envision was welcome to invest in the UK. “We have encouraged them to come here,” she said. But she conceded the UK had to “make sure that we’re not overly reliant on one country” for battery technology.

“What the pandemic showed us was that being overly reliant on any specific country, whether it’s China or somewhere else, is terrible for having strengthened supply chains,” she added. 

Chinese battery makers dominate the European motor industry, with more factories than from any other nation, including South Korea and Japan. 

Badenoch acknowledged that China’s homegrown companies had developed world-leading battery technology for electric cars, making it harder for the UK and other countries to compete.

“We need to recognise just the strength that China has in this area and we need to think more broadly about where we have a comparative advantage,” she said.

She added that China’s economic rise posed a “strategic challenge” to the UK but stressed the government wanted to have “a good relationship with the country that helps us to influence where we can”.

She added: “We cannot cut off our fourth largest trading partner, we rely on it for so much, but we recognise there are a lot of difficulties . . . whether it’s on human rights, economic coercion and so on.”

Prime minister Rishi Sunak is seeking to limit any security risk posed by China in Britain’s industrial supply chains, but at the same time is seeking to bolster economic ties in other areas. Earlier this year, in an update to the UK’s foreign and defence policy, the government identified China as an “epoch-defining challenge.”

Badenoch was speaking at WAE in Oxfordshire, formerly Williams Advanced Engineering, an offshoot of the Formula One team now owned by Fortescue, after the announcement that the Australian iron ore group would build a small-scale battery assembly factory in Banbury.

The new factory will employ around 120 people and supply batteries for heavy duty vehicles, such as mining trucks. The business is in talks with around 20 potential suppliers of battery cells, none of which are in the UK.