The story of UK gigafactory investment reads like a modern-day thriller. At first, we have hopes raised then dashed, rumours of poor management and lavish spending, warnings of an existential crisis to the industry, and then the arrival of a hero at a critical moment in the shape of Tata’s £4 billion announcement this week.
This latest announcement not only breathes new life into the UK’s battery capacity but can also stimulate investment across the UK supply chain. Based on our experience in other countries, we have a few suggestions for agencies looking to attract battery investment into the UK.
Investing in capacity
In terms of production, the UK automotive sector has been hugely successful in transitioning to electric vehicles. This has been helped by a combination of government targets to end the sale of petrol and diesel cars and vans by 2030, and industry investment of more than £10 billion. As a result, the UK has secured a position as the second largest major EV market in Europe.
But one area of concern for the future has always been battery capacity, with research from the Society of Motor Manufacturers and Traders (SMMT) estimating that the UK would require 60 gigawatt hours (GWh) of batteries per year by 2030. There are also ongoing concerns that a lack of domestic battery capacity could lead to tariffs on exports to the EU from 2024 due to Rules of Origin negotiated in the UK trade deal with the EU.
Hopes were raised by the potential 30 GWh promised by startup BritishVolt but quickly dashed by 2022 when the company ran out of money. However, the latest announcement from Tata has placed the country back on the right track to meet demand.
Tata aims to eventually produce 40GWh at its new plant, which when added to the 12Gwh from the Envision AESC factory in Sunderland, would mean the UK is only 8Gwh shy of the 60GWh required.
But 60GWh is only the minimum and there is plenty of room for more investment in UK gigafactories. This is especially true when you consider how global supply chains are forecast to change by the end of the decade.
At present around 80% of global battery cell and component production is based in China while Europe, which accounts for 25% of EV production, is only responsible for 7% of battery cell production and less than 1% of material production and processing. As European governments seek to redress the imbalance, it is forecast that battery cell production in Europe could increase from 7% to 26%.
How to attract gigafactory investment
With more investment out there to be won, how can locations get an edge on the competition? OCO Global has been active in the German gigafactory market for several years, and as our German Director Jens Manke reflected last year that there are several lessons that policy makers and investment promotion professionals can take from this experience. These include:
- Real estate for gigafactory projects needs to be “future proofed” regarding energy and water supply, with companies often making decisions based on the availability of renewable energy.
- Ensure that the correct skill sets are available in the area or can be attracted if needed.
- Planning processes need to move at the same speed as this fast moving industry. Without it, companies have moved to locations with more business-friendly planning authorities
- Take advantage of the increasing trend towards more local industry hubs that localise battery manufacturing near EV manufacturing facilities or R&D facilities.
This last point is a strength that development agencies in the UK should emphasise. The country has manufacturing strengths across the automotive supply chain and R&D expertise in next generation batteries is progressing quickly towards commercialisation.
The UK’s next generation opportunity
The UK has the potential to take a leading role and become a global hub in the manufacture of new solid-state, lithium-sulfur, and sodium-ion technologies for markets in the 2030s and beyond. Prominent manufacturers and material development companies such as Faradion, AMTE Power and Deregallera provide a competitive advantage for the UK in sodium-ion, while the country is also amongst the leaders in developing high energy lithium sulfur battery packs.
On the R&D side, one example is the UK consortium of the Faraday Institution, the University of Oxford Johnson Matthey, Emerson & Renwick, and the WMG, University of Warwick who are working to commercialise a world-leading prototype solid-state battery.
Seizing the opportunity
The opportunity exists for the UK to build on the momentum of this latest announcement. Gigafactories are attracted to strong automotive supply chains, but they also stimulate further growth around them. So, there is also the potential to attract investors across complete future mobility supply chain.
For economic development organisations success comes from developing your offer and your message to meet the needs of this fast moving industry.
OCO has experience in future mobility projects in the UK, Austria, Germany, Canada and Latin America. If you are interested in learning more about how we can share this experience with you, please get in touch by clicking HERE.