“Investment in UK’s electrified supply chain, including accelerated large-scale battery production, is now crucial for sector’s long-term competitiveness and success,” according to SMMT, the lobby group for auto manufacturers and traders. It warned that the UK must grow its battery manufacturing capability by 2027 if it wanst to maintain its position electric vehicle market.
The EU has maintained rules that require 55% local content in electric vehicles. Batteries imported from outside the EU represent a large proportion of the vehicle’s value (although that will fall slightly as battery costs fall). What is more, the EU’s wants to completely end the use of batteries made outside the UK and EU from 2027 if vehicles are to qualify for tariff-free trade between the UK and EU.
That is a big ask even in Europe, which currently manufactures little of its own batteries. But huge investments include so-called ‘gigafactories’ planned or under construction in Hungary, Poland, Sweden and France, with others planned in Germany. The Faraday Institution estimates that, based on current plans, battery manufacturing capacity in the major centres in continental Europe will reach 130GWh per year by 2027.
SMMT said the UK automotive industry needs to see urgent measures to ensure the continued competitiveness of the sector. It said: “Implementing the TCA and its Rules of Origin provisions for automotive, and ensuring its smooth functionality, is essential from day one. However, this is only one part of a complex equation to deliver future success for UK Automotive and the achievement of Net Zero ambitions.
“The TCA must be complemented by coherent industrial and climate change policy with significant support to accelerate investment in battery manufacturing and supply chain adaptation to meet Rules of Origin requirements.
“In addition, consumer incentives for EV uptake and major infrastructure rollout (such as charging networks and electricity grid upgrades), workforce upskilling and a strategy that positions the UK as a leading competitive environment for investment in advanced manufacturing will be essential for future growth.”