The Britishvolt saga emphasises the need for a robust UK industrial strategy

This post is by Ralph Palmer, UK electric vehicles & fleets lead at Transport & Environment.

The news of Britishvolt collapsing into administration is incredibly sad news for those involved and creates a massive headache for the UK automotive industry. But it signals a wider problem: the lack of a robust industrial strategy for electric vehicles (EVs) in the UK. There are crucial lessons that need to be learned fast. The UK will not be at the cutting edge of automotive manufacturing with a half baked industrial strategy and dithering on important pieces of regulation.

From banning new internal combustion engine cars and vans from 2030 and the commitment to introduce a zero emissions vehicle (ZEV) mandate from 2024, to EVs being one of the four main pillars of the UK’s COP26 presidency, EVs have been central to the UK’s climate leadership at home and on the global stage.

In some ways this is coming to fruition. Just last month, a third of new car registrations were battery electric, putting them at over 16 per cent of UK car sales in 2022 and the fastest growing vehicle segment overall.

Britishvolt was the crown jewel of the new UK industry
But, for all the ambition and positive signs in the market, delivery on important policies and funding is lagging behind. The government is yet to publish its long awaited proposals and final consultation on the ZEV mandate, for example, which risks pushing the start of the regulation back to 2025. Meanwhile, the crown jewel of the UK’s homegrown battery industry, Britishvolt, has collapsed into administration, despite commitments of government support, which is a worrying sign.

This is a crucial moment for the UK. The US has set out its stall with significant incentives for clean industry in its Inflation Reduction Act, and the EU will press ahead with measures of its own. The UK needs, now more than ever, to have a clear strategy for public investment and attracting private investment in the industries of the future. This doesn’t, however, mean the UK should take a protectionist approach which could make things worse by raising costs and putting incumbents first, rather than encouraging innovation and change. It does mean removing barriers to investment and ensuring government incentives are forthcoming and accessible for prospective gigafactory investments.

Europe is developing gigafactories fast
The UK will need up to 100GWh per year of battery manufacturing capacity by 2030 to meet demand, equivalent to five large gigafactories running at full capacity. Currently, we have one small site open in Sunderland. With gigafactories taking at least five years to reach operational capacity, decisions on locations of sites and attracting investment need to happen now. Gigafactories are the key to a thriving future automotive industry in the UK with the transition to EVs well underway. Meanwhile, gigafactory developments in Europe are advancing at speed, with around 50 sites either built or in the pipeline over the next decade.

The Britishvolt site at Blyth is still a prime spot for battery manufacturing and the priority should be to find new investment and partners so the opportunity for thousands of high quality jobs and economic growth in Northumberland is not lost. So far, demand and investment from the UK automotive industry hasn’t been forthcoming. Iconic British brand and manufacturer Jaguar Land Rover, for example, has committed to scaling up its production of EVs over the next decade but has yet to commit to making them in the UK, despite being a major West Midlands employer.

Industry will go where the batteries are
There is no reason why the EV transition should be at the expense of jobs. But it does need government action to work with industry to take advantage of the new opportunities that arise. Auto-manufacturers will simply migrate to where battery manufacturing capacity is, which includes Europe, the US and Asia where there is no shortage of investment.

Uncertainties around the ZEV mandate aren’t helping. To grow a thriving UK EV market, ambitious targets in the early years of the mandate and starting it in 2024 will provide the incentive and certainty needed by the industry. While attracting additional car manufacturing is unlikely, the UK could still attract electric van manufacturing with regulation and battery manufacturing capacity, as well as maintain existing car manufacturing. Policy certainty was overwhelmingly highlighted in Chris Skidmore’s recent Net zero review as a priority. Without it, more investment in UK EV production is increasingly unlikely.

The UK urgently needs a strategy if it wants to be a world leader on EVs as it promised at the COP26 climate conference. Ambitious policies must be backed by industrial muscle. This means ensuring prospective gigafactories have access to government incentives, and future sites and investors are identified. Desire from the government is not missing, but delivery and follow through on what works for industrial strategy is. And that will be catastrophic for the UK’s automotive industry.