Business leaders have implored the UK government to urgently support investment across the electric vehicle (EV), battery and critical mineral supply chains, warning that the country’s international competitiveness is being undermined by higher energy costs, regulations and incentives on offer elsewhere.

On May 9 a panel of experts told MPs on the Business and Trade Committee that a lack of coordinated industrial policy and subsidies creates the risk that the UK fails to attract battery gigafactories and causes a “gradual decline” of the automotive industry. 

“The UK does not have a strategy,” said Simon Moores, the CEO of Benchmark Mineral Intelligence. He called for “joined-up thinking” to protect automotive jobs and support the whole supply chain from mining to chemical refining of critical minerals to production of battery cells. The UK automotive industry currently employs 780,000 people, with more than 182,000 working in manufacturing, according to the Society of Motor Manufacturers and Traders.

The panel’s comments come amid intense global competition for EV-related investment. The US, Canada and EU countries including Germany and Hungary have already attracted billions of dollars’ worth of large-scale manufacturing announcements from automakers, battery manufacturers and their suppliers. 

“It is all riven with chicken and eggs in this story. If you can’t attract these big gigafactories then you can’t have those conversations with other companies,” said Ian Constance, CEO of the Advanced Propulsion Centre, a non-profit organisation focused on mobility. 

Despite being the first European country with a fully integrated battery gigafactory — Envision AESC’s plant which started supplying Nissan Leaf production in Sunderland in 2013 — the UK government has been slower than its peers to make developments in the industry. To be a “serious industrial player” in the EV and lithium-ion economy, the UK will need 175 gigawatt-hours (GWh) of battery cell capacity by 2030, according to Benchmark Mineral Intelligence.

“It will be vital to be manufacturing cells and cathode active material in the UK” to ensure compliance with rules of origin and be able to export cars to the EU with zero tariffs, said Paul Lusty, the director of the UK Critical Minerals Intelligence Centre. 

Further reading on EVs: 

Advertisement

• Canada's bet on the biggest incentive recorded
• The world's top EV investors
• Bosch pours $1bn into automotive R&D in China

Beyond incentives, another key hurdle for the UK is energy prices, which are a major cost for gigafactories and need to be made more internationally competitive. “If energy prices are double what our European counterparts are paying, that is a major challenge. We can never recoup that,” said Alan Hollis, the CEO of AMTE Power, a UK battery cell manufacturer.

Given the monopoly that China holds over supply chains for critical minerals — including rare earths, lithium and cobalt — the panel of experts also underlined the importance of building out the UK’s domestic mining and refining capacity. Despite the UK publishing its first critical mineral strategy in August 2022, they stressed there needs to be financial support for mining operations and midstream chemical refineries.

“Without the money to back it up, it is just words,” said Jeff Townsend, founder of the Critical Minerals Association. He noted that there are relatively cheap ways for the UK government to support the mining industry such as underwriting off-take agreements and introducing tax deductible flow-through shares for smaller exploration projects.

The British Geological Survey has identified eight areas of mineral potential in the UK, including nickel in Scotland and Europe’s largest deposit of lithium in southwest England. Providing finance for these projects is essential for the UK to be “seen to be serious”, said Jeremy Wrathall, the CEO of Cornish Lithium, which plans to extract lithium from hard rock and brine in Cornwall.