Low battery: Brexit Britain faces acid test

LONDON, July 20 (Reuters) – Britain kicked off the electric vehicle race with its 2030 ban on the sale of new fossil-fueled cars and offered £ 1bn (£ 1.4bn dollars) to revive its battery industry and supply chain.

But the money and the headline-grabbing deadline – which is several years earlier than many other countries – still leaves it behind the European Union’s drive to create a supply chain and far behind the China, the leader in electric vehicle (EV) batteries.

The stakes are high for Brexit in Britain. To continue selling in the EU to 27 countries duty free, the UK car industry, which employs 170,000 people, must ensure that electric vehicles and the batteries that power them meet strict rules of origin – with up to 70% input in terms of value coming from Great Britain or within the EU.

With its 2030 deadline looming followed by its 2035 cutoff for hybrids, Britain needs more battery factories – and fast.

Yet even Nissan’s (7201.T) plans for a 9 gigawatt-hour (GWh) battery plant in Britain – hailed by the government when it was announced in July – are overshadowed by two factories under construction in just Germany, that of Tesla (TSLA.O) 50 GWh plant near Berlin and 40 GWh plant of Volkswagen (VOWG_p.DE) near Wolfsburg.

“We got to the party quite late,” said Douglas Johnson-Poensgen, managing director of UK-based Circulor, who has worked with Volvo Cars and others on building sustainable supply chains.

The Department for Business, Energy and Industrial Strategy (BEIS), at the heart of Britain’s electric vehicle investment campaign, says it is ensuring Britain remains a world leader in the ‘automobile industry.

“We remain committed to securing UK giga-factories and continue to work with investors to advance plans to mass-produce the batteries needed for the next generation of electric vehicles,” a spokesperson said in a statement sent by email.

EU BILLIONS

Meanwhile, the EU is moving ahead to catch up with China and transform its auto industry, a major employer across the bloc, including heavyweights in Germany and France.

The bloc, which has proposed an effective ban on sales of new gasoline and diesel cars from 2035, has allocated 2.9 billion euros ($ 3.4 billion) from 12 EU states to support de new battery factories. European climate group Transport & Environment says the EU has 38 factories planned or under construction, many of which benefit from other support measures from the EU or individual governments.

The block identified 42 companies, including the American company Tesla and the German BMW (BMWG.DE), for specific roles in the supply chain and battery life cycle, ranging from the supply of raw materials to cell production or recycling. Read more

Last year, the European Commission proposed laws to ensure sustainable battery production, while Germany passed a battery life cycle supply chain law, with factories to stay close to them. from each other, thus helping to comply with environmental rules and contain costs. Batteries are heavy objects to transport.

Britain has yet to meet this target, although BEIS has said it is working to implement green targets for the auto industry and will release an infrastructure strategy this year, including on recharging. vehicles and proposals on road transport emissions.

But manufacturers say Britain is not moving fast enough.

“The UK government needs to wake up and invest in the supply chain,” said Matt Windle, managing director of UK sports car maker Lotus. “We have the knowledge, we have the people, we just need the supply chain.”

Guy Winter, a Fasken partner who has advised the government in the past, said Britain needed a “battery czar” to make sure the industry came together – a role played in the EU by European Commission Vice-President Maros Sefcovic since 2017.

Winter said failing to provide enough support, whether in Britain or the EU, would leave the race to China, which makes about three-quarters of the world’s electric vehicle batteries.

QUICK TRANSITION

Benchmark Mineral Intelligence (BMI) predicts Britain will need at least 175 GWh of battery cell capacity by 2035 to power around 3 million fully electric vehicles. For now, he estimates Britain is far behind the pace, with just 56.9 GWh by 2030.

Among the plans, Britishvolt aims to build a 30 GWh plant by 2027. BMI has only included part of it in its target as it expects the British startup to ramp up more slowly.

Britishvolt said building a 30 GWh plant was a challenge, but a spokesperson said its 10 GWh three-phase construction strategy would help meet its target by 2027.

To avoid EU tariffs, UK-built cars must adhere to a series of rules of origin which from 2027 will include a stipulation that 70% of the battery comes from the EU or Great Britain. Brittany.

BEIS said the rules included a phase-in period.

Winter said this may not give Britain enough time. “We ended up with a period to make a transition that now seems too short,” he said.

Britain has so far managed to nurture small battery supply chain startups through projects like the Faraday Institution, which trains battery scientists and engineers, said Steven Meersman, founder of Zenobe. , itself a startup that manages the batteries on large electric vehicles and extends their life thanks to energy. storage.

But Meersman said Britain does not have a unified strategy to help startups grow and regulate the electric vehicle chain, saying a ministry manages incentives to buy electric vehicles, while that a separate regulator managed the vital deployment of charging points.

The Critical Minerals Association, an industry group, called for a “central coordinating body.”

The Advanced Propulsion Center, a government and automotive industry company, said it has received expressions of interest from more than 120 groups for projects across the battery supply chain.

But its managing director Ian Constance said the UK’s £ 1bn funding offer, about half of which has been allocated so far, “will run out pretty quickly if we complete a few of these projects.”

State subsidies average £ 750 million per battery plant, which can cost between £ 2 billion and £ 4 billion each, according to industry estimates. Read more

($ 1 = 0.7233 pounds)

($ 1 = 0.8472 euros)

Reporting by Nick Carey and Barbara Lewis; Additional reports from Costas Pitas; Editing by Edmund Blair

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