英国动力电池制造业-英

HouseofCommons

BusinessandTradeCommittee

Batteriesforelectricvehiclemanufacturing

FirstReportofSession2023–24

HC196

HouseofCommons

BusinessandTradeCommittee

Batteriesforelectricvehiclemanufacturing

FirstReportofSession2023–24

Report,togetherwithformalminutesrelatingtothereport

OrderedbytheHouseofCommons

tobeprinted14November2023

HC196

Publishedon21November2023byauthorityoftheHouseofCommons

BusinessandTradeCommittee

TheBusinessandTradeCommitteeisappointedbytheHouseofCommonstoexaminetheexpenditure,administrationandpolicyoftheDepartmentfor

BusinessandTrade.

Currentmembership

LiamByrneMP

(Labour,Birmingham,HodgeHill)(Chair)

BimAfolamiMP

(Conservative,HitchinandHarpenden)

DouglasChapmanMP

(ScottishNationalParty,DunfermlineandWestFife)

JonathanGullisMP

(Conservative,Stoke-on-TrentNorth)

AntonyHigginbothamMP

(Conservative,Burnley)

JaneHuntMP

(Conservative,Loughborough)

IanLaveryMP

(Labour,Wansbeck)

AnthonyMangnallMP

(Conservative,Totnes)

AndyMcDonaldMP

(Labour,Middlesbrough)

CharlotteNicholsMP

(Labour,WarringtonNorth)

MarkPawseyMP

(Conservative,Rugby)

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Committeestaff

ThecurrentstaffoftheCommitteeareNickBeech(Clerk),MatthewChappell

(CommitteeOperationsManager),CatherineMeredith(SecondClerk),Abigail

Mills(SeniorEconomist),JacobMoreton(MediaOfficer),LewisPickett(CommitteeSpecialist),DelfinaRaka(CommitteeSupportApprentice),AdamTaylor(CommitteeSpecialist),DavidTurner(CommitteeSpecialist),TimWest(SeniorMediaOfficer),

andSueWrightman(CommitteeOperationsOfficer).

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AllcorrespondenceshouldbeaddressedtotheClerkoftheBusinessandTradeCommittee,HouseofCommons,LondonSW1A0AA.Thetelephonenumber

forgeneralenquiriesis02072198586;theCommittee’semailaddressis

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Batteriesforelectricvehiclemanufacturing1

Contents

Summary3

Introduction:Theroleofbatteriesinthegreentransition7

Ourinquiry7

1GigafactoriesintheUK9

DemandforbatteriesintheUK10

Automotivesector10

Non-automotivesectors13

PipelineofgigafactoriesintheUK15

DevelopingbatterymanufacturingcapacityintheUK17

Batterymanufacturers17

Businessmodels18

Potentialgigafactorysites20

RisksandopportunitiesfortheUK21

2Batterysupplychain24

Rawminerals24

Midstreamprocesses:refiningofrawmineralsandthemanufactureofbattery

components26

Buildinganintegratedbatterysupplychain27

3EncouraginginvestmentintothebatterysupplychainintheUK30

Globalcompetitionforinvestmentinthebatterysupplychain30

Barrierstoinvestmentinthebatterysupplychain33

Industrialstrategy33

Financialsupport34

Energycosts36

Skillsshortages36

Exportopportunities37

4Commercialisingthenextgenerationofbatterytechnologies39

Nextgenerationofbatterytechnologies39

Commercialisingthenextgenerationofbatterytechnologies40

Annex1:EU-UKRulesofOriginrequirements43

Annex2:Britishvolt46

Britishvolt’sstrategyandmanagement46

Batteriesforelectricvehiclemanufacturing3

Summary

HarnessingpowerhasbeenatthecoreoftheUK’sindustrialsuccesssincetheIndustrialRevolution.Today,theUKisinaglobalbatteryracewithcompetitorcountriesthatwanttodeveloptheirindustrialcapabilitiesinthebatterysector.Chinaisdominatingtherace,whiletheUKlagsfarbehindmanyofitscompetitors.Othercountries,especiallyinEuropeandNorthAmerica,arerapidlyexpandingcapacityandareexpectedtogainalargershareoftheglobalbatterymarketby2030.

GigafactoriesintheUK

Largescaleproductionofbatteriestakesplaceingigafactories.TheUKfacesagigafactorygap,becauseofinsufficientdomesticmanufacturingcapacitytosatisfyUKindustry’sdemandforbatteries.SatisfyingdemandfromtheUK’sautomotiveindustryandothersectorswillrequire100GWhofbatterymanufacturingcapacityby2030.Thatrequirementwillincreaseto200GWhby2040.TheUK,however,currentlyhasonlyonegigafactory,whichhaslessthan2GWhofcapacity.ItisrunbyEnvisionAESCnearNissan’splantinSunderland.Moregigafactoriesareunderdevelopment,albeitatdifferentstagesofplanningandconstruction.Atbest,announcedplanssatisfyalittleoverhalfthecapacitythenationneedsby2030.Timeisnowrunningshort.TheUKhasalimitedwindowinthenextthreeyearstoattractfurtherinvestmentintothissector.

AfailuretoinvestinbatterymanufacturingcouldcauseagradualdeclineinautomotiveproductionintheUKbecauseglobaloriginalequipmentmanufacturers(OEMs)mightprefertolocateelectricvehicleproductionoverseasincountrieshostingclustersofgigafactories.Thereare160,000peopledirectlyemployedintheautomotiveindustry,butthesectorsupportsmanymorejobsinthewidereconomy.EmploymentinthisindustryisconcentratedoutsideofLondonandtheSouthEast,especiallyintheWestMidlands,NorthEastandNorthWestofEngland.ManyofthesejobscouldbeatriskifOEMsdecidetolocateelectricvehiclemanufacturingelsewherebecauseofalackofdomesticbatterymanufacturingcapacity.BuildinganindustrialbaseofgigafactoriesintheUKisstrategicallyimportantfortheUK’senergysecurity,fornationalsecurityandfortheUK’sabilitytoreachNetZeroandtounlockthebenefitofeconomicgrowth,newjobsandnewtaxcontributionsfromgreenindustries.

Automotivemanufacturerscomprisemostofthedemandforbatteries.LargeglobalOEMswithvehicleassemblyplantsintheUKareexpectedtohaveenoughdemandforbatteriestojustifybuildinggigafactories.However,theUKneedsgigafactoriesthatcancaterforthediversearrayofvehiclesbuiltintheUK,andothersectorsoutsidetheautomotiveindustrythatarelikelytoneedbatteriesfrom2030onwards.Servingthosemarketswilldeliverstrategicbenefits.

Thebatterysupplychain

Globalbatterysupplychains,andespeciallytheupstreamsupplyofcriticalminerals,haveenvironmental,socialandgovernancechallenges.BatterysupplychainsareheavilyconcentratedinChina.TheUK’sdependenceonsuchsupplychainscreatesastrategicvulnerabilityforthecountry,especiallyifChinarestrictsexportsofmaterialsandcomponentsthattheUKneeds.TheUKGovernmentmustcontinuetocollaborate

4Batteriesforelectricvehiclemanufacturing

internationally,especiallywithourallies,todiversifythebatterysupplychain,safeguardthethousandsoftonnesofcriticalmineralsrequiredforfuturebatteryproduction,ensurethatbatteriesareproducedtohighenvironmentalandsocialstandardsandtosafeguardUKconsumersfromtherisksofconsumingproductsmadeinunethicalways.

TheUKcannothaveaself-sufficientsupplyoflithium-ionbatteriesandwillcontinuetorelyonimportsofrawminerals,materialsandcomponents.TherearestrategicbenefitstobuildingtheUK’sindustrialcapabilitiesacrossthebatterysupplychain,butespeciallyinmidstreamprocessessuchastherefiningofrawmineralsandthemanufactureofcathodesandanodes.

AbatterysupplychainintheUKwouldenablebusinessesbasedinthiscountrytomanufacturebatteriessustainablyandethically.SuchasupplychainwouldoffertheUKacompetitiveadvantageoverothermarkets,especiallyamongthemanyconsumerswhodemandhigherenvironmental,socialandgovernancestandards.TheUK’saccesstolow-carbonsourcesofelectricitymeansthatbatteriesproducedintheUKwillbeproducedmoresustainablythanthoseinChinaandmanyEuropeancountries.

TheGovernmentmust:

•explainhowitwillensuretheUKdevelopsthecapacitytobuildthebatterysupplyneededbythenationtoachieveourtargetsforNetZero.

•specifystrategicallycriticalindustrialcapabilitieswithinthebatterysupplychainandsetoutthekeyinterventionstoincentivisebusinessesthatcandeliverthosecapabilitiestolocateintheUK.ThosespecificationsandinterventionscouldbeexplainedeitherintheforthcomingUKBatteryStrategyorintheGovernment’sresponsetothisReport.

•explainhowtheGovernmentplanstopromoterobustenvironmental,socialandgovernancestructuresacrossthebatteryindustrydomesticallyandgloballytopromotetransparencyandagreenandcleanbatterysupply.

•introduceregulationsrequiringbatteriesavailableontheUKmarkettocomewithabatterypassportexplainingforconsumershowsustainablyandethicallysuchbatterieswereconstructed.

EncouraginginvestmentintothebatterysupplychainintheUK

Globalcompetitioninrelationtotheelectricvehiclesupplychainhasintensifiedfollowingthepassingin2022oftheInflationReductionActintheUnitedStates.TheInflationReductionActhascausedinvestmenttoflowintotheelectricvehiclesupplychain,especiallygigafactories,intheUnitedStatesattheexpenseofEurope.TheUKGovernmentmusturgentlyrespondtointensifiedglobalcompetitionwithaninternationallycompetitivepackageoflong-termsupporttoattractprivateinvestmentintogigafactoriesandthewiderbatterysupplychainwithintheUK.

TheUKisinaracewithotherlargemarketsthatareofferingsignificantsubsidiestoboostdomesticproductionofelectricvehiclesandbatteriesandonshorebusinessesinthesupplychain.TheUKGovernmentdoesnotnecessarilyneedtomatchthescale

Batteriesforelectricvehiclemanufacturing5

ofsubsidiesonofferinthesemarkets,iftheUK’soverallpackageisinternationallycompetitive.However,theUKGovernmentmustprovidealong-termstablebusinessenvironment,withconditionsthatde-riskinvestmentsintheUK’sbatterysupplychain.TheGovernmentneedstosetoutapackageofmeasuresonsubsidies,landaccess,lowcostpower,skills,de-riskedsupplychains,tariff-tradeandresearchanddevelopmentsupport.Specifically,theGovernmentmust:

•improvetheUK’sofferoffinancialsupporttoensurethatitisgloballycompetitive.TheGovernmentneedstosubstantiallyincreasetheamountandvarietyoffinancialsupportavailable.Itshouldconductabenchmarkingreviewtodeterminethescale,scopeanddiversityoffinancialsupportrequired.

•providelonger-termcertaintythatUKbusinessesinthebatterysupplychaincanaccesselectricityatacomparablecosttocompetitorsinotherinternationalmarkets.Forexample,theGovernmentcouldunderwritelong-termcontractsbetweenenergysuppliersandbusinessesinthebatterysupplychain.

•designatestrategicallyimportantgigafactorysitesandworkwithlocalpartnerstoputtogetheratargetedpackageofsupporttoattractinvestorsandensuregigafactoriesarebuiltfaster.Thesesitesshouldbegivenpriorityforimprovementstoenergyandtransportinfrastructure.TheGovernmentshouldworkwithlocalpartnerstograntthoseareasspecialeconomicstatus.

•addressgapsintheskillsneededtosupportgigafactoriesandotherbusinessesinthebatterysupplychain.TheGovernmentshouldensurethatmayoralcombinedauthoritiesorlocalcouncils—especiallythosethatgovernstrategicallyimportantsiteswheregigafactoriescouldbebuilt—haveadequateandflexiblefundingtotailorsupportforlocaltrainingprogrammes.Offersoffinancialsupporttobusinessesinthebatterysupplychainshouldbeconditionalonthesecompaniesinvestinginupskillingandreskillingemployeesfromtheautomotiveindustryandothersectors.

•securetariff-freeaccesstoglobalmarketsforelectricvehicleandbatteriesmanufacturedintheUKandde-riskaccesstotherequisitecriticalmineralsandsupplychainsthroughagreementswithourallies.

•putresearchanddevelopmentintobatterytechnologyonalong-termfootingtoensurethattheUKremainsatthecutting-edgeofbatterytechnology.

ItisvitalthattheUKgovernmentsimplifiesandacceleratesthespeedwithwhichcomplexpackagesofsupportcanbedevelopedforpotentialinvestors.

EU-UKrulesoforigin

WesupportthelocalisationofmoreoftheelectricvehiclesupplychaininEurope.However,theUKGovernmentandtheEuropeanCommissionhaveunderestimatedthetimeframerequiredforthesesupplychainstodevelop.Introducingstricterrulesof

6Batteriesforelectricvehiclemanufacturing

originrequirementsfrom1January2024,asthey1currentlyplantodo,couldleadtoseriousunintendedconsequencesfortheUKandtheEU.Forinstance,placinga10%tariffonelectriccars,butnotonpetrolanddieselcars,wouldsendthewrongmessagetoconsumers,whoshouldbeencouragedtobuyzeroemissionvehicles.ManufacturersintheUKandtheEUarealsoatriskoflosingmarketsharetocheaperelectricvehiclesimportedfromChina.TheUKandtheEUshouldagreeatleastathree-yearextensiontothecurrentrulesoforiginrequirementstoallowmoretimeforasupplychaininEuropetodevelop.

1UKGovernmentandtheEuropeanCommission

Batteriesforelectricvehiclemanufacturing7

Introduction:Theroleofbatteriesinthegreentransition

1.Peoplehaveusedbatteriesforcenturies.In1859,scientistsbuiltontheworkofAlessandroVolta,anItalianphysicist,toproduceleadbatteries.2Inthemid-20thcentury,lithiumbecamethefocusofresearcheffortsintobatteries.Aseriesofbreakthroughsinthe1970sand1980sledtothecreationoflithium-ionbatteries.OneofthesebreakthroughswasaresultoftheworkofJohnB.Goodenough,anAmericanscientist,andhisco-workersatOxfordUniversity.JohnB.GoodenoughwasoneofthreescientiststobeawardedtheNobelPrizein2019fortheirworkwhichledtothecreationoflithium-ionbatteries.3Lithium-ionbatteries,whichwereeventuallycommercialisedinJapanin1991bySony,arenowubiquitous.4Theelectrochemicalpotentialofthemetalswithinthesebatteries,coupledwiththeirweight-to-energyratio,hasmadethemsuitableforawiderangeofapplications.5Laptops,mobilephonesandarangeofelectronicdevicesallovertheglobetodayarepoweredbylithium-ionbatteries.

2.Lithium-ionbatteriesarethedominantbatterychemistryusedinelectricvehicles.Therearedifferenttypesoflithium-ionbatterychemistries.Thetwomaintypesarenickelmanganeseandcobalt(NMC)andlithiumironphosphate(LFP).NMCbatterieshaveahigherenergydensity,whichmakesthembetterforvehicleswithalongerrange,whereasLFPbatteriesaresafer,becausetheyarelesslikelytoignite,andhavealongerlifespan.6Lithium-ionbatteriesarelikelytocontinuetodominatethemarketforthenextdecade.Otherbatterychemistries,suchassodium-ionbatteriesandsolid-statebatteries,areunderdevelopment,buttheyhavenotyetbeencommercialised(seeChapter4).

3.Batterieswillhelptodecarbonisenotonlythewaywetravel,butothersectorsoftheeconomy.Insomesectors,suchascarsandvans,batterieshaveemergedastheleadingalternativetofossilfuels.Othergreentechnologies,suchashydrogen,arelikelytobebettersuitedtootherapplications.7Demandforbatteriesislikelytoincreasesubstantiallyacrossarangeofsectors(seeChapter1).Thatincreaseisalreadyhappeningintheautomotiveindustry,althoughothersectorsarelikelytoexperienceincreaseddemandfromthe2030sonwards.

Ourinquiry

4.On17January2023,thethenBusiness,EnergyandIndustrialStrategyCommitteelaunchedaninquiryonthesupplyofbatteriesforelectricvehiclemanufacturingintheUK.8

2EuroBat,

Batteries101

[accessedon7November2023]

3TheRoyalSwedishAcademyofSciences,

ScientifcBackgroundontheNobelPrizeinChemistry2019:Lithium-ion

batteries

,October2019

4EuroBat,

Batteries101

[accessedon7November2023]

5EuroBat,

Batteries101

[accessedon7November2023]

6GreenAlliance,

PoweringuptheUKbatteryindustry:Annexes

,September2023

7TheFaradayInstitution,

TheRoleofHydrogenandBatteriesinDeliveringNetZerointheUKby2050

,April2023

8InApril2023,followingchangestothemachineryofgovernment,theBusiness,EnergyandIndustrialStrategyCommitteewasrenamedastheBusinessandTradeCommitteetoscrutinisetheworkofthenewlyformed

DepartmentforBusinessandTrade.TheresponsibilityofscrutinisingoftheGovernment’senergypolicywaspassedontothenewEnergySecurityandNetZeroCommittee.

8Batteriesforelectricvehiclemanufacturing

5.ThelaunchofthatinquirycoincidedwithnewsthatBritishvolt,aUKbatterystart-up,hadenteredadministrationafterstrugglingtoraisesufficientinvestmenttoproceedwithitsgigafactorynearBlythinNorthumberland(SeeAnnex1).Wereceivedmorethan50writtensubmissionsinresponsetoourcallforevidencefromavarietyoforganisationsandindividuals.WebegantakingoralevidenceinMay.

6.Thepicturehascontinuedtoevolve.Thissummer,TataGroup’s(theownersofJaguarLandRover)planstobuildagigafactoryintheUKtosupplyJaguarLandRoveraswellasBMW’smulti-million-poundinvestmentinOxfordprovidedsomewelcomenewsfortheUK.Morerecently,thePrimeMinisterannouncedplanstodelaythebanonthesaleofnewpetrolanddieselcarsandvansfrom2030to2035.

7.TheUKGovernmentplanstopublishanAdvancedManufacturingPlan,coveringtheautomotiveindustryandothersectors,aswellasaUKBatteryStrategy.ThoseplansareurgentlyneededtohelpsupporttheUK’sautomotiveindustryandtheUK’swidertransitiontoagreenereconomy.

8.Wearegratefulforthevaluablecontributionswereceivedfromeveryonewhoengagedinpublicandprivatelywithourinquiry.Weheardfromautomotivemanufacturers,batterymanufacturersandsupplychaincompaniesaswellasNGOs,academicinstitutions,think-tanksandtradeunions.

Batteriesforelectricvehiclemanufacturing9

1GigafactoriesintheUK

9.Gigafactoriesarelargefactoriescapableofmanufacturingbatterycellsorfuelcellsatscale.9Gigafactoriestypicallytaketwotothreeyearstobuild,butconstructioncantakelongerdependingonwhetherthesitehasplanningpermissionandwhetherthegigafactoryisanewdesignorareplica.10Otherpartsofthebatterysupplychain(e.g.miningofrawminerals)havelongerleadtimestobringintooperation.11Theupfrontcapitalcostsofbuildingagigafactoryarehighandcanbeprohibitive.12Oncebuilt,gigafactoriesdonotoperateatfullcapacityimmediately.Instead,operationalcapacityisgraduallybuiltupoverafewyears.13

10.TheUKGovernmentisworkingtosecureinvestmentsingigafactories.14However,theUKisinaglobalbatteryracewithothercountriesthathavethesameobjective.15Chinaisfaraheadintherace,becausetheproductionofbatterycellsisheavilyconcentratedinChina.16China’sglobalpositionistheproductofmorethanadecadeofpoliciesdesignedtodevelopanintegratedbatterysupplychain.17Chinadominatestherefiningofrawmaterialsandmanufacturingbatterycomponents.ThatdominationinmidstreamprocesseshasenabledChinatosecuretheleadpositionintheproductionofbatteriesandelectricvehicles.18Chinaisexpectedtoretainitsleadtotheendofthedecade.19Othercountries,especiallyinEuropeandNorthAmerica,arerapidlybuildingtheirowncapacityandareexpectedtogainalargershareoftheglobalmarketby2030.20BenchmarkMineralIntelligence,amarketdatareportingcompany,describedtheUKasa“bystander”inthisrace,with“nocomprehensivecommercialposition”intoday’sglobalbatteryindustry.21Otherinformedcommentators,suchastheFaradayInstitution,abatteryresearchinstitution,havesuggestedthattheUKisalreadybehind,orislosinggroundto,internationalcompetitors,especiallytotheEUandUS.22

11.ManygigafactoriesareinoperationorunderdevelopmentacrossEurope.TheEuropeanBatteryAlliance23hassetanobjectivefor90%ofEurope’sannualbattery

9HouseofLordsScienceandTechnologyCommittee,

Batterystrategygoesflat:Net-zerotargetatrisk

,1stReport

ofSession2021–22-published27July2021-HLPaper

53

10UKBatteryIndustrialisationCentre(

BEV0028

)

11BenchmarkMineralIntelligence(

BEV0010

);Q110[DavidWong]

12Thecostofbuildingagigafactoryvarydependingonthelocation,theproductandthecompany.However,

batterymanufacturersincludeAsiahavereportedthatitcostsaround$40–50milliontobuild1GWhofcell

manufacturingcapacity.SeeGreenFinanceInstitute,

PoweringtheDrivetoNetZero:UnlockingPublicand

PrivateCapitalfortheUKBatterySector

,May2022

13Q77[JeffPratt]

14PQ

18521

[ElectricVehicles:ManufacturingIndustries]answeredon24May2023

15BenchmarkMineralIntelligence(

BEV0010

)

16BenchmarkMineralIntelligence(

BEV0010

)

17BenchmarkMineralIntelligence(

BEV0010

);IEA,

GlobalSupplyChainsofEVBatteries

,July2022

18IEA,

GlobalSupplyChainsofEVBatteries

,July2022

19BenchmarkMineralIntelligence(

BEV0010

)

20BenchmarkMineralIntelligence(

BEV0010

)

21BenchmarkMineralIntelligence(

BEV0010

)

22UKRIFaradayBatteryChallenge(

BEV0032

);WestMidlandsGigafactory(BEV0017);Transport&Environment(BEV0012);IntelligentEnergy(BEV0020);MidlandsEngine(BEV0022);CornishLithiumLimited(BEV0042);TheFaradayInstitution(BEV0011)

23Launchedin2017byMarosŠefcovic,VicePresidentoftheEuropeanCommission,theEuropeanBatteryAlliancebringstogethernationalauthoritiesandregionsintheEUaswellasresearchinstitutesandotherstakeholdersacrossthebatterysupplychain.TheallianceissupportedbytheEuropeanCommissionandtheEuropean

InvestmentBank.TheaimoftheallianceistobuildupmanufacturingcapacityandbatterytechnologyintheEU.

10Batteriesforelectricvehiclemanufacturing

demandtobesuppliedfromwithintheEUby2030.24By2030,GermanyisexpectedtohavethelargestamountofbatterymanufacturingcapacityinEurope.25EasternEuropeancountries,suchasHungaryandPoland,havealsoattractedsignificantinvestmentsfromleadingAsianbatterymanufacturers,partlyduetothecheaperlandandlabourinthesecountriesbutalsobecauseoftheirproximitytotheGermancarindustry.26ThepipelineofgigafactoriesplannedintheUnitedStateshasgrownrapidlyattheexpenseofinvestmentsinEuropesincetheInflationReductionActwasintroducedinAugust2022.27

DemandforbatteriesintheUK

12.Theautomotiveindustryandothersectorsarelikelytogeneratesufficientdemandtojustifybuildingmultiplegigafactorieswi