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Can the UK car industry survive without the vast domestic battery manufacturing bases?

Cost and policy are essential to localizing battery production in Europe.

Brexit and the subsequent Brexit deal basically link the UK automotive industry to the use of UK or European BEV / battery components rather than relying on import systems.

Currently, the Rule of Origin (RoO) threshold before tariffs are applied is 55% (UK / EU) content. There are exceptions to EVs that temporarily enjoy low RoO requirements (40%) until 2027, after which they will return to normal rates (55%). Batteries are important because they account for a large percentage of the total vehicle input cost and affect the RoO threshold. If this threshold is not met, the EU tariff is 10%. Shipping costs associated with imports between regions are added to this cost.

As the transition to electrification accelerates, European production procurement decisions for new BEV capacities are beginning to be developed, putting the UK at a potential disadvantage given the RoO threshold from 2027.

THere are three possible directions for the UK:

  1. Import battery cells and systems from Europe (as Mini does today)
  2. Localize UK BEV production using domestic battery suppliers (such as AESC).
  3. The UK has not participated in mainstream BEV manufacturing, leading to a long-term reduction in domestic mass vehicle manufacturing

New supply chain conditions indicate that most of the demand for battery cells will be met by imports from mainland Europe.

What is the outlook for the shift to domestic supply?

Most of the domestic supply comes from AESC (for Nissan). So far, Britishvolt has found a car customer with a bespoke cell solution. This has always been our expectation, but this niche segment does not require gigawatt scale.

EV batteries are often mistaken for alternative products. Automakers cannot simply install Britishvolt cells in vehicles designed for CATL batteries without going through a multi-year cell certification process and vehicle development cycle. Therefore, it is unlikely that the UK will move closer to 100% domestic procurement of batteries in the last decade.

What about the demand from other applications?

Sure, there is room for demand from stationary energy storage, two-wheeled EVs, heavy-duty transportation, shipping, aerospace, and other applications, but these 10 will be diminished by the BEV sector of light vehicles for the foreseeable future. Huge cell production infrastructure within a year.

In the very long term, demand from stationary energy storage will need to grow to orders of magnitude similar to the BEV sector in order for the UK to reach its net-zero target.

How about exporting to mainland Europe?

Exports have fallen behind all other developed countries during the recovery of COVID-19 since the UK established trade barriers with its largest trading partners. It’s hard to imagine a customer of a car manufacturer in mainland Europe choosing a British start-up. This is especially true for customers who do not have their own selling points or advantages over the more established and localized suppliers of joint ventures. To attract these customers, UK battery suppliers need to offer a significant competitive advantage in terms of cost, technical advantage, or capacity.

There is optimism in the long run.

The UK has a long-standing research base on next-generation battery technologies and government-sponsored agencies to industrialize them. Therefore, domestic companies have a bright future as a pioneer in cell manufacturing in the United Kingdom.

In summary, although not ideal, the UK automotive industry can survive without the vast domestic battery manufacturing bases. Despite lagging behind mainland Europe by establishing itself as the region’s leading cell production hub, there is still the opportunity to serve other areas of the battery supply chain and leap forward in modern lithium-ion technology. .. Can the UK car industry survive without the vast domestic battery manufacturing bases?

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