Britain’s Electric Car Took An Ugly Turn

• Production of cars in the UK has tumbled from 1.7m per year to just 866,000 this year.
• Britain must get better at turning that innovation into businesses that generate manufacturing, jobs and wealth, says Sillem.
• Demand for batteries in the UK market is expected to reach 100 gigawatt hours (GWh) per year by 2030.

As the electric car revolution dawns, Britain’s vehicle manufacturers are on track to return to the doldrums of the 1970s rather than seizing the opportunities in front of them.

Nissan’s origin

When Margaret Thatcher opened Britain’s first Nissan plant in 1986, it was a new dawn for the British car industry. 

The factory was “confirmation from Nissan after a long and thorough appraisal, that within the whole of Europe, the United Kingdom was the most attractive country – politically and economically – for large scale investment and offered the greatest potential,” said Thatcher in a speech officially opening the plant. 

After a years-long courtship, she had persuaded the company to set up a manufacturing hub in Sunderland, in a major political coup that revitalized the domestic industry. 

Production of cars in the UK has tumbled from 1.7m per year to just 866,000 this year. 

The malaise is a product of political uncertainty and legacy of Covid pandemic. A looming recession is now set to test the industry “to the core”. 

As the electric car revolution dawns, Britain’s vehicle manufacturers are on track to return to the doldrums of the 1970s rather than seizing the opportunities in front of them.

No time to waste

With a government-imposed ban on the sale of petrol and diesel cars due to take effect in 2030, there is precious little time left for the industry to not only reverse its decline but also reinvent itself for the battery-powered era. 

But to replace assembly lines centered around internal combustion engines and claim a stake in the future, Britain needs to build battery factories – and fast. 

Almost every other part of the electric car supply chain will be built around so-called “gigafactories” that produce batteries, with manufacturers co-locating facilities to reduce costs. 

However, the sorry saga of BritishVolt illustrates how Britain’s efforts to become a thriving hub for manufacturing electric vehicles have so far stalled.

While BritishVolt had won praise from the Government and been assigned £100m in grant funding, the company had not yet reached the milestones required to unlock the public money. 

It left hopes for a national battery champion, 3,000 jobs and the seeds of a home-grown success story suddenly looking shaky – and all for the sake of what was, to BritishVolt, a rounding error in the Government finances. 

By lunchtime Rolton dared to hope he would get what he needed to save his business and keep its dream of building the UK’s first battery “gigafactory”.

Successful roots

“We’re on the precipice and we’re staring into the abyss”, says Andy Palmer, a seasoned executive who worked at Japanese car giant Nissan before running the luxury British car maker Aston Martin. 

As many supporters point out, the UK’s car industry has strong roots built on some of the most famous brands in the world. 

The post-war government owned the steel industry and, in an effort to rescue the country`s battered economy, it demanded that up to 75pc of cars be made for export, leading to a boom for the industry and for British exports. 

British car makers dominated the Le Mans 24-hour contest in the 1950s, with Jaguar and Aston Martin motors winning six in 10 races.

After coming to power in 1979, Margaret Thatcher sought to put this right, by forcing existing national giant British Leyland to become more efficient and bringing in more competition from abroad. 

Success story

A major part of Thatcher’s plan also involved attracting investment from Japanese manufacturer Nissan, by pitching Britain as a business-friendly staging post for making cars that could be sold in masse to neighboring Europe. 

Today Nissan’s Sunderland plant is regarded as an undisputed success story, employing 6,700 people and producing 246,000 cars last year alone. 

The company vies with Jaguar Land Rover for the top spot in UK car production.

Nissan gets a skilled workforce and plant, workers get better-than-average pay, and Britain gets a valuable source of exports. 

The most recent testament to this success is Nissan’s decision to build a new gigafactory next door. 

Government help is a common theme in motor plant success stories. 

Secured investment

Lord Heseltine, a veteran Cabinet minister under both Thatcher and John Major and a former president of the Board of Trade, says the interventions to woo Nissan 40 years ago ostensibly conflicted with Thatcherite, free market policies but that “any government would have done that to secure an investment on that scale”.

“We had the sites that were available and we had the skilled workforce, and we saw an argument that as part of the single European market, we were the best place for the Japanese to base their investment. 

Car makers have faced a succession of challenges in recent years, “each unprecedented and posing its own threat to the sector”, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).

Buoyant motor industry

Britain is not alone in its fight to keep a buoyant motor industry in the face of growth from Japan and China. 

France, Italy and the US have all suffered drops in their car output as competition from abroad and industrial and production problems at home eroded the dominance of once-ubiquitous brands. 

The Faraday Institution, which has been tracking these efforts since 2017, says all-important battery gigafactories typically take at least five years to reach operational capacity. 

Demand for batteries in the UK market – which will come predominantly from cars and other vehicles – is expected to reach 100 gigawatt hours (GWh) per year by 2030, the equivalent output of around five large factories.

Meanwhile, the Faraday Institution says the investment decisions on others planned for 2030 “are all likely to be made in the next two to three years”. 

That would give Britain a total productive capacity of 49GWh.

Development and capacity

By comparison, European gigafactory capacity is 78 GWh and projected to be 1,100GWh by 2030, with more than 40 plants expected to be open and producing. 

Further afield, the US boasted 44GWh per annum of capacity in 2021 and China a colossal 558GWh, according to research by S&P Global. 

Last year the EU signed off on €2. 9bn (£2.5bn) of state aid for gigafactory development. In China, offers such as free land, cheap electricity and recent subsidies for electric car buyers drew gigafactory developers including Tesla to the country. 

Green vehicles are a central pillar of the country`s Made in China 2025 policy, which also offers state-subsidized research and lower tax.

Heart of mini

For example, German company BMW has been building electric versions of the Mini at its Oxford plant since 2020. 

BMW has insisted Oxford will “remain at the heart of Mini production”, but there is no clear answer over whether production of electric models will remain in the UK in future decades or move to Europe. 

“The car industry is really important both to Oxford – we are the home of Morris Motors and the Mini – and to the country,” Brown says. 

The company warned the government this summer that it would end manufacturing in the UK if it brought forward a ban on hybrid models to 2030 as part of net zero plans, something reportedly considered by Boris Johnson when he was prime minister.

Exporter departure

Toyota made 124,918 Corollas at its manufacturing site in Derby in 2021, and historically 90pc have been for export. 

The departure of exporters like Toyota would be a blow not just to Britain’s electric vehicle hopes, but also to the country’s economic standing. 

Britain’s gap between imports and exports now stands at a yawning 8pc of GDP.

Industry decline

Andrew Graves at the University of Bath, a 50-year UK car industry veteran, says that “a strong car making industry can help to fix that. 

The car industry declined in the UK after this because it did not keep up with the modern production processes championed by Germany and Japan,” he says. 

When Mrs. Thatcher invited Nissan, Honda and Toyota to turn the industry around, it worked, but it also made the country an outpost rather than a center. 

While Britain has a good base for the aerospace industry, with companies such as Rolls-Royce, Meggitt and Cobham, the number of companies making components for cars is much lower.

Fundamental strengths

One new, growing supplier is Myenergi, which makes home chargers for electric cars and is backed by the former Tesco boss Sir Terry Leahy. 

Myenergi boss Lee Sutton says the UK needs gigafactory capacity for battery production to reinvigorate the vehicle manufacturing industry and serve emerging sectors such as domestic energy storage. 

He estimates that the UK can only produce 50,000 car batteries a year, not even a tenth of what will be needed. 

Hawes at the SMMT argues that Britain`s automotive industry has “fundamental strengths” but that changes are needed to make sure it doesn`t fall prey to more agile rivals.

“It can, and will, build back,” he adds. 

“But the UK Government – like others with whom we compete – must take action to ensure the UK remains a competitive destination for inward investment.” 

“Extra checks on exports to the EU – the UK car industry`s biggest market – have inevitably added time and pressure. 

The UK motor industry has a 0pc tariff deal with the EU, but there is still plenty of paperwork that was not there before the UK’s exit from the union,” says Ian Foley, founder of electric bus maker Equipmake.

These small differences can mean foreign investors are put off from the UK.

Ambitious gamble

Palmer, who is known as the “godfather of electric vehicles” because of his work launching Nissan’s electric Leaf, can vividly recall being awoken at 3am by former business secretary Lord Mandelson 12 years ago when he was still an executive based in Japan. 

Nissan needed to decide where to situate a battery factory for the Leaf – then seen as an ambitious gamble – and Mandelson had caught wind that Palmer was set to choose Portugal over the UK. 

Today, ministers need to be similarly proactive to ensure that Britain gets its share of the electric car market, he says. 

“You look across the channel, and the EU has made battery manufacturing a project of strategic priority,” Palmer says.

“JLR probably also wants to be close to a battery manufacturer, otherwise it’ll decide to go somewhere like Slovakia.” 

Palmer, who is chairman of battery producer InoBat, says his own company is currently choosing between Spain and the UK as possible sites for a gigafactory – but Madrid is working harder to woo him. 

“One thing that concerns me is if you look at the level of commitment from other countries, regions, to things like battery manufacturing, it’s orders of magnitude larger than the UK,” he says.

Gigafactory conundrum 

“Fundamentally, in the UK, the people who run investment funds are more conservative than in America,” Foley says.

If the UK can crack the gigafactory conundrum, it can harness the great strengths already here. 

“The UK is known for having outstanding creativity and innovation,” says Hayaatun Sillemchief, chief executive of the Royal Academy of Engineering.

But, Sillem adds, the country must get better at taking that innovation and successfully commercializing it into businesses that generate manufacturing, jobs and wealth. 

“We do need to have that clear partnership between government and business,” she says. 

“We’d better get a move on if we think we’re going to save the car industry. ” 

In the end, Rolton says, either his business succeeds or another one must if the British car industry is to survive.

For now, BritishVolt’s dream of powering the electric car revolution is operating on borrowed time. 

Like the UK’s car industry at large, time is running out to save it. 

But unless the country can get it right, Britain risks the sun setting on its electric car ambitions.

Did you subscribe to our Newsletter?

It’s Free! Click here to Subscribe.

Source: Telegraph