First Report - Batteries for electric vehicle manufacturing

The government's response

What the committee recommended 23

1. 1
   Specify domestic supply targets for UK battery demand by 2030 and 2040, including scaling-up plan Recommendation · paragraph 16
2. 2
   Outline battery manufacturing capacity for niche automotive and support non-automotive suppliers Recommendation · paragraph 17
3. 3
   Set out plan to attract established and new battery gigafactory manufacturers to UK Conclusion · paragraph 23
4. 4
   Facilitate offtake agreements between OEMs and battery manufacturers for gigafactory funding Recommendation · paragraph 26
5. 5
   Designate gigafactory sites as strategically important and grant special economic status Recommendation · paragraph 29

See all 23 recommendations and conclusions

Sources

• First Report - Batteries for electric vehicle manufacturing ↗The committee's report, HC 196, parliament.uk
• Second Special Report - Batteries for electric vehicle manufacturing: Government Response to the Committee’s First Report of Session 2023-24 ↗The government's response, 14 February 2024, parliament.uk

Recommendations and conclusions 23

1. 1
   Specify domestic supply targets for UK battery demand by 2030 and 2040, including scaling-up plan Recommendation · paragraph 16 · addressed to Department for Business and Trade Recommendation (the committee's words)

   In the forthcoming UK Battery Strategy, the Government should specify the extent to which future demand for batteries in the UK should be supplied by domestic sources in 2030 and 2040, along with a 10-year plan for scaling-up this capacity and an estimate of the public money required to do so. To match our competitors, the UK Government should consider targeting at least 90% of the UK’s annual demand for batteries to be met from domestic supplies by 2030.
2. 2
   Outline battery manufacturing capacity for niche automotive and support non-automotive suppliers Recommendation · paragraph 17 · addressed to Department for Business and Trade Recommendation (the committee's words)

   The UK needs gigafactories that can cater for the diverse array of vehicles, including luxury cars, public transport and commercial vehicles, manufactured in this country. Retaining niche segments of the automotive market in the UK is strategically important, because the highly specialised nature of these vehicles provides an opportunity to encourage innovative battery manufacturers into the UK. The UK also has an opportunity to take the lead in supplying forms of transport (rail, maritime, aviation and micro-mobility) and sectors of the economy (e.g. energy storage and military applications), which are expected to see demand for batteries rise, especially from 2030 onwards. To capitalise on these opportunities, the Government should: • outline, in the Advanced Manufacturing Plan, what UK battery manufacturing capacity will be needed to cater for the diverse needs of niche segments of the automotive industry, and by when, together with the measures required to secure this. • support battery manufacturers looking to supply batteries to non-automotive sectors by stimulating demand for batteries in these industries and ensuring government support is available to manufacturers targeting these market segments.
3. 3
   Set out plan to attract established and new battery gigafactory manufacturers to UK Conclusion · paragraph 23 · addressed to Department for Business and Trade Conclusion (the committee's words)

   Encouraging a competitive mix of battery manufacturers to locate in the UK will help to build the supply chain while capturing intellectual property from new technologies. The Advanced Manufacturing Plan and UK Battery Strategy must set out how the Government plans to attract established battery manufacturers as well as new entrants to the battery market to build gigafactories in the UK. Those plans could include a twin-track process for access to financial support to reflect the differences between firms at different stages of development.
4. 4
   Facilitate offtake agreements between OEMs and battery manufacturers for gigafactory funding Recommendation · paragraph 26 · addressed to Department for Business and Trade Recommendation (the committee's words)

   Having secure orders from an anchor customer is critical if battery manufacturers are going to raise sufficient funds to build a gigafactory. Offtake agreements between OEMs and battery manufacturers help signal to investors that there is demand for their product. The Advanced Manufacturing Plan and UK Battery Strategy should set out ways in which the Government could help to facilitate offtake agreements between OEMs and battery manufacturers.
5. 5
   Designate gigafactory sites as strategically important and grant special economic status Recommendation · paragraph 29 · addressed to Department for Business and Trade Recommendation (the committee's words)

   There are limited number of potential gigafactory sites—but we have enough sites in the UK to meet the nation’s needs, including sites in the UK’s key automotive clusters. These sites are strategic national assets and should be treated as such. The Government must designate gigafactory sites as strategically important sites and 50 Batteries for electric vehicle manufacturing work with local partners to put together a targeted package of support, with a view to attracting investors and ensuring gigafactories can be built at pace. These sites should be given priority for improvements to energy and transport infrastructure. The Government should work with local partners to grant those areas special economic status.
6. 6
   Establish a single project office, led by DBT, to coordinate gigafactory support. Conclusion · paragraph 30 · addressed to Department for Business and Trade Conclusion (the committee's words)

   Building a gigafactory will require support from central Government Departments, local authorities and private companies such as National Grid. The transaction cost of co-ordinating between these bodies should not fall on investors. A single project office integrating the full panoply of public support drawn from the various bodies involved is required, and the Department for Business and Trade should take on that lead role, as ‘gold command’.
7. 7
   Publish the scale and scope of government support for the Jaguar Land Rover gigafactory. Recommendation · addressed to Department for Business and Trade Recommendation (the committee's words)

   Tata Group’s plans to build a gigafactory in the UK provide a much-needed boost to the UK’s gigafactory pipeline, especially after Britishvolt’s administration earlier this year. We congratulate the Department on its efforts to secure this investment, following close competition from other markets. However, we reiterate our preference that the scale and scope of support offered to Jaguar Land Rover should be in the public domain.
8. 8
   Gigafactory expansion capacity for other manufacturers lacks clarity. Conclusion · addressed to Department for Business and Trade Conclusion (the committee's words)

   We are pleased that this new gigafactory will supply batteries to Jaguar Land Rover’s suite of electric vehicles built in the UK. However, we would welcome more clarity on the extent to which this facility can be expanded to cater for other manufacturers, within and outside the automotive industry. Battery supply chain
9. 9
   Specify strategically critical industrial capabilities to onshore within the UK battery supply chain. Recommendation · paragraph 50 · addressed to Department for Business and Trade Recommendation (the committee's words)

   It is not feasible or desirable to onshore the end-to-end battery supply chain. The UK cannot have a self-sufficient supply of lithium-ion batteries and will continue to rely to some degree on imports of raw minerals, materials and components. However, building the UK’s industrial capabilities across the battery supply chain, and especially in midstream processes such as the refining of raw minerals and the manufacture of cathodes and anodes, will confer strategic advantages. The Government should specify the industrial capabilities within the UK battery supply chain that are strategically critical to onshore along with new interventions that will encourage relevant businesses to locate in the UK. Such specifications could be set out either in the forthcoming UK Battery Strategy or in response to this Report.
10. 10
    UK dependence on China-concentrated global battery supply chains poses significant strategic risks. Conclusion · paragraph 51 · addressed to Department for Business and Trade Conclusion (the committee's words)

    Global battery supply chains, and especially the upstream supply of critical minerals, have environmental, social and governance challenges. Those supply chains are concentrated in China. The UK’s dependence on those supply chains poses risks to the UK and to the Government’s strategic objectives, especially if China were to restrict exports of the materials and components that the UK needs. It is critical that the UK Government continues to collaborate internationally not only to diversify the battery supply chain, but to ensure that batteries are produced to high environmental and social standards.
11. 11
    Detail how the UK Battery Strategy will promote robust ESG standards across the battery industry. Recommendation · paragraph 52 · addressed to Department for Business and Trade Recommendation (the committee's words)

    The UK Battery Strategy should set out how the Government plans to promote robust environmental, social and governance standards across the battery industry domestically and globally to promote transparency and a green and clean battery supply.
12. 12
    Require all batteries on the UK market to include a comprehensive battery passport. Recommendation · paragraph 53 · addressed to Department for Business and Trade Recommendation (the committee's words)

    A battery supply chain in the UK would enable businesses based in this country to manufacture batteries sustainably and ethically. This offers the UK a competitive advantage over other markets, especially as consumers demand higher environmental, social and governance standards. The UK’s access to low-carbon sources of electricity means that batteries produced in the UK will be produced more sustainably than those in China and many European countries. The Government should empower UK consumers by requiring batteries available on the UK market to come with a battery passport containing information about how sustainably and ethically those batteries were produced.
13. 13
    Implement an internationally competitive package of long-term support for gigafactories and battery supply chain. Conclusion · paragraph 62 · addressed to Department for Business and Trade Conclusion (the committee's words)

    Global competition for the electric vehicle supply chain has intensified following the passing of the Inflation Reduction Act in the United States. The Inflation Reduction Act has seen investment flow into the electric vehicle supply chain, especially gigafactories, in the United States at the expense of Europe. The UK Government must urgently respond to this intensified global competition with an internationally competitive package of long-term support to attract private investment into gigafactories and the wider battery supply chain within the UK.
14. 14
    Provide a long-term stable business environment to de-risk investments in the UK battery supply chain. Conclusion · paragraph 63 · addressed to Department for Business and Trade Conclusion (the committee's words)

    The UK is competing against other large markets that are offering large subsidies to boost domestic production of electric vehicles and batteries and onshore businesses in the supply chain. The UK Government does not necessarily need to match the scale of subsidies on offer in these markets if the UK’s overall package is internationally competitive. However, the UK Government must provide a long-term stable business environment, with a clear framework of support that de-risks investments in the UK’s battery supply chain.
15. 15
    Adopt an integrated approach to develop industrial capabilities across the battery value chain. Recommendation · paragraph 66 · addressed to Department for Business and Trade Recommendation (the committee's words)

    The absence of a clear and visible industrial strategy for the UK’s automotive sector had deterred investment in the UK. The forthcoming publication of the Government’s Advanced Manufacturing Plan and UK Battery Strategy should help to address that lack of investment. The Government should adopt an integrated approach, with measures to develop industrial capabilities across the battery value chain and to collaborate internationally with friends and partners with rich sources of battery minerals. The Advanced Manufacturing Plan and UK Battery Strategy must set out how the Government plans to capitalise on the UK’s sources of competitive advantage and also to address structural barriers that are deterring investment in the UK’s battery supply chain.
16. 16
    Conduct and publish a benchmarking review of UK battery industry financial support against competitor countries. Recommendation · paragraph 71 · addressed to Department for Business and Trade Recommendation (the committee's words)

    The Automotive Transformation Fund has helped to unlock private investment into the UK, including in gigafactories and businesses further up the supply chain. However, now global competition has intensified, the UK Government needs to ensure that financial support on offer in the UK is internationally competitive. The Government should conduct a benchmarking review to determine how the financial 52 Batteries for electric vehicle manufacturing support on offer compares with that available in competitor countries. It should publish this review and use the findings to inform a new offer of support for the UK’s battery industry in its forthcoming UK Battery Strategy.
17. 17
    Set out interventions to provide investors with long-term certainty on competitive UK energy prices. Recommendation · paragraph 74 · addressed to Department for Business and Trade Recommendation (the committee's words)

    High energy prices in the UK are deterring investment in the battery supply chain. The Government has taken steps to support energy-intensive industries. However, investors still need more certainty that UK energy prices will remain internationally competitive. The Advanced Manufacturing Plan and UK Battery Strategy should set out further interventions that will provide investors with more long-term certainty that the UK’s energy prices will be competitive with other markets.
18. 18
    Set out forecast labour market, training costs, and plans to reskill automotive sector professionals. Recommendation · paragraph 76 · addressed to Department for Business and Trade Recommendation (the committee's words)

    The UK faces skills shortages across the battery supply chain. The Advanced Manufacturing Plan and UK Battery Strategy should set out: a) the forecast labour market involved in reaching its targets for UK-supplied batteries b) the forecast training cost for this workforce; and c) how they plan to train and reskill professionals in the automotive sector to support domestic production of electric vehicles, batteries and other processes in the battery supply chain, including through devolution of the requisite training budgets to local areas.
19. 19
    Ensure adequate funding for local training programmes and make business support conditional on upskilling employees. Recommendation · paragraph 77 · addressed to Department for Business and Trade Recommendation (the committee's words)

    The Government should ensure that mayoral combined authorities or local councils— especially those that govern strategically important sites where gigafactories could be built—have adequate and flexible funding to tailor support local training programmes. Offers of financial support to businesses in the battery supply chain should be conditional on these companies investing in upskilling and reskilling employees from the automotive industry and other sectors.
20. 20
    Secure tariff-free global market access for UK-manufactured electric vehicles and batteries. Conclusion · paragraph 79 · addressed to Department for Business and Trade Conclusion (the committee's words)

    The UK Government’s trade policy should aim to secure tariff-free access to global markets for electric vehicles and batteries manufactured in the UK.
21. 21
    Set out how to commercialise new UK battery technologies with competitive advantages domestically. Conclusion · paragraph 83 · addressed to Department for Business and Trade Conclusion (the committee's words)

    The UK has potential competitive advantages in new battery technologies. However, despite excelling in innovation, it struggles to ensure that new technologies developed in the UK are commercialised domestically. The UK Battery Strategy must set out how the Government plans to ensure that new battery technologies, where the UK has a competitive advantage, are commercialised in the UK.
22. 22
    Include long-term support for research and development of new UK battery technologies. Conclusion · paragraph 85 · addressed to Department for Business and Trade Conclusion (the committee's words)

    The UK Battery Strategy should include long-term support for research and development of new battery technologies in the UK to ensure the UK remains at the cutting-edge of battery technologies.
23. 23
    UK must establish its lithium-ion battery industry before leapfrogging to new technologies. Conclusion · paragraph 87 · addressed to Department for Business and Trade Conclusion (the committee's words)

    The UK may not be able to simply leapfrog into new technologies without first establishing itself in the lithium-ion battery industry. That conclusion reinforces the importance of acting at pace now to develop a battery supply chain in the UK.