Gigafactory ambitions ‘face dead end’ without extra investment

MPs on the Environmental Audit Committee have warned that hopes for large Tesla-style electric vehicle (EV) battery factories in the UK may not come to fruition without increased financial support.

The committee concluded that a government scheme intended to support the establishment of ‘gigafactories’ with the Automotive Transformation Fund is insufficient for the scale of ambition. The entire fund is worth £500m but a single Gigafactory costs £2-4bn to establish.

There is one official Gigafactory in Europe (Giga Berlin), which will manufacture battery packs and powertrains for Tesla EVs. Deutsche Welle estimates that the factory will cost €4bn, of which the EU contributed €1bn from the €2.9bn European Battery Innovation fund.

Witnesses told the committee that national governments in other European countries are supporting factories with £750m each.

There are no so-called gigafactories in the UK, although the struggling automotive sector has been heartened in recent months with openings of EV battery plants in Blyth and Sunderland, and potential for a plant in Coventry. In order to meet ambitions for the phase-out of vehicles with internal combustion engines and for exports to the EU, an estimated five further factories will be required in the UK by 2027.

Conservative MP Philip Dunne, who chairs the committee, said recent announcements about gigafactories being opened in the UK are “clearly welcome” but for the UK to reach net-zero carbon emissions, the government cannot continue at its current pace.

“If we are to continue manufacturing vehicles to sell into the EU and UK at our current rate, the industry estimates we will need five more gigafactories up and running by 2027,” he said. “We doubt the £500m government funding left in reserve for automotive transformation will be sufficient to secure the additional 100GWh of gigafactory output needed for the UK electric vehicle sector to reach its full potential.

“Without further government support, establishment of the battery electric vehicle sector in the UK – critical to maintain our auto industry supply chain – will reach a dead end.”

The Prime Minister, Boris Johnson, indicated support for the proposed Coventry plant during a visit to the new £130m UK Battery Industrialisation Centre in Coventry this week. The facility aims to support UK industry with development of battery technologies for future electrification.

“We need these batteries, there’s absolutely no question,” Johnson said. “It’s great that Envision is bringing a gigafactory to Sunderland and we have high hopes of the BritishVolt plant in Blyth.

“But even those two together will only supply a fraction of the demand that the UK’s own domestic vehicle market will have. We’re going to need 70,000 skilled people just to make batteries across this country. We want […] to make sure we produce those gigafactories across the whole UK.

“There’s obviously a case for having a gigafactory here in the West Midlands. You’re going to want one next to a centre of automotive manufacturing, but even that won’t be enough to satisfy the demands, just for the UK domestic market.”

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The UK continues to be one of the best locations in the world for automotive manufacturing, particularly for electric vehicles, through major investments to electrify our supply chain, create jobs and secure a competitive future for the sector. This has been clearly demonstrated by Envision AESC and Nissan, who have recently announced a £1bn investment in Sunderland, backed by government.

“We have pledged hundreds of millions of pounds to support the development and mass-scale production of batteries for electric vehicles and are dedicated to securing the UK gigafactories we need to deliver on our ambitions.”

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