UK’s motor industry at risk of ‘mass exodus’ by car makers

As Jaguar Land Rover enters discussions with overseas suppliers as part of its forward planning, a new report suggests the UK’s motor industry risks future collapse

The UK is at risk of becoming a footnote in the global motor industry’s shift to battery-powered vehicles, according to a report by Bloomberg UK, with the country facing a potentially disastrous lack of cell and pack factories needed by car manufacturers to support their transition away from the internal combustion engine.

In what could be a fresh blow to British car production, the report also states that Jaguar Land Rover (JLR) is currently in talks with Northvolt AB and SVolt Energy Technology Co about supplying batteries for a range of electric vehicles that could be built in Slovakia. JLR has stated that all new Jaguars will be fully electric from 2025, with 60 per cent of Land Rovers also being battery-electric by the end of the decade.

Bloomberg UK predicts that unless battery investment picks up, car makers may accelerate their exodus from what was once the world’s second-biggest motor manufacturing base. In recent years, the UK has fallen outside the top 15 of car-making nations.

As the move to electric brings major changes to the global motor industry map, the UK is hampered by scarce supplies of raw materials, expensive energy, relatively low government incentives and potential Brexit-related tariffs. Although the country has pumped hundreds of millions of pounds into battery-technology research, Bloomberg UK reports this has so far created minimal production.

To date, the UK has just one major battery plant in operation, owned by China’s Envision Group. The manufacturer added production of longer-range packs for the Nissan Leaf last year, and has announced plans to expand – but not until 2024 at the earliest.

Andy Palmer, the former CEO of Aston Martin, who also helped to spearhead the Nissan Leaf at the Japanese firm’s Sunderland plant, commented: “It’s about to be too late to preserve the UK role as a major automotive producer. Unless there’s either a carrot or a stick to incentivise battery production in the UK, it’s only a matter of time before the automobile industry here becomes a niche industry that caters to brands such as Rolls-Royce and Bentley.”

A spokesperson for Jaguar Land Rover, which produced more than 220,000 vehicles in Britain last year, told Bloomberg UK that it continues to explore all options for electric vehicle battery supply and that no decisions have been made. Representatives for Northvolt and SVolt declined to comment.

Meanwhile, start-up company Britishvolt has announced plans to build a giant battery plant in Blyth, Northumberland, with the capacity to produce enough cells for around 300,000 battery packs a year.

Preliminary partnerships with Aston Martin and Lotus have been secured, but manufacturer commitments from mass-market names are currently lacking.

Nissan, Bentley and Stellantis (owner of Vauxhall, Peugeot, Citroen and others) have all committed to making electric vehicles in the UK, but analysts are warning that more investment is needed to protect the industry’s position. In a recent report, the Green Finance Institute’s Coalition for the Decarbonisation of Road Transport said that the UK needs to increase battery capacity 45-fold – to more than 90 gigawatt hours – just to preserve the current size of the car sector: “If a battery sector does not emerge in the UK, there is both the lost opportunity cost of the financial gains of batteries being captured elsewhere, and in turn a risk that the existing automotive industry in the UK could diminish through moving to co-locate with battery production.”

The UK’s opportunity to attract battery makers is narrowing, with European governments lining up major support packages to make them more attractive for investment. EU countries have collectively pledged more than €6 billion (over £5 billion) in public spending to build up the industry.

Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, commented: “It’s not, unfortunately, a level playing field. Governments intervene in Europe. They intervene in America. They intervene in Asia. So the UK government has got to make sure that, at the very least, it creates the framework for UK manufacturing to be competitive.”

Meanwhile, the future of Jaguar still looks uncertain, following JLR’s announcement early last year that the marque would drop internal combustion engines entirely by 2025 – although the company has still yet to detail its production plans or give any real indication of how the next-generation electric Jaguar range will look. The company currently has a contract-manufacturing arrangement with Magna Steyr for its sole fully-electric model, the Jaguar I-Pace, which is produced in Austria.