The UK car industry risks losing 90,000 jobs unless the government spends significantly more money to attract investors to build battery factories, the sector’s trade body has warned.
The Society of Motor Manufacturers and Traders also demanded other measures to encourage manufacturing, such as lower business taxes, in a report published on Tuesday.
The UK government has said it wants to make Britain the most attractive place in the world to make electric vehicles. But the SMMT warned that building only one new battery plant by 2030 — its worst-case scenario — would push the industry into decline, leading to lost jobs and factory closures.
High energy costs, low government incentives compared with other nations, and the friction of post-Brexit trade all mean the industry may “underperform its potential”, according to the SMMT.
The government’s funding pot of £500m to attract battery makers needed to increase significantly to close the “growing gap” with the EU’s €2.9bn war chest, it added.
SMMT chief executive Mike Hawes told the group’s annual summit on Tuesday that government ambitions needed to be matched by investments. “If ambitious words were currency, the UK would be rich,” he told the SMMT annual summit, saying the UK was “falling behind our competition”.
“With the wrong government decisions, we will become consumers not producers; spectators not innovators,” he added.
Nissan will this week announce a new battery plant in Sunderland to allow it to produce electric vehicles at scale. But more sites are needed to protect the network of plants that includes Jaguar Land Rover, Toyota and BMW’s Mini that rely on internal combustion engines.
Stellantis, which owns Vauxhall and is in talks to make an electric vehicle at its Ellesmere Port plant, is also considering sourcing batteries from the UK.
The company’s UK boss, Alison Jones, told the summit that “the ability to source batteries close to where you’re manufacturing”, was a “key component and consideration” of the decision.
The carmaker, formed earlier this year by the merger of Peugeot owner PSA and Fiat Chrysler, has plans with energy giant Total to build battery factories in France and Germany, as well as another undisclosed location in Europe.
But Jones also cited high energy costs in the UK as one factor that potentially weighed against a decision to invest further.
The industry will need factories capable of building 60-gigawatt hours’ worth of batteries a year — the equivalent of three new Nissan sites — by 2030 just to remain at its current size, according to the SMMT report.
Under current projections, the UK will have only 12GWh of capacity by 2025, compared with 164GWh in Germany and 94GWh in the US.
Building up to 80GWh of capacity would create up to 40,000 new jobs across the industry and spur further investment, the SMMT said.
But its most pessimistic scenario, of only 15GWh of capacity or one new plant, would cost the sector an estimated 90,000 jobs.
At present, six potential investors are in talks to produce batteries in the UK, the Financial Times reported last week.
Business secretary Kwasi Kwarteng told the summit the £500m set aside by government would help “safeguard” jobs in the industry but he did not promise any additional funding.He said in a video address that the government “absolutely recognises the centrality of the automotive industry in levelling up, net zero and international trade”.“We want to attract new inward investment but also help manufacturers who are already here to be competitive,” he added.