The UK automotive industry is facing existential challenges on multiple fronts. The Covid-19 pandemic, Brexit and the transition to electric vehicles (EVs) are testing the UK’s ability to retain the vehicle manufacturers based in the country and the jobs they support.
Amid this turbulence, one of the leaders of the UK automotive industry, Graham Hoare, left his role as the chairman of Ford’s UK operations to join nascent electric battery manufacturer Britishvolt.
The move could be interpreted as symbolic of a declining industry, with one of the industry’s top talents moving away from traditional OEMs, where he had built his whole career, but Hoare rejects the idea that vehicle manufacturing in the UK is destined to decline.
“I don’t subscribe to the idea that the industry should effectively pivot its way out of manufacturing,” says Hoare. “That is not the right thing for the UK.”
I don’t subscribe to the idea that the industry should effectively pivot its way out of manufacturing. That is not the right thing for the UK.
Hoare says the UK’s automotive sector has gone from “strength to strength” since the global financial crisis of 2008 and now “punches above its weight” with a capability “renowned around the world”.
If the 180,000 vehicle manufacturing jobs in the UK are to be maintained, however, the country needs to build battery production capacity ahead of the government’s ban from 2030 on selling internal combustion engine vehicles. Batteries are the main component of EVs and, as Hoare says, “where we produce batteries, we will be producing cars”.
Britishvolt is developing the UK’s first gigafactory in Blyth in the North East of England, where the first units are expected to be produced in 2023. The country is playing catch-up, however, as China already has almost 100 operational gigafactories, while mainland Europe has half a dozen gigafactories and is projected to be the global leader in EV manufacturing by the end of the decade.
Hoare is optimistic that the UK will have four or five gigafactories operational by 2030. “If the UK doesn’t localise batteries, then the car industry that they support will be significantly compromised,” he says.
The UK’s first battery gigafactory
Hoare worked at Ford for almost 20 years before leaving in May 2021, having previously also worked for BMW and Jaguar Land Rover. Understandably, he had planned to take a few weeks off before starting at Britishvolt but says “it didn’t quite work out that way” due to “important activities that needed to start immediately”.
Hoare now heads up global operations at Britishvolt. Although it was only founded in 2019, and is yet to build its first production facility, Hoare has been brought on board to help expand the business internationally.
While Hoare says the UK and in particular the Blyth gigafactory is the company’s primary priority, “discussions in other parts of the world, most notably Canada, are progressing very well”.
The success of the Blyth plant, which Britishvolt says will be the fourth-largest building in the UK once completed and employ 3,000 directly and 5,000 through its supply chain, will be crucial to these wider plans.
Construction, which is due to begin in mid-2021, consists of three stages with full completion due in 2027. Hoare says building the plant in stages is essential because “chemistry will change over time” and the company will need to “capitalise on the latest technology as it comes”.
He adds that Britishvolt is constantly looking at its manufacturing strategy and there may be an opportunity to pivot to solid-state rather than industry standard lithium-ion batteries for the third phase, although it is “way too early to make that call yet”.
Reports suggest Britishvolt is in advanced discussions with several UK-based OEMs, but Hoare says there are several steps that need to be undertaken before firm contracts are in place, adding: “I don’t anticipate a significant portfolio of offtake agreements until into next year.” The company is first fulfilling initial development agreements, delivering samples matching specific applications to potential clients.
Hoare says a couple of big global OEMs as customers can “easily fill the facility” but that Blyth will probably have a “broad range of customers, including new entrants, some of the smaller OEMs and then some of the large global players”.
Meeting the UK’s battery demand
While progress is being made on the Blyth plant, the UK needs many more gigafactories like it to support its automotive sector. Hoare believes investment decisions on those additional plants need to be made in the next three years given the level of planning required.
[The UK has] got to be completely committed to the transition and think very strategically as we go through it and not just make short-term tactical decisions.
“These are big investments,” he says. “They are not just significant financially but in planning, synchronisation of the local economy, investment in electrical infrastructure. That coordination is quite complicated, so to have even four or five of them running by the end of the decade is a huge undertaking for the UK economy.”
Supply is in real danger of not meeting demand, with some estimating the UK needs 140 gigawatt hours (GWh) of battery production by 2040 with only 45GWh currently in planning. The Blyth plant is expected to have a total capacity of more than 30GWh by 2027.
So, is the UK government doing enough to support gigafactory development? Hoare is the joint chair of Automotive Council UK, a representative body formed in 2009 to lobby government on legislation and initiatives to support the industry. He says the government is aligned with the industry’s ambitions to deliver the complex challenges of bringing consumer demand, industrial capacity and charging infrastructure up to a level required to support mass manufacturing of EVs.
Hoare highlights the government-administered Automated Transformation Fund for which UK-registered businesses can apply for a share of £1bn ($1.41bn) in funding for innovative projects. Battery production is just one of the qualifying categories, however, and with the Blyth plant due to cost £2.6bn to develop, this funding is just a drop in the ocean in terms of what is required.
The last few government budgets and spending reviews came and went without hoped for announcements of greater support for gigafactory development, and many have called for greater incentives for cell manufacturers.
Although he does not criticise the government’s efforts, Hoare says the UK has “got to be completely committed to the transition and think very strategically as we go through it and not just make short-term tactical decisions”.
Building a sustainable automotive sector
Part of that strategic thinking required by government is how to ensure the significant power demand of new gigafactories is met through new renewables.
Many of the battery factories we see today are not on the coast, they are embedded in the heart of Europe. So, it is an interesting strategy and allows us to be flexible.
Hoare say that power demand is one of the main reasons Britishvolt chose the coastal town of Blyth for its first gigafactory. The site will have access to hydropower from Norway dispatched to the UK via the North Sea Link interconnector and will be close to offshore wind farms in the North Sea.
Being located next to a deepwater port will enable it to ship and store raw materials locally and export from the port in an efficient way.
Hoare has said he sees an opportunity to export to mainland Europe, anticipating huge unmet demand there for EV batteries. “It does open a significant opportunity for exporting into Europe,” he adds. “Many of the battery factories we see today are not on the coast, they are embedded in the heart of Europe. So, it is an interesting strategy and allows us to be flexible.”
The rules of origin requirement under the Brexit agreement will have a major impact on the automotive industry by determining tariffs based on products’ ‘economic nationality’, but Hoare says Britishvolt has built its supply chain to be compliant with rules of origin to enable it to export to the EU.
Battery mining’s environmental concerns
While Britishvolt is committed to using clean energy to power its manufacturing, Hoare acknowledges that the mining required to source the metals and minerals involved in battery production carry their own environmental and ethical concerns.
“We are very conscious the areas of the world these minerals come from have challenges in terms of human and environmental rights,” he says. “Our ethical commitment as a company is to ensure a rigorous supply chain strategy that demonstrates sustainability.”
We are very conscious the areas of the world these minerals come from have challenges in terms of human and environmental rights.
Hoare adds that increasing recycling and reuse of batteries is “clearly on our radar” but says the critical time for having these processes in place is a few years away given the long lifespans of batteries being produced today.
“High volumes [of spent batteries] will start to come towards the end of the decade, so we are engineering our processes to be ready for those inputs,” says Hoare. “Once we have our foundation plan for the plant in action, we will start evolving our reuse strategy. For now, we are involved in and supportive of the research.”
He adds that the rapid transition required by the automotive sector is a culture shock for an industry used to five-year planning and the status quo.
Britishvolt is trying to both move fast and create entirely new types of long-term plans to become a global leader in battery production. Will the rest of the UK’s automotive industry keep pace?