What does the purchase of Britishvolt mean for localised EV production?

28 February 2023

Australian company Recharge Industries has bought Britishvolt, after the company went into administration in January. The purchase will come as a relief to many in the UK’s automotive industry, especially as the importance of localised production grows.

Under plans presented by the Australian battery-technology company, Britishvolt will look to establish the UK’s first gigafactory in Cambois, Northumberland. The site looks to be a cornerstone in the country’s industrial and sustainability strategy while providing thousands of green, skilled, and local jobs.

‘We are thrilled to have been successful in our bid for ownership of Britishvolt; our plans are the right ones for the local community and the UK economy,’ said David Collard, founder and CEO of Scale Facilitation. ‘Our proposal combined our financial, commercial, technology and manufacturing capabilities, with a highly credible plan to put boots and equipment on the ground quickly.’

‘Backed by our global supply chain, strategic delivery partners and a number of significant customer agreements in place, we are confident of making the Cambois Gigafactory a success and growing it into an advanced green energy project,’ added Collard.

Recharge Industries is currently developing Australia’s first large-scale lithium-ion cell production facility. It aims to provide efficient, safer, and recyclable batteries, as well as the development of next-generation energy solutions.

UK EV production

Combined production of battery-electric vehicles (BEVs), plug-in hybrids (PHEVs), and hybrid-electric vehicles (HEVs) rose 49.9% year on year to 28,329 units in January, data from the Society of Motor Manufacturers and Traders (SMMT) reveals. More than four in every ten cars made in the month was electrified. Now with the renewed promise of a local battery production site, the SMMT appears hopeful.

‘This news shows that the UK’s promise as a battery production location remains undimmed. We must ensure, however, that Britain attracts more capacity and capability for its automotive sector, as the industry has the potential to be a crucial driver in the UK’s transition to a zero-emission, growth economy,’ said Mike Hawes, SMMT chief executive.

But without a site like Britishvolt’s, electric-vehicle (EV) manufacturing in the country could become increasingly difficult. After Britishvolt entered administration, the UK’s business, energy, and industrial strategy committee launched an inquiry into the supply of batteries and the viability of local EV production.

‘The future of car manufacturing in the UK is dependent on our ability to make electric vehicles, and to be able to export them into the EU,’ the committee’s chair Darren Jones said. ‘That means we need local supplies of electric vehicle batteries – something we are falling significantly behind on compared to other parts of the world.’

Andy Picton, chief commercial vehicle editor at Glass’s (part of Autovista Group), pointed out the enormous disparity between the battery production capabilities of the west and of China, South Korea, and Japan. ‘The future of vehicle manufacturing in the UK is dependent on our ability to make EVs and to be able to export them to other markets,’ he said.

‘With up to 200,000 workers currently employed in UK plants, it is imperative that the country acts now to build the supply chains and new processes central to vehicle electrification. Without these, UK vehicle manufacturing could become a thing of the past,’ Picton added.

Balancing battery building

The UK is not alone in wanting to balance the building of EV batteries. Accelerating electrification and supply chain disruptions have highlighted the need for local supply chains across Europe. In January, Transport and Environment (T&E) forecast that the EU would be able to end its reliance on China for lithium-ion batteries by 2027.

The group also found that two thirds of Europe’s demand for cathodes could be met locally by 2027. Existing production plans include Umicore in Poland, Northvolt in Sweden, and BASF in Germany. Additionally, T&E projects that more than half of the region’s refined lithium demand can be secured by European projects come 2030.

‘The EU’s phase-out of combustion engines in 2035 has already spurred much investment. Today, half of the lithium-ion battery cells used in the EU are already made there,’ said Julia Poliscanova, senior director for vehicles and e-mobility at T&E.

However, the green group highlighted concerns over the tax benefits provided by the Inflation Reduction Act (IRA), which could tempt production away from Europe and towards the US. ‘The Inflation Reduction Act has changed the rules of the game, and Europe needs to put more money on the table or risk losing planned battery factories and jobs to America,’ Poliscanova said.

T&E claims that the only way for the EU to compete is to offer its own local green technology fund. It pointed to the need for direct disbursement of funds to EU companies to avoid the slow absorption rates seen under the Recovery and Resilience Facility (RRF).

Within the trading bloc, individual countries are also trying to encourage local battery production. Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group), pointed to a series of activities in Germany. These are taking place on a political and economic level, as well as within the automotive industry to reduce external dependencies, especially on China.

‘The current visit of the German chancellor to India can be seen as a political example of these efforts, and with regard to the industry, there are reports of a new BMW battery plant in Bavaria,’ he said. ‘In the end, however, customers are largely indifferent to where the battery comes from.’