UK: Is The UK The Future For Automotive Batteries?

Last Updated: 29 May 2019
Article by Emma Foster

Greenhouse gases (GHGs), such as carbon dioxide (CO2), prevent heat from escaping from the Earth’s atmosphere. Whilst this “greenhouse effect” is essential to maintain the temperature of the Earth so that it habitable by humans, animals and plants alike, the increased amount of GHGs in the Earth’s atmosphere today compared to just a few decades ago has caused the temperature of the Earth to rise to harmful levels. The devastating effects of global warming have already begun to be observed, e.g. in rising sea levels and in the melting of polar ice caps. The combustion of large amounts of fossil fuels has been a major contributor to increased CO2 levels in the atmosphere in recent times.    

At the 2016 UN Framework Convention on Climate Change in Paris, countries agreed to try to reduce global GHG emissions to limit the global temperature rise to 2 °C by 2100. The result of this is that the EU is aiming to achieve an 80% reduction in GHG emissions by 2050 relative to a 1990 baseline. The UK responded to this by being the first country to set legally binding carbon budgets (see here). In addition, the UK government has committed to ensuring that by 2040 the majority of vehicles sold in the UK will be at least partly based upon battery power.

With this target in mind, Innovate UK and the Advanced Propulsion Centre UK commissioned a report to determine what would be required to set up a UK-based supply chain for electric vehicle (EV) batteries. A summary of the report can be found here.

Current situation

According to the summary report, the UK built around 1.6 million vehicles and 2.7 million engines in 2018. Most EV battery cells are, however, currently manufactured in Asia. If the UK is dedicated to its commitment to reducing GHG emissions, something therefore needs to change.

The UK already has an extremely strong chemical sector, which includes some of the world’s biggest battery supply companies. These companies generate large volumes of intellectual property (IP) through invested research and development (R&D) programmes and many already supply chemicals to the Asian battery market. Given that most of the value of a battery pack is in the chemicals used for the anodes, cathodes and electrolytes, the UK is in a strong position to establish a supply chain linking all of these companies.

Proposed strategy

The commissioned report therefore sought to gauge the interest of automotive manufacturers and the chemical industry in establishing a UK-based EV supply chain. In phase 1, over 60 chemical companies declared an interest in the proposal but indicated that (a) they would need to receive clear demand signals to give them the confidence to scale up and (b) it would be necessary to fill the existing gaps in the supply chain.

According to the summary report, factors considered essential to achieve such a UK-based EV supply chain are:

- build at least one UK-based “giga-factory” to manufacture batteries, electrodes and cells on a large scale, thereby linking the automotive and chemical sectors;

- expand current UK production of chemicals for anodes, cathodes and electrolytes;

- endeavor to make use of low carbon electricity; and

- develop new battery technologies and collaborations through investment in R&D.  

Conclusion

UK chemical companies have sent a strong message that they are prepared to commit to a UK-based EV supply chain but that they need clear signals from both the automotive industry and the UK government before they invest heavily in the necessary scale-up.  

If the proposal becomes a reality, it is thought that it will translate into a £4.8bn a year supply chain opportunity for the UK by 2030. Increased investment in R&D will inevitably lead to the generation of new IP in the form of new battery technologies. Assuming this IP is registered (e.g. by filing patent applications directed to the technology), UK chemical companies will be in a strong position to secure a competitive advantage in the emerging EV batteries market. Given that the UKIPO offers the option of accelerated prosecution of patent applications directed to “green” technologies (see here), this should provide further encouragement for UK chemical companies to commit to investing in new EV battery technology and, in turn, help the UK to achieve its target to reduce GHG emissions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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