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Electric car buyers could face UK battery shortage unless more factories built, warns industry group

People hoping to buy an electric vehicle (EV) have been warned that there may be a shortage as the UK produce enough batteries, as plans to build more EV battery factories have stalled this year.

Although carmakers are aiming to ramp up production of battery-powered EVs to meet both customer demand and the Government’s net-zero plans, there are warnings that a shortage of factories to build batteries, strains on global supply chains and international competition could lead to delayed construction.

For those wanting to buy a new car, it means delays and a long wait to secure their new wheels. UK buyers of popular models made by Tesla, Porsche and Volkswagen face waits of more than a year, according to analysis by Electrifying.com, due to issues along the supply chain and growing demand for electric models.

It comes as the number of EVs on UK roads has risen past 750,000, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). They now account for one in five new vehicle registrations.

But the industry body has warned that despite more plug-in electric cars, vans, trucks and buses appearing on UK roads, there are still “highly challenging pandemic and economic conditions” that could delay wider uptake in the near future.

“[EVs] still represent just one in 50 cars on the road, so there is significant ground to cover if we are to fully decarbonise road transport at pace,” says Mike Hawes, chief executive of the SMMT.

“With fleet renewal essential to net zero, we must build consumer confidence in the economy and, for drivers, confidence in the charging infrastructure to get the transition into top gear.”

The supply of batteries is currently one of the most significant bottlenecks to producing enough EVs in the UK, and therefore achieving the government’s net-zero ambitions. The government has pledged £1bn of support to boost the UK’s battery supply chain, and industry experts have estimated that the country needs four to six “gigafactories” – an industry name given to a battery plant with the capacity to build cells producing more than 10 gigawatt hours per year – to sustain a healthy EV industry.

This week, UK battery startup Britishvolt committed to investing more than £200m in a new facility in the West Midlands to test manufacturing techniques that will eventually be used at a planned £3.8bn battery plant, due to be constructed in Northumberland for production to start in 2024.

The gigafactory is being backed by the government, alongside investment firm Abrdn, fund manager Tritax and carmakers Aston Martin and Lagonda.

Peter Rolton, executive chairman of electric vehicle battery startup Britishvolt, shows plans for a battery plant in the former industrial town of Blyth in the North East (Photo: Nick Carey/Reuters)

The Government is also locked in talks with Jaguar Land Rover (JLR) to keep production of the firm’s future range of electric vehicles. JLR, which is owned by Indian conglomerate Tata, said it will “explore all options” for its battery supplies, despite previous commitments to maintain its main West Midlands factories, which employ some 30,000 people.

Despite these plans, there are few suitable sites for building EV battery plants. “In terms of shovel-ready land in the UK, there isn’t an obvious glow of places to go,” said Andy Palmer, chief executive of EV maker Switch Mobility and chairman of Slovak battery startup InoBat. “If the gigafactories don’t come here, the car companies will go where the gigafactories are. It’s just economics.”

One issue is that the UK produces a range of vans, cars, SUVs and luxury models with different battery needs, whereas other countries specialize in certain models with the same requirements.

“If you’ve got to build six different types of battery in one gigafactory, it will never be economically viable,” said Adrian Hallmark, chief executive of Bentley, owned by Volkswagen. He described the threat of cheaper production in Europe as an “existential problem” for the UK EV industry.

Another issue is raw materials. Tesla’s chief executive Elon Musk said his firm’s aspirations to deliver 20 million EVs a year by the end of the decade were at risk due to constraints in lithium and cathode production.

Those problems are likely to get worse before they get better: the global automotive industry is now the principal consumer of cobalt, a rare metal used to make lithium-ion batteries. The Cobalt Industry has warned that the car industry could account for half the world’s cobalt demand by 2026, a problem as supplies are concentrated in just a few locations and mined by just a few global companies.

It has led to the likes of Musk suggesting that car firms could buy a mining company just to secure their supplies for the future. “It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that,” he told a Financial Times conference.

To avoid those problems hamstringing the UK’s EV industry before it can even start, there needs to be widespread support not just for supporting the country’s plug-in infrastructure, but also for transitioning production away from fossil fuel vehicles, the SMMT has warned.

“The industry, as ever, is ready to take on the challenge, but we cannot do it alone,” Hawes added.

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