Sunday, July 21, 2024
Sunday, July 21, 2024
Home » How a Brexit Stitch-up and Battery Failures Left Britain’s Car Industry on the Brink

How a Brexit Stitch-up and Battery Failures Left Britain’s Car Industry on the Brink

by Finley Hawkins
0 comment 105 views

They were meant to create a homegrown electric vehicle industry and wean manufacturers off their dangerous addiction to China.

But as the dust settles, car import rules agreed between Britain and Brussels in the wake of Brexit look less like a farsighted, mutually beneficial agreement – and more like an existential threat to the UK’s struggling companies.

From January next year, cars must have at least 45pc of their components by value made in either the UK or European Union. Those which fall short of this level will be slapped with a 10pc duty if exported to the Continent.

The plan was to encourage companies to set up supply chains closer to home, particularly with regards to the so-called gigafactories that make batteries for electric vehicles, a field increasingly dominated by China.

The trouble is, Britain has failed to create a homespun battery industry. And as the deadline looms ever closer, carmakers fear that the risk is becoming overwhelming.

Car giant Stellantis has said the tariffs could mean it has to close its Vauxhall van making factory at Ellesmere Port. Ford and Jaguar Land Rover (JLR) have also said it is too soon for the rules to be in place.

“It will wipe out potential profit,” says Andrew Graves, a car expert at the University of Bath.

“So basically, you will start to lose the whole of the UK industry, not just Vauxhall and a couple of other manufacturers, but it really makes no industrial sense to locate in the United Kingdom.”

Honda has already left Britain, closing its Swindon factory, which put a permanent dent in UK production numbers. It leaves Nissan, JLR, Toyota and Mini as large-scale manufacturers here.

Around 80pc of British-made cars are sold abroad, half of them in the EU. Stellantis currently imports batteries made in China by CATL, while Nissan is supplied by the UK’s only gigafactory and Mini gets the components from Germany. Toyota does not yet make electric cars in Europe.

While 45pc also sounds like a modest demand for local parts, electric cars rely on a host of exotic materials from lithium, cobalt and nickel in batteries to the magnets found in electric motors.

Many of the refineries for these materials are in China, and the host of other imports car makers make – wire harnesses from Ukraine, for instance – start to tip the balance further towards foreign-made components. 

Complying with the rules means building gigafactories, but also the facilities which supply them; refineries for lithium and graphite and other supplies.

With 2024 months away, this is a tall order and the industry would like rapid action.

“At a time when every country is accelerating their transition to zero emission transport, and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly,” says Mike Hawes, chief executive of the Society of Motor Manufacturer and Traders lobby group.

“We urgently need an industrial strategy that creates attractive investment conditions and positions the UK as one of the best places in the world for advanced automotive manufacturing.”

The last decade has not been kind to Britain’s car industry. Brexit made operating more costly because of the added paperwork in moving cars and parts across borders.

Russia’s attack on Ukraine has driven up energy bills, worsening an existing gap in price which makes electricity more costly in Britain compared to the Continent. 

The war and the pandemic tipped supply chains upside down and led to shortages of parts, particularly in computer chips. Production is still below 1m a year, way behind its pre-pandemic peak.

Britain’s most ambitious independent battery maker, Britishvolt, collapsed into administration earlier this year.

According to founder Orral Nadjari, it failed in part because of foot-dragging by the Government in funding the factory after the exit of its biggest political backer, former Prime Minister Boris Johhnson.

Mr Nadjari told Sky News that he fears the UK is too far behind now to catch up.

But the UK does have options left, says Guy Winter, a lawyer at Fasken specialising in mining.

The EU’s biggest fear, he says, was that British carmakers would buy in cheap Chinese components and undercut the bloc’s own industry.

However, he says that creating a UK processing industry could help allay this concern.

Many of the minerals used in electric cars come from Australia and Chile, but that is not necessarily a problem as long as value is added by refining and processing them in Britain.

Meanwhile, lithium mining sites in the UK could produce much of the supply needed for one of the most important elements in batteries. The UK also has access to some of the world’s largest wind farms, cheap land in the North East, and skilled workers to refine the metal and other components.

The industry wants a plan where Britain can show that it is laying the groundwork for building a supply chain for electric cars.

Showing Brussels that the UK is onboard with creating a European supply chain and wants to ease China’s grip on the industry will probably grease negotiations.

The EU is also likely to be nervous about the sheer size of the subsidies the US has shown it is willing to unleash for green industries, committing hundreds of billions of dollars as part of President Joe Biden’s Inflation Reduction Act.

“There’s always going to be a fear now in the EU, that the US will act in its own best interests, and to the possible detriment of the EU,” says Winter.

This could mean that the EU will want friendlier ties with the UK to work together, pooling investing power.

Britain can offer some lithium reserves and its huge potential for offshore wind.

But progress so far does not bode well, Winter adds, recalling a conversation about critical minerals with a Parliamentary committee three years ago.

“I said, this is now an urgent, seven-year challenge,” he says.

“And basically, we haven’t done anything in real terms. I think that the progress has really been incredibly disappointing.”

A hint of rosier news came from the Chancellor Jeremy Hunt. The UK is attempting to help woo Jaguar Land Rover’s owner Tata in placing a battery plant in the UK to supply the car maker. 

He told the British Chambers of Commerce’s annual conference that  “we need to have battery making capacity in the UK”.

Mr Hunt said: “All I would say is, watch this space, because we are very focused on making sure the UK gets that EV manufacturing capacity.”

If Britain’s carmakers are to avoid disaster, that focus needs to generate results – fast.

Source: telegraph

You may also like

Yew Media is a global leader in the online news. We seek to inform and engage with our readers. Staffed 24 hours, seven days a week by a dedicated team around the globe, we deliver news from journalists around the world. We are contrarian truth-seekers and truthtellers. We are journalists united by a mission to inform and engage with our readers. We bear witness to history as it unfolds and explain not just what happened, why it happened and what it means to our readers and the public. We are contrarian, we are committed to the news, speaking truth to power.

Yew Media, A Media Company – All Right Reserved.