Brexit Exposes U.K. Car Sector’s Lack of EV Batteries

Britain must build up its electric-vehicle battery industry in the coming years or it will lose out to the European Union in the intensifying race to build plug-in cars, the country’s automotive trade group warned.

The Brexit deal reached late last year gives carmakers and their suppliers little time to localize production, Mike Hawes, the chief executive officer of the Society of Motor Manufacturers and Traders, said in a briefing with reporters. It’s a tall order for an industry coming off the steepest annual drop in vehicle sales since 1943.

Battery packs have to have 30% of their content sourced from the U.K. or EU at first to trade tariff free as part of the agreement, and those requirements get stricter starting in 2024. Hybrid and electric vehicles also will be subject to rules of origin that start out easier relative to combustion cars, taking account a lack of local production of batteries now. But they too will get tougher three years from now.

The requirements put Britain’s vehicle plants in a bind, Hawes said. Battery packs are heavy and would be costly to ship from plants in the EU, so it will be key to have factories in the U.K. feeding local car-assembly sites.

Brexit Exposes U.K. Car Sector’s Lack of EV Batteries

For now, Britain’s battery making is limited to one site that feeds packs to Nissan Leaf electric hatchbacks in Sunderland, England. The startup Britishvolt Ltd. announced plans last month to build a factory in northeast England, but the company has released little detail on how it will fund the project.

Established battery manufacturers such as LG Chem Ltd. and Samsung Electronics Co. as well as startups including Northvolt AB are planning much more capacity in the coming years elsewhere in Europe. Germany and France are among the national governments committing billions to support the projects.

Sales of plug-in cars were a bright spot in an otherwise gloomy year for the U.K.’s auto industry. Shipments collapsed 29% in 2020, equivalent to more than 20 billion pounds ($27 billion) in lost revenue, according to SMMT. Still, it was a record year for fully-electric and hybrid vehicles, which accounted for more than one in ten registrations, up from about one in 30 in 2019.

©2021 Bloomberg L.P.

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