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Insider UK
Business
Peter A Walker

Hopes for more UK gigafactories ‘face dead end without more investment’

Ambitions for more electric car battery plants to be planned in the UK could “reach a dead end” without increased financial support, MPs have said.

A government scheme expected to support the establishment of so-called gigafactories is “insufficient”, the Environmental Audit Committee (EAC) warned.

The Automotive Transformation Fund is worth just £500m, but a single gigafactory costs between £2bn and £4bn to set up, according to the committee.

The EAC has heard evidence that governments in other European countries are supporting factories with £750m each.

There are no gigafactories in the UK, but in recent months openings in Blyth and Sunderland have been confirmed, while there is also a proposed plant in Coventry.

Thuro-based battery producer AMTE Power has set out its own plans, with a trading update today noting that a recent IPO has "accelerated investment in its people and the preparatory work around the gigafactory", resulting in an increase in operating costs.

It added that the company "is in regular dialogue with elements of the UK Government to secure funding for the expansion of production capacity to gigafactory levels" and is on track to confirm plans and select a site in 2022.

An estimated five more are required by 2027 to meet ambitions for the production of battery electric vehicles in the UK for sale in domestic and EU markets, according to the EAC.

Tory MP Philip Dunne, who chairs the committee, said recent announcements about gigafactories being opened in the UK are “clearly welcome”, but for the UK to reach net zero carbon emissions “we still need to take it up a gear”.

He went on: “We doubt the £500m government funding left in reserve for automotive transformation will be sufficient to secure the additional 100 gigawatt hours of gigafactory output needed for the UK electric vehicle sector to reach its full potential.

“Without further support, establishment of the battery electric vehicle sector in the UK - critical to maintain our auto industry supply chain - will reach a dead end.”

Prime Minister Boris Johnson gave the clearest signal yet that Westminster will lend support to the building of the proposed plant in Coventry during a visit to the UK Battery Industrialisation Centre in the city on Thursday.

In a speech, he said: “We need these batteries, there’s absolutely no question, it’s great that Envision is bringing a gigafactory to Sunderland and we have high hopes of the BritishVolt plant in Blyth.

“But even those two together will only supply a fraction of the demand that the UK’s own domestic vehicle market will have.”

He added the UK could also “do much more” to source chemicals and metals in the UK, “to make sure this country retains its lead in devising ever cleaner, ever greener, more beautiful technology”.

A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “The UK continues to be one of the best locations in the world for automotive manufacturing, particularly for electric vehicles, through major investments to electrify our supply chain, create jobs and secure a competitive future for the sector.

“This has been clearly demonstrated by Envision AESC and Nissan, which have recently announced a £1bn investment in Sunderland, backed by government.

“We have pledged hundreds of millions of pounds to support the development and mass-scale production of batteries for electric vehicles and are dedicated to securing the UK gigafactories we need to deliver on our ambitions.”

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