Boosting Britain’s Automotive Industry

The automotive industry is a vital component of the UK economy, providing a turnover of £82 billion in 2018 and accounting for 14.4% of the UK’s total export of goods[1].  However, the global automotive landscape is changing, and the accelerating issue of climate change is forcing governments around the world to implement radical policies and regulatory measures in an effort to reduce road carbon emissions.

In 2018, the UK government launched its “Road to Zero” strategy which established the government’s ambition to entirely phase out the sale of new fossil fuel vehicles by 2040.  Moreover, according to sources within the energy and transport industries[2], this target is shortly expected to be brought forward by 10 years to 2030 in order to accelerate the rollout of electric vehicles across the UK.

More than a dozen other countries, including France, Germany and the Netherlands, have outlined similar plans to phase out the production of fossil fuel vehicles within the next two decades, and the effect of such measures is becomingly increasingly apparent.  In 2010, the global stock of electric vehicles lay in the region of 17,000.  However, by 2019, that number had surged to 7.2 million, accounting for approximately 2.6% of global car sales in 2019, and about 1% of global car stock[3].

Given the approaching ban on fossil fuel vehicles, this rapid expansion in passenger car electrification is set to continue.  The question is, how will the UK automotive industry react? Will the next generations of electric vehicles be produced in the UK, or will the UK gradually cease to be a manufacturer of vehicles and instead become an importer?

According to a recent report by the Faraday Institute[4], the answer to this question will largely be determined by the UK’s future approach to batteries, and in particular by whether the batteries for electric vehicles are manufactured within the UK.

With batteries contributing to approximately 40% of the total value of an electric vehicle, their importance to the future of the automotive industry cannot be overstated.  In addition, strong synergies can be achieved by locating vehicle producers and battery manufacturers in close proximity to one another.  For example, a close proximity of vehicle and battery manufacturers enables the formation of an improved knowledge ecosystem, allows supply chains to be better protected against political and climate shocks, and is able to provide greater flexibility for “just-in-time” production.

As a result of these synergies, and the intense competition within the global automotive market, if electric vehicle batteries are not manufactured within the UK, global car manufacturers are likely to turn their funds elsewhere and not invest in the production of electric vehicles within the UK.  Therefore, if the UK wants to remain a key player in the global automotive industry, it will need to start planning for a significant ramp-up in battery production.

The Faraday institute estimates that the UK will need to increase its battery manufacturing capacity to approximately 140 gigawatt-hours a year by 2040, up from 2 gigawatt-hours a year currently, in order to support the electrified automotive industry of the future.  This would require the creation of large-scale battery production plants within the UK, commonly referred to as “gigafactories”.

AMTE Power and Britishvolt are two British battery manufacturers that are already looking to seize this opportunity.  Earlier in the year, the pair signed a deal to collaborate on building the UK’s first gigafactory to supply batteries for the UK car industry.  The project has a prospective manufacturing start date of 2023 but, with an estimated cost of £4 billion, the project will need significant government support and a strong partnership with the UK automotive industry in order to succeed.

Regardless of the success of this particular project, it is clear that there is a large window of opportunity for vehicle and battery manufacturers over the next few years.  If automotive manufacturing is to remain a mainstay of the UK economy, businesses will need to innovate and invest in new battery technology as soon as possible.

Of course, in order to protect such investments, it is critical for a business to have an effective IP strategy that is tailored towards their commercial goals.  The attorneys in Gill Jennings & Every’s Advanced Engineering Group have a wealth of expertise in the battery and electric vehicle technologies, and would be happy to assist with your IP needs.

If you would like more information on this article, or would like to discuss your IP needs, please find my contact details on my website profile here or contact us at gje@gje.com.

[1] https://www.smmt.co.uk/industry-topics/uk-automotive/

[2] https://www.theguardian.com/environment/2020/sep/21/uk-plans-to-bring-forward-ban-on-fossil-fuel-vehicles-to-2030

[3] https://www.iea.org/reports/global-ev-outlook-2020#the-global-electric-vehicle-fleet-expanded-significantly-over-the-last-decade-underpinned-by-supportive-policies-and-technology-advances

[4] https://faraday.ac.uk/wp-content/uploads/2020/03/2040_Gigafactory_Report_FINAL.pdf