Just as restaurants tout reduced food miles by local sourcing, so the UK car industry is looking for suppliers closer to home as it overhauls its purchasing in the EV era.
Much of that is driven by legislation, specifically Brexit. The deal agreed with the European Union, the UK's biggest market, calls for a gradual decrease in parts sourced from outside the UK or EU from 60% now to 45% by the start of 2027.
Given that the battery in a modern EV might account for half the value of the car, the race is hotting up to find local replacements for a supply base that is currently dominated by Asian producers.
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It becomes even more urgent given that the value of UK-sourced parts for internal-combustion-engine cars is already low, at around 25% of the total.
The UK already has two new battery plants confirmed, both close to Newcastle, north-east England, that combined will come close to providing the 60 gigawatt hours of batteries industry lobby group the SMMT estimates we need by 2030.
But making the battery cells alone isn’t going to dramatically increase local content or boost our automotive economy. (Cell making is relatively low margin.) For that, we need to get involved in materials that make the cells – and that’s much harder.
The most expensive part of a cell is its cathode, the metallic elements that attract lithium ions from the anode and so generate electricity. The cost of the so-called cathode active material made of metals such as nickel, cobalt and magnesium, plus the lithium, can represent around 40-50% of the cell cost, according to Jon Regnart, automotive trend strategist at Advanced Propulsion Centre UK (APC), a government-funded body that is trying to refocus the UK's supply chain to fit the needs of car makers moving to EVs and other future technologies.
These cathode active materials have such an impact on cost that the UK's free trade deal with the EU decrees we have to source these from the UK or mainland Europe for the cell to be considered to be originating from the UK – ie the UK didn’t just import them from Asia (where the vast majority are currently made).
Currently, the UK makes no cathode active materials, which is a huge problem given that we are banning sales of new internal-combustion-engine cars by 2030 and hybrids by 2035. The UK’s Johnson Matthey was going to produce nickel-rich cathode materials but abruptly pulled out last November, citing “increasing commoditisation and lower returns” in the market. In other words, they couldn’t compete with the sheer scale of global players.
One big problem is getting hold of raw materials. Mining is a relatively low-value activity in the whole battery value chain, according to APC figures, but it does get you on the ladder and it does give you control of those materials.
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