Can the UK lead the world in the development and production of
batteries for electric cars?
This is the stated aim of the government’s support programme for
the battery sector. Yet, in the light of the current state of the
UK battery sector and the strength of international competition,
world leadership in car batteries is almost certainly
unattainable. If the demand for electric cars grows as fast as
many forecasters expect, investment in battery production should
be financed by the private sector, argues Sir Geoffrey Owen,
Policy Exchange’s Head of Industrial Policy and a former editor
of the Financial Times, in a new paper Batteries for
electric cars: a case study in industrial strategy.
The Faraday Challenge has made £246 million of taxpayers’ money
available to establish and maintain a leading position for the UK
in battery technology. Given the increasing importance of energy
storage, for the electricity grid as well as for cars, the
government is right to step up state funding for academic
research in this area, but the case for government support at the
commercialisation stage is much less clear. There are also
dangers in a single national programme which may be skewed in the
direction of supporting existing technologies, rather than
pushing out the technological frontier.
Sir Geoffrey said:
“The government’s industrial strategy sets out a range of broad
policies aimed at improving the business environment as a whole.
But the strategy also involves support for particular
technologies which, in the government’s view, offer promising
commercial opportunities and in which UK-based firms, with
government help, should be able to improve their competitive
position.
“The choice of batteries as an early target was based partly on
the belief that the UK car assemblers are more likely to make
electric cars in the UK if they have access to a viable battery
supply chain including the manufacture of battery cells. The
government is understandably concerned about the future of the
British car industry as it makes the transition to electric cars
- a concern shared by governments in other car-producing
countries. Yet the presence or absence of cell-making capacity is
unlikely to have a decisive influence on whether these companies
make their electric cars here. If the future for electric
cars is as bright as many forecasters expect, investment should
be provided by the private sector.
“In batteries, as in other technologies targeted in the
industrial strategy, we need the fullest possible rationale for
government intervention, based on a realistic assessment of the
UK’s current strengths in the relevant sector. This must go with
rigorous evaluation – and a willingness to call a halt if the
programme is not achieving its original objectives. Industrial
strategy should not be used as a means of giving open-ended
support to favoured sectors in the belief that one day they will
become world leaders”.
ENDS
Notes
The Faraday Challenge is a £246 million support programme
announced by the Government last summer as part of the Industrial
Strategy Challenge Fund.
You can read an embargoed copy of the report on Policy Exchange’s
website
