Electric Vehicle
Battery Production
Commons Urgent Question
The following Answer to an Urgent Question was given in the House
of Commons on Wednesday 18 January.
“Britishvolt entering into administration is a regrettable
situation, and our thoughts are with the company’s employees and
their families at this time. The Government are entirely
committed to the future of the automotive industry and promoting
EV capability. As part of our efforts to see British companies
succeed in the industry, we offered significant support to
Britishvolt through the automotive transformation fund on the
condition that key milestones, including private sector
investment commitments, were met. Unfortunately, the company was
unable to meet these conditions and as a result no ATF funds were
paid out. Throughout the process, we have always remained hopeful
that Britishvolt would find a suitable investor and we are
disappointed that this has not been possible. We want to ensure
the best outcome for the site, and we will work closely with the
local authority and potential investors to achieve this.
The automotive industry is a vital part of the UK economy, and it
is integral to delivering on levelling up, net zero and advancing
global Britain. We will continue to take steps to champion the UK
as the best location in the world for automotive manufacturing as
we transition to electric and zero-emission vehicles.
Despite what the party opposite may claim, we are not giving up
on the automotive industry: on the contrary, our ambition to
scale up the electric vehicle industry on our shores is greater
than ever. We are leveraging investment from industry by
providing government support for new plants and upgrades to
ensure that the UK automotive industry thrives into the future.
Companies continue to show confidence in the UK, announcing major
investments across the country including: £1 billion from Nissan
and Envision to create an EV manufacturing hub in Sunderland;
£100 million from Stellantis for its site in Ellesmere Port; and
£380 million from Ford to make Halewood its first EV components
site in Europe. And we will continue to work through our
automotive transformation fund to build a globally competitive
electric vehicle supply chain in the UK, boosting home-grown EV
battery production, levelling up and advancing towards a greener
future.”
3.37pm
(Lab)
My Lords, 12 months ago, £100 million was made available by the
Government to Britishvolt to help unlock the necessary private
finance and the company’s future. Ministers were falling over
themselves boasting about how they were supporting 3,000 highly
skilled direct jobs and a further 5,000 jobs in the supply chain
in the north-east of England. But the money never materialised,
and we all now know the consequences. Does this signal the end of
the Government’s green industrial revolution, at the expense of
these jobs and the key role they would have played in the
electric vehicle industry and the wider decarbonisation of the
UK’s economy?
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy () (Con)
No, is the short answer to the noble Lord’s question. Of course,
before we make any government money available, we do the
appropriate due diligence. As a result of this work, the funding
was designed so that agreed milestones had to be achieved for the
company to draw down substantial amounts of taxpayers’ funds. In
the event, it was not able to meet those milestones, so the money
was not handed over. I am sure the Opposition would like us to be
careful with public money. If the alternative had happened and we
had handed over the funds and the company had still gone into
administration, I am sure the noble Lord would have been on his
feet demanding an inquiry into why we had been so careless with
public funds.
(Con)
My Lords, given that, as I am sure my noble friend agrees,
gigafactories are a vital part of our industrial infrastructure
going forward, is there not a case for publicly stating that they
must be home grown and for calling together successful UK
companies such as Rolls-Royce and BP, and entrepreneurs such as
Sir James Dyson, to try to find a structure that will take this
forward? Unless something like that happens, is it not a fact
that it will result in imports from China?
(Con)
The Government stand willing to talk to any manufacturers that
want to establish such facilities. There have already been a
number of excellent investments in the UK, supported by the
automotive transformation fund. The site in Cambois that was
going to be developed by Britishvolt remains available. Subject
to the decisions of the administrators and the local authority,
we very much hope that a project can be taken forward there.
(LD)
My Lords, the collapse of Britishvolt is a symbol of the
Government’s failure to create an industrial strategy to fill the
void left by Brexit. It is about much more than the loss of one
potential factory, because it threatens the future of the UK
car-manufacturing industry as a whole. The SMMT and the Advanced
Propulsion Centre estimate that we need 90 to 100 gigawatt
capacity by 2030 to supply the electric vehicle industry. Current
capacity is 2 to 2.5 gigawatts, so rapid expansion is urgently
needed. There is a forest of gigafactory projects throughout
Europe. Why does the Minister think those Governments have
succeeded, while our Government have failed to create the
industry needed? What discussions have the Government had in
recent weeks with UK-based vehicle manufacturers, which are
seriously concerned about the current void?
(Con)
We have constant discussions with UK motor manufacturers and of
course, we are always available for further discussions with
companies that want to bring forward projects. The noble
Baroness, as usual, is completely wrong. Already there have been
substantial investments in this country. On 1 July 2021, Nissan
and Envision announced a £1 billion investment to create a
north-east EV hub. The site will produce a projected 100,000
battery-electric cars each year. Ford has committed a total of
£380 million to make Halewood its first EV component site in
Europe. Pensana received an in-principle offer of government
support for its £145 million factory near Hull to make metal for
magnets. So, this investment is coming. Of course, it was
disappointing that the Britishvolt project was not successful,
but the site remains an excellent one for this investment.
Subject to discussions with the local authority and the
administrators, we hope it can be taken forward.
(Lab)
My Lords, what does the Minister anticipate the future of Jaguar
Land Rover to be if there is no battery factory to supply it in
the UK?
(Con)
Jaguar Land Rover has an exciting future. It is an excellent
company, providing brilliant vehicles that are exported all over
the world. I am sure that it wants to make sure that its supply
chain is appropriately robust.
(CB)
What would the Government do differently in future? What have
they learned as a result of this failure—or is the Minister’s
position genuinely that it is just one of those things, and these
things happen?
(Con)
I think we acted appropriately. We agreed a grants award with
this company, and we very much hoped that that project could be
taken forward. It was a substantial amount of grant aid, but
appropriate due diligence was done. The company produced a
business plan and we set out an agreed series of milestones that
it needed to meet, including securing the necessary private
investment, before the public funds could be released.
Unfortunately, it did not manage to achieve that. As I said in
response to the noble Lord, , noble Lords would have
criticised me if we had released the funds and the company had
then gone into administration.
(Con)
Jaguar Land Rover and Mini are iconic examples of British culture
and manufacturing. How can the Minister be satisfied with new
Jaguar Land Rovers only being supplied with one key because the
company does not have chips, and with electric Minis being made
in China? Surely this cannot be right, and the Government need to
get a grip on this.
(Con)
I know that my noble friend has personal experience of problems
with his keys, and I hope they are resolved. That is not intended
as an obscure comment—his is a genuine complaint, and I know it
will be resolved. Of course, it is always regrettable if
manufacturing is outsourced overseas, but the UK car industry has
been successful in the past, and we have one of the biggest car
industries in Europe. A massive programme of transformation is
required in the industry as we move towards more electric
vehicles, but I am sure that the industry will rise to the
challenge.
(LD)
My Lords, the Minister, given his intimate knowledge of the trade
and co-operation agreement, will know that there is an important
clause relevant to this. In 2024, the rules of origin for
electric vehicles change, increasing the need for local content.
Because batteries make up so much of electric cars, we cannot
achieve that local content without batteries being built in this
country. Will the Minister tell the House whether his department
speaking to the other relevant departments in government to
reopen this negotiation? Is it this Government’s intention to
push back the commencement date of this clause, because without
doing so, we have a really serious problem here?
(Con)
Like the noble Lord, I am familiar with the rules of origin
provisions of the TCA. There was a lot of debate about this at
the time, and we continue to keep an eye on it. Of course, there
are discussions across government. One of the reasons for setting
up the automotive transformation fund was to attempt to get more
of these gigafactories into the UK, and we stand ready to talk to
any other prospective investors to do that.
(Lab)
My Lords, since 2016, UK car production has nearly halved. Honda
has closed its factory in Swindon and BMW is moving production of
its electric Mini from Oxford to China. We really need to make
sure that we have good infrastructure, especially when it comes
to electric batteries. With that in mind, would the Government
consider bringing Britishvolt into public ownership? That is the
only way to make sure we have a viable local player.
(Con)
I note the noble Lord’s nostalgia for the great, successful
British industries of the 1970s under public ownership, but I do
not think that is a viable suggestion. Government has proved that
it is not good at running businesses and industry—we should leave
that to the private sector, with appropriate government support
where required.
The Lord
My Lords, the Minister loves the north-east, just like I do, and
has noted that this is an extremely suitable site. Is not part of
the problem that the return on investment is a very long way
forward, so will the Government consider upping the amount they
are willing to commit upfront to enable production on this
site?
(Con)
The amount of money on offer here was very considerable. I am not
going to get into details of commercial negotiations but as I
said, we stand ready to talk to any potential investor in that
site or any others. The right reverend Prelate is right that this
is one of the best sites in Europe for such a facility: it has
the right shape, connections and location. We are optimistic it
will be taken forward, but as the right reverend Prelate will
understand, I am not going to get into commercial negotiations at
this point.
