Kevin Brundish, CEO of AMTE Power, commenting on how COVID-19 has highlighted a substantial problem in global manufacturing supply chains.

The need for strong, stable, onshore supply chains in the face of global disruption has never been more apparent. Political uncertainties, trade wars, and the pandemic have all highlighted an imbalance and over-reliance on the Far East, posing a particular threat to the effectiveness of manufacturing in Western countries, such as the U.K and the U.S. This is especially relevant as the unprecedented transition to vehicle electrification and renewable energy is gaining momentum – in order for countries worldwide to meet zero-emissions targets by 2050.

By 2040, over half of cars are projected to be powered by electricity[1], with the lithium-ion battery playing a key role as the most valuable component, and making up around a third of an electric vehicle’s cost. However, global demand for battery manufacture is outstripping supply, and the market is still reliant on a few large-scale, offshore manufacturers, creating uncertainty and risk. The pandemic has brought the nature of global supply chains into sharper focus, and has caused significant disruption – China, as a global hub for sourcing, dominated a staggering 70 percent of the battery market[2].

To counter these trends, disruptive, emerging areas of niche manufacturing – such as vehicle electrification and energy storage – now provide a vital moment for the U.K. to establish a more robust position on the global stage. British manufacturing firms such as AMTE Power are carrying forward the country’s heritage in best-in-class engineering capabilities that shine through in support of these niche markets. These are skills that are critical to the U.K.’s development of high-performance vehicles, and although onshore electric vehicle production (EV) remains in its infancy, there is vast opportunity for the country to seize. In the U.K. alone, the EV market is forecast to be worth £8.7 billion by 2030, with an estimated 980,000 vehicles being made a year^[3].

Many new electric car models are due to be released in the next couple of years, giving consumers a greater choice and driving down premiums on price. This will consequently drive demand for lithium-ion cells, presenting a real opportunity to revitalize automotive industries. The Faraday Institute project the European demand for U.K.-produced batteries is set to skyrocket up to 200 GWh per year by 2040 – the equivalent of up to 13 gigafactories. In the absence of any onshore battery manufacturing facilities, British automotive jobs are predicted to be lost by 2040. In order to meet this demand and retain the country’s status as an international automotive leader, having a robust onshore supply chain is critical.

Aligning with the country’s Industrial Strategy, which outlines the government’s ambitions on EV and battery technologies, the U.K. should now be building out their own independent infrastructure for lithium-ion batteries. Through initiatives such as the Faraday Challenge, a springboard is being provided to invest in research and development for high-value areas of the EV supply chain, where the country has a comparative advantage. However, more support is needed from the U.K. government, to invest and provide incentives to support the transition to electrification, while prioritizing the creation of onshore plants, and supporting firms like AMTE’s own gigafactory plans. It is potentially dangerous, costly, and increases carbon footprints to import batteries from the Far East – the exact issue the global community is fighting against.

The quality of talent, research, and skilled labor in the West provides the perfect backdrop to develop a sustainable onshore EV ecosystem – British manufacturing companies in particular have a world-renowned history of excellence in niche automotive manufacturing. The shake-up of the global supply chain is bound to draw in investment, stimulating the economy and creating jobs whilst mitigating the risk of unpredictable external factors, such as COVID-19.

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References

[1] https://www.forbes.com/sites/rrapier/2019/08/04/why-china-is-dominating-lithium-ion-battery-production/#6a69cc103786

[2] https://www.forbes.com/sites/rrapier/2019/08/04/why-china-is-dominating-lithium-ion-battery-production/#6a69cc103786

[3] https://www.itproportal.com/features/its-electrifying-what-does-the-future-spell-for-the-auto-industry/