The Britishvolt gigafactory collapse

From Ecosocialist Discussion

The recent collapse of Britishvolt’s £3.8 billion lithium-ion electric car (EV) battery gigigafactory in Blyth in Northumberland is an existential threat both the future of car making in Britain and the transition to green energy and zero carbon.

The Britishvolt initiative was promoted by Boris Johnson, who put £100m of government money into the plant in 2021, as a part of his “green industrial revolution” and his bogus “levelling up” agenda. It was also in one of the ‘red wall’ seats that had gone Tory at the last general election. As Johnson tweeted at the time: “Fantastic news that EV pioneer Britishvolt will build a gigafactory in Northumberland, creating thousands of jobs in our industrial heartlands and boosting electric vehicle production as a part of our Green Industrial Revolution.”

The plant was designed to produce 100,000 batteries a year but collapsed before production had even started. The first batteries had been due to come off the production line by 2024 and full production reached by 2028. Work was halted, however, in August 2022 when the project ran out of money. The 300 workers already employed at the plant were sacked following the announcement.

The Blyth location had been determined by its proximity to one of NISSAN’s biggest car plants in Sunderland in Tyne and Wear, which employs  6,000 workers producing the Nissan Qashqal.

Although the collapse did not come as a surprise, since it was under-funded from the outset, it comes at a time when car making in Britain has semi-collapsed and is facing possible wipe-out. The industry is a shadow of its previous self and what is left is owned entirely by foreign multi-nationals. Last year its production was the lowest for 66 years.

There are two principal reasons for the demise of the UK car industry.

The first is Brexit, which robbed it of its tariff-free entry into the EU single market – which by that time was its principal rationale for existence. It also added reams of export import paperwork that is incompatible to vehicles criss-crossing Europe as a part of just in time production models.

The Honda plant in Swindon announced its closure soon after the Brexit vote. Even Nissan with a major investment in Sunderland would have relocated after the Brexit vote had it not received special backdoor assurances from Downing Street. The Brexit dimension will become even more acute in 2027, when, under the terms of the UK-EU trade deal negotiated by Johnson, all EVs entering the EU must have batteries that were manufactured either in the UK or the EU.

The second is the UK’s disastrous response to the speed of the EV revolution, which has exceeded all expectations, and which has put the plans to end the production of new internal combustion engines (ICEs) by 2030 in Britain and by 2035 in the EU and the USA within reach

The industry research analyst EY has just published the following remarkable figures:

“Electric vehicle sales in the US, China and Europe will outpace all other engines three years sooner than previously expected. The latest predictions show that by 2027 EV sales in Europe will surpass those of other powertrains (or energy sources), a trend that will be repeated in both China and the US by 2032.

For Europe and China this is one year faster than previously expected and for the US four years faster.” Their analysis also shows that by 2040, ICE vehicle sales will shrink to less than 1% of global sales, five years faster than previously expected.”

Against such a situation the UK government has failed completely to plan for the kind of battery capacity that would support a viable EV manufacturing industry to exist in this country. All that currently exists is a small Chinese owned battery plant in Sunderland which produces batteries for the Nissan Leaf.

David Bailey a professor of business economics at the Birmingham Business School an impressive annalist on this subject, has concluded that a viable EV manufacturing capacity in this country require the construction of 8 gigafactories the size the one that has just collapsed.

Any viable EV production capacity, moreover, must be based on locally manufactured batteries, since the weight of an EV battery makes long supply chains unacceptable from either an economic or an environmental perspective. In fact, the location of the battery manufacture today determines the location of the assembly plants rather than the other way around. It is not impossible to produce EVs without locally sourced batteries but it is second best and probably temporary.

In fact the race is on to establish the battery manufacturing capacity that will be needed. It is a global scramble for future dominance of the automotive industry during the transition from the ICE to electric power, and under conditions where Britain has yet to locate the starting blocks.

There are already 40 gigafactories either in production or being built in the EU while the USA has five plants in production, 12 more in the pipeline, and another 20 planned by 2030. China, which is already the global battery super power, is now building a new battery gigafactory every week, and the USA is building one every four months.

Six battery manufacturers dominate the global lithium-ion EV battery market. These are the Chinees companies BYD and CATL, the Dutch/American company LG Chem, the Japanese companies Panasonic and Samsun, and the South Korean company SK Innovation. They accounted for approximately 87% of the global battery capacity in 2021. CATL is by far the biggest and manufactured a third of the world’s EV batteries in 2022, supplying them to Tesla, Peugeot, Hyundai, Honda, BMW, Toyota, Volkswagen, and Volvo.

The BMW plant in Cowley, which currently produces 40,000 electric Minis a year, alongside petrol powered cars, with batteries sourced from Dingolfing in Germany, has announced that the electric Model will be switched to China by the end of this year. Although BMW has given assurances that the petrol version will continue in Cowley the fact that the production of petrol powered vehicles will be banned after by 2030 means that it could hardly be more empty.

Why does this matter?

All this matters, first and foremost, because a strong and viable lithium-ion EV battery manufacturing capacity is crucial if we are to have the fully decarbonised, publicly owned, transport, sector that we need for the future. Multiple forms of electricity storage, including batteries, is also the corner stone of a fully decarbonised economy.

It is important that the UK has a viable EV production capability and we should insist that it does. Transport accounts for around 30% of global CO₂  emissions, and 72% of these emissions come from road vehicles  – cars, vans, lorries, buses.

Fortunately, is also the easiest of all the major carbon emitting sectors of the global economy to decarbonise, since it’s obvious replacement, electric power, is a tried and tested alternative energy source that has been suppressed, for the whole of the 20^th century, by the oil lobby. It has long been the low hanging fruit of carbon reduction and it offers the biggest CO₂ reduction in the shortest time that available to us on the planet.

Our aim, however, must not be the replacement of the current global fleet of fossil fuel powered vehicles with a similar number of EVs. Two things are necessary. First we need a major reduction in passenger cars world-wide and big changes in the way they are used. Secondly fossil fuel cars, and other forms of carbon driven transportation, must be completely phased out and replaced by 100 per cent electric vehicles.

Some cars and vans will still be necessary, of course, for the foreseeable future, but they need to smaller (i.e. with a drastic cut in SUVs) powered by electricity, and collectively rather than privately owned. The key to this is a comprehensive system free safe and reliable public transport at every level – cities, towns and intercity. The current car culture needs to be challenged and a culture of collectivised transportation promoted.

The World Health Organisation, moreover, has long identified the internal combustion engine (ICE) as the biggest single environmental outdoor health risk in the world, contributing to 3.7m deaths a year.

The advantages of EVs are already clear. They already emit far less CO₂ than fossil fuel vehicles, which will be further improved once the national grid is decarbonised. They emit far less roadside pollution, they are simpler and to manufacturer and maintain than IEC vehicles. They last longer and are cheaper to maintain and refuel than either petrol or diesel vehicles.

Alan Thornett, Feb 4 2023.