Electric Mini’s Reliance On German Batteries Highlights UK Weakness

- Jul 26, 2017-

Winning production of the electric Mini was supposed to shoot a current through the UK’s ambitions as a pioneer of battery vehicles. But the announcement from BMW that it would make the car in Oxfordshire came with a caveat — the batteries will be German. While it will assemble the cars in the UK, BMW will ship battery packs and electric motors from plants in Bavaria — a costly exercise, but one that the company deems worthwhile because of the investment and expertise it has there. The UK government this week announced the first phase of a £246m programme to help develop battery technology in Britain, in the hope that it will attract investments from the international carmakers who have spurred near-record levels of production. Britain made 2.5m engines last year, across brands such as Ford, Jaguar Land Rover, BMW, Honda, Nissan and Toyota but the vast bulk are petrol or diesel powered. There is some UK expertise in low emission cars. Nissan manufactures the electric Leaf at its plant in Sunderland in north-east England, where it also makes battery cells and electric motors in the largest clean-room in Europe. But the lack of a central plant making the lithium-ion batteries that power electric cars has held back production of other models in the UK. Jaguar Land Rover, for example, is building its first electric vehicle in Austria because of the lack of a battery factory in Britain. One major problem is that the batteries are very heavy. “Moving a battery from one place to another is horrendous,” said Lord Kumar Bhattacharyya, who runs the manufacturing group at Warwick university. “You have got to have the car factory nearby.” Warwick is one of the groups that has applied for a tranche of the government funding to set up a battery prototyping centre to help carmakers produce electric vehicles in the UK. Even if the research areas the government is targeting are among the right ones, this amount of money is less than what leading battery manufacturers are already investing annually in R&D LOGAN GOLDIE-SCOT, ENERGY STORAGE ANALYST But not everyone is convinced the £246m of state support will be much help. One person involved in the process called the result a “damp squib”. Analysts also said it was far from clear if the UK could make much of a dent in an industry where billions of dollars have been invested over many years in the world’s four biggest battery producers: China, South Korea, Japan and the US. The UK is a minnow in comparison. Its annual lithium-ion battery manufacturing capacity is 1.4 gigawatt hours, according to the Bloomberg New Energy Finance research group. China has 72GWh while Japan has 14GWh. Both South Korea and the US have about 18GWh but the US figure includes only part of the 35GWh scheduled for the Tesla car company’s new battery “gigafactory”, which has yet to reach full production capacity. The companies behind this growth are already raising significant amounts as they seek to develop better, cheaper, longer-lasting batteries. In one deal alone in April, a subsidiary of the China and US-headquartered Microvast company raised $400m in venture capital funding to help develop the lithium-ion battery systems it has installed in more than 15,000 electric and hybrid vehicles. Not all investments are as big as this but the transaction underlines the challenge of ensuring the UK’s £246m has a meaningful effect, especially if the money is split among many different companies. “Even if the research areas the government is targeting are among the right ones, this amount of money is less than what leading battery manufacturers are already investing annually in R&D,” said Logan Goldie-Scot an energy storage analyst at Bloomberg New Energy Finance. Other governments are also keen to develop the technology. In the wake of the 2008 financial crisis, the US federal government awarded $2.4bn in grants in 2009 under the American Recovery and Reinvestment Act to makers of lithium-ion cells and battery packs to boost domestic manufacturing. RECOMMENDED BMW chooses UK to make fully electric Mini The Big Read: Tesla and Elon Musk’s moment of truth Lex: Electric vehicles, watts up Individual states made separate investments. Michigan alone offered more than $1bn in grants and tax credits to lithium-ion battery makers, while also investing in research centres. Still, many UK battery companies are pleased with a move they said sent a signal about the country’s openness to investment. Chris Wright, chief technology officer of Moixa, a small London-based company that makes home battery systems, said: “It’s really great news that the smart technologies we have been developing are now getting real attention.” Francisco Carranza, a Nissan director, said the government support gives clarity on the “road map” towards using battery technology in UK homes and cars. “This is probably the first time I have seen a very clear statement on how we get to this sustainable economy. For our company it makes it much easier to invest in the market.”