A report by the Green Finance Institute’s Coalition for the Decarbonisation of Road Transport (CDRT) illustrates how the UK could become a global player in electric vehicle batteries (EVs) if billions of pounds are invested now in building a battery supply chain.

The report Power the device to Net Zeroemphasizes the possibility for the United Kingdom to invest in global demand for batteries for electric vehicles, which are expected to be at the heart of the future of road transport.

In addition, the report warns that there is a narrow window to seize this opportunity and significant barriers to investment must be overcome.

Lauren Pama, Program Director, CDRT, said: “The global EV market is vying to expand the battery supply chain. This search means new investment opportunities in the UK, but only if barriers to realizing these opportunities are removed. Cross-sectoral cooperation is crucial to identify solutions that will eliminate investment and unlock the capital needed to build the battery supply chain that will secure the future of the UK car industry.

Mike House, CEO of the Society of Motor Manufacturers and Dealers (SMMT), added: “To ensure that the United Kingdom remains globally competitive as an electric vehicle manufacturer, we need urgent support to help with the transition. of our supply chain, to strengthen retraining and skills programs and, crucially, to increase our capacity to produce batteries at home. “

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EVs and financing the pursuit of net zero

Power the device to Net Zero concludes that only the private sector can provide the funding at the pace and scale needed for the transition to cleaner road transport.

At present, battery supply chain organizations find it difficult to secure the high levels of funding needed to scale up, as battery development is often considered high risk. Banks and institutional investors are wary of investing in an emerging sector, especially when future revenues are uncertain and battery purchase agreements have not yet been signed.

This means that developers need to overcome what the CDRT calls the “valley of death” for funding, as they seek to expand, with challenges around securing investments that match the risk profile.

The report finds that financial decisions, including risk mitigation mechanisms, such as guarantees, along with supporting government policies, are essential to unlock the larger amounts of capital needed to build battery supply chains.

He warns that the failure to invest now risks other countries seizing this opportunity, as investment implementation times and battery construction periods could be extended to several years.

Investors can benefit from an orderly transition from an internal combustion engine (ICE) to the production of electric vehicles, as revenue from one is replaced by revenue from the other. The successful transition will also provide opportunities to invest in the infrastructure needed to recycle waste batteries, reducing the need for primary materials.

Richard Hill, Head of Automotive and Manufacturing, NatWest, a member of CDRT, said: “The window of investment opportunity in the UK is closing fast. Reports of investment in batteries and supply contracts are now critical at the time for the UK, and all stakeholders, including the financial industry, need to work together at a rapid pace to maintain the existing automotive sector and seize new opportunities.

Only 5% of car production in the UK is battery-powered electric cars in 2020, but the Advanced Propulsion Center (APC) estimates that this could grow to 34% by 2025 and 78% by 2030. that ICE vehicle production will fall rapidly from 94% in 2020 to 61% in 2025 and only 5% in 2030 to serve the shrinking export market.

The position of the United Kingdom

The United Kingdom is well placed to become a global player in the electric car battery revolution. It has a strong automotive sector, with over 30 manufacturers building more than 70 vehicle models, a highly competitive chemical industry and is at the forefront of research and development in the field of new low-carbon engines.

The APC study highlights the UK’s potential to compete globally in three key areas that could deliver combined market growth of £ 24 billion ($ 29.6 billion) by 2025:

  • £ 12 billion ($ 14.8 billion) batteries
  • Power electronics at £ 10 billion ($ 12.3 billion)
  • Electric machines worth one billion British pounds ($ 2.5 billion)

Ian Constance, CEO of APC, said: “The battery supply chain in the UK is a real opportunity. Our forecasts show that demand will reach over 90 GWh by 2030, but achieving growth on this scale requires a healthy appetite to invest significant capital. To maximize green jobs and economic growth, gigafactories and their supporting supply chains are essential. The right balance of policy and support, as outlined in the CDRT report, is essential to ensure investor confidence in the UK electric vehicle sector.

IN report was launched as the global automotive industry went through a rapid transition. Achieving global climate goals relies on the phasing out of ICE vehicles.

In the United Kingdom, where road transport accounts for about a quarter of the UK’s greenhouse gas emissions, sales of new ICE vehicles will be completed by 2030 and the move to EV is a key priority for the government. A ten-point plan for a green industrial revolution.

The cost of the transition from ICE to EV propulsion systems could benefit the UK economy by more than £ 24 billion by 2025, according to government-funded advanced propulsion center.

UK electric vehicle investment window closing fast – report

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