The West Midlands, south Wales and the north-east of England are among the regions vying to host the UK’s first “gigafactory” making electric car batteries, as the government edges towards a commitment to the key technology.
The UK has said it will spend as much as £1bn on an automotive transformation fund, but is yet to detail what will happen with the bulk of that money.
Gigafactories are expected to take a central role in the country’s effort to retool the economy for a fossil fuel-free world. But industry is growing impatient for a commitment from the government, even as it prepares to formally announce a ban on new internal combustion engine cars after 2030.
The prime minister, Boris Johnson, is expected to address the automotive sector with a 10-point plan on green industry as soon as this week. A gigafactory announcement could form part of chancellor Rishi Sunak’s spending review on 25 November.
Discussions are taking place with at least two serious potential investors. Someone with knowledge of the talks said one option under consideration was a joint venture that could include European and British companies.
Companies have submitted multiple proposals for a gigafactory, which would take a central role as the UK moves away from fossil fuels, but several sources said private investors will not commit until government support had been confirmed.
Carmakers in the UK such as Jaguar Land Rover, Nissan and BMW are under intense regulatory pressure to swap internal combustion engines that emit carbon dioxide for electric vehicles with zero exhaust emissions.
However, the industry fears that a reliance on battery cell suppliers from China, South Korea and Japan could mean automotive employment in the UK shrinks as petrol and diesel engine production winds down.
A business department spokeswoman said the government “is committed to securing investment in gigafactories in the UK” and that the industry needs “a robust battery supply chain to realise our ambitions of making the electric vehicles of the future here in the UK”.
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Julian Hetherington, director of automotive transformation at the Advanced Propulsion Centre (APC), the body in charge of disbursing UK government investment in the sector, said he was “very optimistic,” about the prospects for securing investments soon because of the strength of expected demand as more carmakers go electric.
“You’ve got to look at the demand picture,” he said. “People will make commitments when they’re certain they’ll have offtake [of batteries].”
The APC has previously forecasted that the UK industry will need batteries with a capacity of 60 gigawatt hours (GWh) a year, implying the need for four gigafactories (generally considered to be plants capable of 15 GWh per year).