Is the UK automotive sector ready for the electric transition?
It’s not news that the automotive sector will no longer be allowed to produce cars without significant electrification from 2030 onwards. But with less than nine years until the deadline, is the UK and automotive manufacturers really ready for such a swift transition?
Out on the open road
Let’s start with the basics, are EV’s a suitable option for the UK consumer? If you haven’t noticed the UK is a relatively small island, with the ability to fit inside the state of Texas twice over. One of the main barriers holding back the adoption of EV’s is the need to charge after a certain distance is covered. In terms of practicality alone, those in the UK will cover smaller distances than compared to the likes of the US who cover considerably longer distances. The average car journey in the UK is 8.4 miles and the average distance a fully electric car can travel before it requires charge is 181 miles. Therefore, the need to consistently charge and require charging points throughout a journey is significantly reduced and with ‘destination’ charging points becoming increasingly popular at supermarkets and hotels, the inconvenience of consistent charging is significantly reduced.
A new era of automotive manufacturing
Whilst a Brexit deal has been relatively favourable to the automotive industry, the strict rules-of-origin legalisation means that by 2027, at least 55% of an electric car must be built in the UK or EU. As a result, there is a huge drive from UK manufacturers to develop their own EV tech.
The move to electric-powered vehicles is a paradigm shift, as it’s not just related to changing the vehicle, it’s the entire infrastructure behind it. Data provider IHS has been analysing information provided by carmakers and found that the UK will have the lowest per capita production of battery electric cars compared with other major car producing countries.
Serious progression needs to be made by UK manufacturers in order to make the 2030 target, investing heavily in new battery manufacturing and converting existing production to electric models. Manufacturers are faced with compressed development timescales, tightening regulatory requirements and technology churn, having to adapt at a pace they have never experienced before.
A major challenge for many manufacturers is scaling EV production, going from just a few thousand cars to around 300,000 units annually. When you consider that productions lines have been developed for years to be tailored to the vehicles they produce and over time have become more efficient. Whereas production lines will now have to be altered and many want to retain as much of their assembly as possible for common facilities such as paint or body shop to minimise capital spend.
As the first creators of the lithium-ion battery at Oxford University, the technology hasn’t been fully capitalised on. But the growth of EV’s and the drive to produce these in the UK could soon change this. One example of this is the introduction of the UK’s first Gigafactory by Britishvolt, which when completed in 2027 will produce enough lithium-ion batteries for 300,000 electric cars.
It’s not just the technology behind the batteries either, the UK also has a local supply chain with access to raw materials that can be sourced in the UK. The second-largest nickel refinery in Europe is based in South Wales, whilst Lincolnshire produces high-quality needle coke, a vital component for lithium-ion batteries.
In the transition to electric, it isn’t just around the manufacturer’s changes, there needs to be major adoption from the consumer side. Luckily for us, Brits love a fresh set of wheels. According to research from hpi, UK consumers change their car more regularly than they change their mattress and some even sooner than their smartphone!
With the introduction of finance options, consumers have a lot more flexibility and can now trade in cars and upgrade relatively easily and evidence has now shown that the average lease is now around 18 months. This places the market in a strong position to move towards electric at a faster pace than other nations.
Latest sales and registration figures have also shown that EV’s are now outpacing diesel car purchases in 2021. Yet petrol vehicles are still outpacing both combined. The major barriers still holding buyers back are the higher purchase prices and charging concerns. The Society of Motor Manufacturers (SMMT) has called for zero tax on zero emission-capable cars alongside long-term commitment on the Plug-In Grant to drive a considerable increase in sales.
Whilst consumers may be quick to adopt, they are still reliant on a strong chargepoint infrastructure. Charging needs to become as accessible as refuelling to make it an effective move. Aside from charging points in homes and those destination chargepoints, there needs to be a considerable increase in on-street charging as not every driver will have designation off-street parking, especially the younger generation who tend to live in house shares or flats. When researching residential charging availability, it was determined that around 25% of households don’t have access to off-street parking, with 6.7 million households relying on a public charging port.
Clearly, a lot of work needs to be done in that area, and the Department for Transport (DfT) is looking to address this by recently doubling its annual allocation to £20million for councils to spend on street chargers in residential areas. Yet the uptake from councils has been slow, with most local authorities planning to install an average of just 35 roadside chargers between now and 2025 and 1,226 local authorities without any plans to implement any.
Can the grid handle demand?
Aside from having enough charging points, a critical question is whether the electricity network can cope with increased demand. National Grid’s ‘Future Energy Scenarios’ report forecasts that annual electricity demand from road transport could increase from around 1 terawatt hour (TWh) in 2020 to up to 96 TWh by 2050. Major schemes to introduce new grid capacity typically take five years of planning and delivery, and thinktank Energy Systems Catapult believes there is a “real risk the uptake of EVs is potentially much faster than the investment cycles within which network operators operate”.
However, National Grid has responded to this stating that it is confident that it can meet the growing demand through the likes of ‘smart charging’ which automatically defers charging away from peak times to periods that have spare capacity to avoid overwhelming the grid but this mainly applies to those charging their car overnight.
A New Breed of Automotive
As with all industries, start-ups and SME’s are typically the drivers of change as they break into markets with never seen before technology and are a lot more agile than larger businesses. There are new entrants in the EV market that are producing vehicles from a completely new perspective. For example, UK-based Arrival delivers electric buses, vans and cars but with a considerably lower carbon footprint through their use of microfactories utilising autonomous technology.
The innovation on the components and energy storage is very much being driven by SME’s. One example is IRP systems who specialise in high-performance electric powertrain systems for a variety of e-mobility platforms, helping EV’s most cost-effective and perform better.
With such a fast-growing sector there is soon to be a possibility of ‘product pollution’ with so many new entrants trying to break through or established brands trying to make their mark.
Yet even with a strong brand, it doesn’t necessarily mean entering this market will be a success. The most notable example being Dyson’s electric car project which came to a sudden demise last year, even with £2.5 billion of personal investment from Sir James Dyson. Even a ‘success’ like Tesla has only yet to make a first profitable year, after 18 years in the making and this still was below investor predictions.
The move to electric isn’t going to be an easy one. As the legislation driving this move is UK-specific a lot of the innovation and delivery must be driven by UK companies and manufacturers to make a real impact on this target and avoid hefty tariffs from importation. In addition, there needs to be major improvements to the nationwide charging infrastructure to make it an accessible option to the wider public. We have the tools we need; we just need an intertwined approach between the government and private sector to deliver this monumental shift.