The UK government’s announcement at the end of March that it will pump £30m (US$41.3bn) of investment into battery technology research, the electric vehicle (EV) supply chain and hydrogen vehicles is a welcome development for the automotive industry. Add to this Joe Biden’s recent infrastructure plan in the US—which he hopes will add US$174m in investment to the EV sector—and there are many reasons to be positive about the future of the EV and automotive industry. But scratch a little deeper and you’ll soon realise that there’s a lot more that needs to be done for the industry that adds over £15bn to the UK economy alone.
Over the next few years, we’ll see gigafactories—factories that produce batteries for EVs on a mass scale—become more important. This transition towards gigafactories has been led in part by the increased popularity of EVs. According to the IEA, sales of EVs topped 2.1 million globally in 2019. This number surpassed the figure in 2018 and accounted for 2.6% of global car sales, registering a 40% year-on-year increase.
The point of EVs is to lower emissions and help with the carbon footprint, but if components are being flown from different parts of the world, there is clearly an issue
Supply chain challenges
The increased popularity in EVs has led to a growing demand for batteries around the world, but challenges remain. The supply chain involved in building EVs often involves parts being shipped from around the world, usually Asia where these parts are much cheaper. However, anyone can see the issues created here. The point of EVs is to lower emissions and help with the carbon footprint, but if components are being flown from different parts of the world, there is clearly an issue.
There are already more there 20 gigafactories being built across Europe, with the benefits far outweighing the negatives. Not only will they bring confidence to the European EV market but they will also bring much needed jobs and reduce the carbon footprint of importing parts from around the world. The location of these upcoming gigafactories is interesting and something that requires some consideration.
Location, location, location
Take the Tesla gigafactory in Berlin. According to reports, the factory is expected to employ 12,000 people and produce half a million cars for the European market per year while Tesla is hoping to invest €4bn (US$4.8bn) into the project. Berlin is already a thriving metropolis with a strong economy and job market and while more jobs and money are always beneficial, especially in the current coronavirus economic climate, the question has to be asked whether these jobs would be more valuable in a smaller town, with a struggling economy.
Bringing jobs—and confidence—to the European automotive sector is an essential part of the EV journey as we look to build a greener, more sustainable future for the entire industry
Let’s look at the UK’s first gigafactory which is to be built in Blyth. The town is situated on the Northumberland coastline and was a major mining and shipbuilding town in the 20th century, but as these industries dried up, so did the Blyth economies. Now that the power station is being turned into a Gigafactory—and in the process, creating around 3,000 jobs—the economy will benefit in the long term.
This is the case across the continent and while the number of gigafactories being proposed is a step in the right direction, we must continue to remember that location is key. We must begin looking towards areas that were previously hubs of industry and manufacturing, such as Detroit in the US and Scarmagno in Piedmont, where Italvolt is building its gigafactory. Bringing jobs—and confidence—to the European automotive sector is an essential part of the EV journey as we look to build a greener, more sustainable future for the entire industry.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Lars Carlstrom is Founder and Chief Executive of Italvolt
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