The way forward suddenly looks much clearer for UK carmaking. Two companies, Nissan and Vauxhall owner Stellantis, have announced major investments in UK factories, mostly focused on electric vehicles.
Nissan news includes spending £ 1 billion to create a new all-electric vehicle at its Sunderland plant. About half of that money will go towards battery production, with ambitious plans to match the levels of Tesla’s battery plant in the United States – estimated to be capable of producing batteries to power around 600,000 cars a year.
Nissan and its partners are so confident in their ability to produce large numbers of batteries that government ministers are already celebrating their development.
This is simply because the key to producing a lot of electric vehicles is producing a lot of batteries to put in them. So far this has been an area where the UK has lagged behind countries such as the US, China and South Korea – where there are more vehicles. electrical products.
It is clear that additional capacity was desperately needed in the UK. Lithium batteries are large, expensive and complex to transport internationally due to international regulations. It is a good idea to place them as close to the car factory as possible.
It also makes sense for any car maker to make as many vehicles as they can in one place (and since Brexit a political necessity, given the rules on how much electric cars must be made in the UK). But the sophistication of modern cars makes this difficult. Gone are the days when most vehicles were put together with little more than metal, plastic moldings and wiring.
Modern cars – and electric vehicles in particular – have a wide range of electronic components, such as touch screens, cameras, microprocessors and sensors. Tesla’s computer, installed in every car they’ve made since 2019, looks more like a games console in terms of computing power than something traditionally found in a car.
This use of high-tech components in cars means that they increasingly depend on semiconductor producers, which are mainly located in China, Japan, South Korea and Taiwan. Each of the car’s computer chips, displays, and cameras rely on semiconductors as the main component to function.
When these chipmakers struggle to deliver the volumes they need (as they did in 2020 and 2021, automakers find they have to temporarily shut down production in order to cope with the parts shortage. BMW and Tesla have had to remove some of the less used parts from their cars to keep production lines moving.
The smaller the volumes that an automaker can order from its suppliers and the further apart they are, the greater the effect. This puts the UK in a precarious position because while they can manufacture many car components locally, including very important batteries, there are parts they have to look elsewhere.
As more technology enters cars, if UK manufacturing is to remain competitive and resilient to supply chain fluctuations, it will need to find a way to manage its dependence on the countries that supply these. rooms.
So while the UK government is understandably keen to celebrate recent investments in car manufacturing, it should be borne in mind that the journey from here is not guaranteed to be smooth. A key element for the future will be to establish positive relationships with semiconductor, display panel and camera manufacturers abroad. Only then will the UK be able to step up a gear and become an automotive manufacturing powerhouse.