Electrify or die

February 3, 2021

Automotive is one of the few sectors of the North East economy that is genuinely the best in the UK. The region is home to the most productive car plant in Britain and is also at the forefront of electrification, which is increasingly viewed as the future of the industry. Richard Dawson speaks to two leading experts in Matt Boyle and Dr Colin Herron to find out just how well placed the North East is to drive this green automotive revolution and what barriers car makers face to going electric by 2030.

Ten years ago, the idea that the internal combustion engine would be replaced by electric and hybrid alternatives seemed very far away.

If you were to have asked the average motorist what they thought of electric cars, most would have shrugged their shoulders and got back into their petrol and diesel Corsas, Golfs and Fiestas.

But back then, industry bosses were already imagining a zero emissions future for cars and putting in place the foundations for the electrification we are witnessing today.

Former Sevcon chief executive and current chair of the North East Automotive Alliance Matt Boyle remembers a trip to Paris in 2011 where he met a group of directors at the Renault- Nissan partnership, which at that time was headed up by Carlos Ghosn.

Outlining the company’s plans to the group, Carlos said: “Strategically, we want to be ahead of everybody else in zero emissions vehicles.”

Nissan has certainly been successful in that regard. The Nissan Leaf was the first mass market battery electric vehicle (BEV) to be sold across the world and, until December 2019, was the top-selling electric vehicle of all time.

While other manufacturers adopted a wait-and-see strategy on electric cars, Nissan blazed a trail. Now, the rest of the industry is playing catch up and the momentum behind electrification seems unstoppable.

A green automotive revolution is underway.

Even a year ago, this was far from clear, however.

Annual figures released by the Society of Motor Manufacturers & Traders (SMMT) show that in 2019, BEVs had only a 1.6 per cent market share.

In 2020, this number had risen to 6.6 per cent, representing a 185.9 per cent growth rate.

Electrics now count for one in ten new vehicle registrations, up from one in 30 a year ago.

In the month of December 2020, the figures are even more profound.

While BEVs accounted for just 3.3 per cent of sales in December 2019, they accounted for 16.5 per cent in December just gone – a 344 per cent increase.

Of course, 2020 was anything but a typical year. Nevertheless, the drive towards zero emissions vehicles is there for all to see.

For the car industry at large, 2020 was one of the most difficult years it has ever faced.

Total new car registrations were down 29.4 per cent year-on-year, the worst performance for the market since 1992.

There were 603,076 fewer cars sold than in 2019, equivalent to £20.4 billion in lost revenues.

A combination of collapsing consumer demand and shuttered car showrooms were ruinous for the motor trade, as was the suspension of production at many UK car plants last spring.

Brexit uncertainty also plagued the industry throughout the year, as motor companies waited with bated breath to see whether or not a free trade agreement would be secured.

The answer to that question only came on December 24, one week before the transition period was due to end.

News of a deal was still met with relief by the industry, as more than half of all cars built in the UK are bought by customers in the EU.

“Relief is the right word to use because World Trade Organization (WTO) tariffs would have been an absolute disaster,” Matt says.

The trade deal provides near-term certainty over the future of Nissan in Sunderland, where company boss Ashwani Gupta had previously said WTO tariffs would have made its UK operation “untenable”.

Non-tariff barriers have arisen out of the deal around things like product certification, standards and rules of origin.

But as Matt says, if there’s one thing the car industry is good at, it’s adapting to change and “creating new systems that are efficient and low-cost.”

The rules of origin requirements have generated a lot of discussion in recent weeks, as they dictate that UK-made cars must have a specific content of UK or EU parts in them to be exported to the European market.

At the present time, UK manufacturers use imported parts from places like Morocco, Turkey, Japan and South Korea, particularly for the production of electric vehicles where the British market is only just maturing.

Matt says: “Under the rules of origin, we’re going to need to onshore a whole load of electrification capacity.”

Dr Colin Herron, managing director of Zero Carbon Futures, is feeling positive about how the changes could boost domestic manufacturing.

“There is a huge incentive now to create new industry in the UK so that car parts can be UK-certified,” he says.

For the North East, which has perhaps the most developed and sophisticated automotive manufacturing sector in the UK, the rules of origin present a big opportunity to build economies of scale.

That work has begun already. Electric vehicle battery producer Britishvolt made headlines in December when it announced plans to build a £2.6 billion ‘gigaplant’ in Blyth, which it says will be capable of producing 300,000 batteries per year at full capacity.

Described as the largest industrial investment in the region since Nissan’s arrival in 1984, bosses say the gigaplant will provide 3000 jobs directly and up to 5000 more in the supply chain.

It promises to strengthen what is already a very strong hand the North East has to play in the green automotive revolution.

The region already builds more electric cars than anywhere else in the UK and has a ready-made supply chain for EV production, as well as purpose-built infrastructure for exporting cars across Europe and beyond – not to mention the world-leading research and development coming out of its universities and the innovative companies that work with them.

You could even go as far to say that the North East is the best placed it has been to benefit from industrial innovation since the first industrial revolution more than 150 years ago.

Dr Herron says: “The fact we can make the cells and the batteries here, that we’ve got the companies making electric machines and power electronics, as well as the companies finding second life uses for batteries – we’ve got everything we need right here in the North East.

“We are a long way ahead of everybody else.”

That the car industry is now backing electrification as the way out of the perils of 2020 and the way back to a prosperous future is music to the ears of North East automotive businesses, which have been at the forefront of EVs since day one.

Of course, another key driver of this is the Government’s ban on new sales of petrol and diesel cars by 2030.

The date was originally set at 2040, but ministers decided an earlier date was necessary for getting the UK to net zero by 2050, as per our obligations under the Paris Accords.

It’s a tight timeframe, but both Matt and Dr Herron believe it is possible to get there.

“The technology and price points are here today,” says Matt.

“If we put our minds to it, we can do it in a very short space of time, but the key thing is availability of cars.”

Dr Herron adds: “We’ve got ten years to do this and we can, but we’re going to need cars and lots of them.”

This is the key challenge for car makers facing up to the green automotive revolution.

It’s not technology or cost preventing the transition but rather the logistics around halting production on millions of petrol and diesels and starting production on millions of electrics.

“One of the key bottlenecks is that car companies have to decommission capacity for millions of petrol and diesel vehicles and then spend billions redesigning new models and new production lines for millions of EVs,” Dr Herron explains.

To meet the 2030 target, there is going to have to be electric alternatives to just about every kind of car that consumers currently have available to them.

New models are coming through all the time as the big auto companies play catch up with early pioneers like Nissan and industry disruptors like Tesla, but we are nowhere near the kind of scale that is needed.

This is also the key challenge for the North East.

We have a head start in the race towards electrification but now we must massively scale up operations to meet demand that will grow exponentially in the years to come.

Matt says: “The North East can be proud of the fact that it always seems to be one step ahead of where trends are going.

“But one of the things I keep saying to people is, ‘let’s just execute’.”

If the region can create supply chains to meet demand across the country and the continent, the possibilities are endless.

Who knows, Sunderland could even become the UK’s motor city – a 21st century, zero-carbon Detroit.

To make it happen, Matt and other industry professionals are working on an initiative called Driving the Electric Revolution – an £80 million scheme aimed at making the UK a global leader in the manufacture of core technologies that support electrification.

Matt explains: “We’re working with hundreds of businesses across the UK to create power electronics, machines and drives for applications where the internal combustion engine is prevalent today and where those applications need to be electrified.”

There is something ironic in the fact that what is going to save the automotive industry is getting rid of the internal combustion engine.

But when a revolution happens, things that were once irreplaceable become defunct and things that were seen as defunct become irreplaceable.

Take the site where Britishvolt will build its gigaplant. Blyth Power Station was a coal-fired power station demolished in 2003 and until recently unusable.

Now, with the North Sea Link between Norway and the North East set to deliver huge quantities of renewable electricity, the site is the perfect place to spearhead the green automotive revolution.

Matt adds: “I think today, there is a potential for getting rid of the internal combustion engine almost entirely.

“Eventually, most – if not all – internal combustion engines will be confined to history. There are enough resources now to make this happen.”

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