North East’s EV and battery industry nears decisive moments, national report says

A NATIONAL report says the electric vehicle and battery industry is reaching a crossroads which could profoundly impact North East jobs and prosperity in the years ahead.

The car sector in the region, dominated by the Nissan plant in Washington, already supports tens of thousands of jobs and pours billions of pounds into the North-East economy.

But, depending on Government and investor support now, the industry will either speed off on the road to more success or risk crashing into the buffers depending on how fast the electric vehicle sector is backed.

That’s the conclusion of an in-depth report commissioned by the Energy and Climate Intelligence Unit (ECIU), with analysis provided by CBI Economics published this week.

The report, titled Electrifying Growth, outlines four potential scenarios, ranging from best case to worst case, and shows that outcomes for the country could vary by up to £50 billion – as much as the car industry is currently worth to the country today.

The key to success lies in the Government consciously and quickly driving investment in electric vehicles and battery development says the report.

Across the world, countries are building electric car plants and battery factories and competition for investment and development is intense. If the Government and industry don’t take the lead, the UK risks missing out on a grand scale.

It is estimated that the car industry in the North East employs 25,545 people and brings in £2.5 billion gross added value to the region every year.

Depending on the investment decisions being weighed up now – and how rapidly the sector transitions to making battery electric vehicles –  that £2.5 billion for the North East will either rise to £3.3 billion by 2035 or drop to £2.1 billion.

That’s the difference between the creation, or loss, of thousands more car jobs in the region – nationally the report estimates the difference in jobs would be on the scale of hundreds of thousands depending on which route the car industry takes over the course of the next decade.

Colin Walker, head of transport at the ECIU said: “Global competition for the investment that will build the factories that manufacture EVs is intense. 

“If the UK attempts to stand still on the transition, it risks repeating the mistakes of the 70s and 80s, leading to a crash in economic output and jobs lost.

“The UK’s car industry has huge strengths, and there is enthusiasm to modernise, but the Government will need to create the right conditions with incentives and investments to ensure the UK is at the front of the queue to leverage private capital and make the transition to building the electric cars of the future. 

“A huge number of jobs and income will be lost if the UK underinvests, clings to dying technologies, and continues to build cars that our major export markets are moving away from.”

Louise Hellem, chief economist at the CBI, who oversees CBI Economics said: “We are competing in a global market for battery electric vehicles.

“The UK  ranks third globally for research quality in industrial batteries, and its automotive manufacturing sector and battery start-up ecosystem are the second highest in Europe and fourth worldwide by value. 

“Significant recent investments by major industry players in electric vehicle production and its supply chain in the UK highlight the sector’s potential. 

“However, scaling the UK’s battery electric vehicle supply will hinge on future demand, creating the environment for investment, and maintaining a favourable trade environment.

“Our analysis highlights the necessity for a proactive, ambitious strategy to support the sector’s evolution.

“In this transformative period, it is essential for government and industry to collaborate, ensuring the UK remains competitive globally while building on its rich automotive legacy.” 

The growth of Nissan – Europe’s biggest car plant – and the announcement by AESC UK of a giant new battery factory on its doorstep at the International Advanced Manufacturing Park (IAMP), has been one of the North East’s biggest success stories in recent years.

In contrast, a proposed gigafactory start-up by Britishvolt in Blyth attracted huge publicity when it was announced in 2019 but the scheme soon hit troubles and collapsed completely in 2023. 

Nissan has committed itself completely to electric vehicle manufacture at Washington and the gigafactory next door will boost its production capabilities.

With global competition set to intensify in the battery electric vehicle market, the report highlights expanding production will be vital for both supporting domestic demand and export demand, as historically the majority of UK-produced vehicles (79% in 2023) are exported.