What does it mean to be a success? Is it purely a matter of right place, right time? Of course there is an element of serendipity, but in our view the attributes of vision and implementation are equally important. Decarbonising cars and vans is a major opportunity for the UK, and will require large portions of all these qualities if we are to fully reap the benefits of our leadership to date.
The vision of the REA, of this government, and of the range of parliamentarians that we have spoken to is one where the UK is a crucible of innovation where electric and autonomous vehicles can thrive. Where we can capitalise on this formidable new manufacturing opportunity that lies before us and demonstrate to the world that Britain remains a red-hot hub of brave thinking, big innovation, and bold policy.
It is crucial that despite the Brexit whirlwind disrupting Westminster that legislation and regulation is introduced to structure this sector. The Automated and Electric Vehicles (AEV) Bill, now journeying through Parliament, and new funding for charging infrastructure in the recent Budget, are positive steps but fall short of the comprehensive action required to really develop a reliable, accessible, and more affordable alternative system.
The market takes off
Internationally, the market for electric cars and vans is taking off. As detailed in the REA’s report EV Forward View, raised in the House of Commons in October, the Conservative government in the UK has confirmed that they will ban the sale of new petrol and diesel cars and vans without a battery element in the UK by 2040. France has done the same, while the Dutch government has gone a step further and confirmed its plan to ensure all new cars are zero-emission by 2030. Germany is considering banning new petrol or diesel car sales by 2030, which would require the upgrading of the country’s manufacturing processes and supply chain as the EU’s largest vehicle manufacturer.
China’s new Zero Emission Vehicle credit system, announced in September requiring minimum “New Energy Vehicle” sales by 2020, has been labelled by some commentators as "probably the single most important piece of EV legislation in the world” (Colin McKerracher, head of advanced transport at BNEF). India’s Government has also announced that it wants all new car sales to be electric by 2030. The list goes on.
Industrial innovation and policy drivers are having major impacts on market development. Volkswagen estimates that 40 Tesla-sized “gigafactories” for manufacturing batteries will be needed globally to meet EV demand by 2025. Boston Consulting Group has forecast that half of the global car fleet would be electric by 2030 (this includes hybrids, plug-in hybrids, and battery electric vehicles). Bloomberg New Energy Finance’s analysis (July 2017) estimates that costs for “producing a battery [pack] in a Korean manufacturing plant in 2017” more than halved since 2010 and will more than halve again by 2030. This is in line with the REA’s own position in the EV Forward View that anticipates that 50% of new car and light commercial vehicle sales could be fully electric or plug-in hybrid by 2025.
The REA believes that there is scope for a number of these factories (Tesla or those belonging to other manufacturers) to be located in the UK, creating new manufacturing jobs and inward investment if domestic markets are created for battery products. A domestic market for battery products is critical if we are to attract new EV and battery manufacturing capacity, which, frankly, means smart charge infrastructure and energy policy that encourages flexibility.
All of this is of course taking place within the context of established transport decarbonisation activities, such as the establishment of a renewable fuel supply which will be paramount during the transition to electric cars. The REA is keen to see the introduction of E10 (containing 10% bioethanol) for decarbonising heavy goods vehicles and off road machinery, shipping, and aviation by increasing the renewable content of diesel and gas fuels.
Timing, vision, and then implementation
While the timing is right and with a vision in place, what’s necessary now is implementation. The AEV Bill is a positive step towards the development of reliable, accessible, and affordable charging infrastructure in the UK, which in turn is critical to building the domestic market needed to support new manufacturing of batteries and electric vehicles. The Alternative Fuels Infrastructure Directive, another relevant piece of legislation that is being brought over from the EU, is also a constructive piece of legislation that requires ad-hoc access to newly installed public charge points from November 2018, no longer able to be ‘subscription only’ access.
Amongst other provisions, the AEV Bill proposes giving government powers to impose requirements on large fuel retailers or service area operators to ensure they provide public charging points. It also gives the government powers to ensure all chargers, be they domestic, workplace, or commercial, are ‘smart’.
The Budget goes further, and commits the government to:
- investing £200 million, to be matched by private investment, into a new £400 million Charging Infrastructure Investment Fund; and to electrifying 25% of cars in central government department fleets by 2022;
- providing an additional £100 million to extend the plug-in car grant to 2020 to “help consumers with the cost of purchasing a new battery electric vehicle”;
- confirming that from April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.
The supporting documents to the Industrial Strategy additionally mentioned a desire to ensure “all new homes are built with the right cables for electric car charging points,” but provided little further detail.
Amendments to the Bill
Frustratingly, while the new funding is welcome, the Bill falls short of the bravery that we believe is required. Power supplies in new homes and housing developments need to be bolstered. This can be done through the introduction of three-phase electricity supply or by ensuring solar and storage as an onsite pre-requisite.
New commercial developments need to have minimum power supply specifications as well. We believe that the Tesco and Asda stores being built, even if there isn’t a major market for EV charging on their car parks at present, should have enough power supply to accommodate the rollout of a multitude of fast and rapid chargers when the market becomes more evolved in the 2020s. This will save both the retailer and grid time and money, and have been mentioned by a range of MPs in the Commons in recent weeks, ranging from the Dame Cheryl Gillan MP (Con) to Helen Goodman MP (Lab).
An industry call to action - #UKChargePlan
What’s also needed is a vision for the charging network. Innovate UK has taken positive steps towards this but a clear roadmap is needed. The future of charging is one of the most critical elements of this transition and a piece that the REA sees opportunity for its members - be they suppliers, developing solar or storage, in large scale power generation, or in demand response - to tackle. We’re calling for a UK charge strategy (known as #UKchargeplan on twitter) which takes a holistic approach. The plan should ask, and in part answer, what is the role of Highways England, of central government and of the devolved authorities, of planning policy, energy policy, and beyond.
The REA intends to take the lead in the development of this policy and then take it to government. We’re looking for member and sectorial support, and are calling for your vision and inclusions.
We are also pleased to announce that the REA is working with the Rt Hon Cheryl Gillan to establish an All-Party Parliamentary Group on Electric and Automated Vehicles, which will drive debate about issues of manufacturing, charge infrastructure, and decarbonisation of the transport sector more broadly on the parliamentary estate.
This is neither the time for thunderous press releases or righteous rhetoric, but instead for concrete action. The facts are that western Europe’s EV charge infrastructure is more interoperable, and in many cases more widely accessible than that of the UK. The shift to EVs is happening and the UK in the future will not be privy to discussions about how they will incentivise new manufacturing capacity. We must think for ourselves and with an eye to global developments, act for ourselves. Media reports indicate that Japan is taking steps to maintain their lead in battery research and manufacturing. The EU has recently called for an “airbus-style consortium” to group battery manufacturers in the EU together and compete with eastern and American interests. Tesla is in discussions with Shanghai regarding a new Gigafactory.
For Britain, in regards to manufacturing, the window is small and competition growing. Now is the time, and we’ve got ideas that fit the bill.
The REA’s report on electric vehicles, the EV Forward View, can be found online here.