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INTERVIEW: FDI could help build the UK's EV gigaplant ambitions: CBI executive

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More investment required

EV demand continues to grow

New York — One possibility for the UK to build out its electric vehicle manufacturing ambitions would be for foreign companies to invest in the sector, according to the Confederation of British Industry's head of energy and climate change James Diggle.

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In conversation with S&P Global Platts on Sept. 16 Diggle said that there is a big question around domestic manufacturing, exacerbated by the pending Brexit process.

The auto industry, already struggling, has been further dented by the ongoing coronavirus pandemic and related economic fallout. Diggle noted that the UK has a "strong" pedigree in high-end auto manufacturing.

"This is a difficult time for the sector, [it's] facing some significant headwinds," he added.

There are two new gigaplants in the pipeline for the UK, one from start-up manufacturer Britishvolt and another from AMTE Power.

This week AMTE director Kevin Brundish told Platts that it is looking at three possible sites, with the favorite -- and most talked about in the industry -- being Dundee on the east coast of Scotland. The other two were Teesside in Northeast England, and Wales.

"Scotland is rich in low carbon, renewable, green energy. We are keen on a sustainable future," Brundish said.

While AMTE and fellow UK manufacturer Britishvolt always had their own ambitions, a memorandum of understanding signed previously between the two companies recognizes the opportunity to potentially work together on an EV gigaplant going forward, according to Brundish.

Separately, Britishvolt has already signed an MOU with the Welsh government in an attempt to build the UK's first large-scale EV battery factory, the company said July 17. The plant is aiming for commercially viable capacity of 30 GWh, staggered over three tranches, with a 200 MW solar plant alongside to assist in making the manufacturing of batteries as green as possible, it said.

One source said that he has concerns around the government's approach to funding such initiatives.

"I am worried that continental Europe is getting ahead of us, as governments there have frameworks to give huge cash injections to projects. The UK could get left behind, and that's no good for anyone. Especially the UK auto industry," the source said.

Europe, and particularly the UK, need to secure an EV battery supply chain in order to maintain a competitive edge in the sector, according to Britishvolt founder Orral Nadjari in a recent conversation with Platts.

Nadjari said that the coronavirus pandemic had created an opportunity for Britishvolt, as it highlighted the need for local supply chains.

Diggle said the CBI feels that the UK government "needs to give strategic direction" identifying any fragilities in the EV ecosystem that it can support and help grow.

He said that all options need to be on the table as no one really knows where technology will be in 10-15 years time.

Roadmap to net-zero

Diggle praised the fact that the UK is at the forefront of climate change initiatives, with clear direction on a road to net-zero. As such, even with the Brexit outcome on the horizon, he said that foreign direct investment would be willing to deploy in the UK.

"Green finance is a global perspective, there is a lot of money out there looking for low carbon investments. There is a lot of money looking for a home that fits in with growing ESG requirements," he said.

Still, one senior battery market source was less enthusiastic about FDI of any kind in the current climate.

"People are too cautious, ahead of any Brexit deal or no deal. I really don't think anyone will want to deploy capital until there is more certainty around the end-game," the source said.

Turning to Environmental, Social and Governance matters, Diggle said that the movement is certainly gaining traction, but that the varying methodologies behind ESG metrics represent a work in progress, which will be fine-tuned along the way.

"This is a challenge of complexity, it's not perfect but we need to understand that we're on a journey, towards net-zero. ESG is a vital component for any company planning on raising funds," he said.

One thing he did stress was the importance of a Brexit deal, echoing sentiment of the CBI membership.

"This is a UK leadership opportunity. A low carbon leadership opportunity. The clock is ticking, and we need to build back better [post pandemic]," Diggle said.