Why Germany beat the UK to Tesla's European gigafactory
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When Tesla founder Elon Musk announced his first industrial move into Europe with the purchase of German engineering business Grohmann, the billionaire gave hope to the UK that Britain’s automotive expertise could be in his sights.
Speaking about the deal to take on the automation specialist in 2016, Musk praised Britain’s engineering base, and in particular its dominance in top-flight motorsport.
“We have a lot of respect for the British automotive engineering talent,” the billionaire said. “Just look at Formula 1 - it amazes me how much British talent there is in that. We are likely to establish a Tesla engineering group in Britain at some point in the future.”
Like so many of Musk’s promises, that has yet to come true.
Despite his comments at the time that “he did not see” Brexit having a “significant impact” on Tesla’s aim to make electric cars mass market, it seems that the UK has dropped off Musk’s radar.
At an awards event in Berlin on Tuesday, Musk said that the company would build its next “gigafactory” on the outskirts of Berlin, along with an engineering and design centre. These are facilities designed by Tesla to bring electric vehicle and battery production under a single roof.
The news is a blow to Britain, where car makers are struggling under the pressure of the wider global slowdown, with problems compounded by uncertainty over Brexit.
Failure to seal a free trade deal is a massive worry for the industry, which employs 168,000 people directly in vehicle manufacturing and five times that in the wider sector. Combined, they generate annual turnover of £82bn and are responsible for 14.4pc of the UK’s goods exports: 80pc of the 1.5m cars built in Britain are sold abroad, mostly to Europe.
However, Musk’s decision is not a shock, says Professor David Bailey, an automotive industry expert at Birmingham University.
“Despite some excellent work here on battery R&D, it’s little surprise that Tesla didn’t really consider the UK as a location,” he says. “Brexit uncertainty has stymied investment in the automotive industry, which is down by over 80pc in the last three years.
“The longer that uncertainty goes on the higher the risk the UK misses investment in the new automotive technologies that are coming.”
Official data from the Society of Motor Manufacturers and Traders back him up. In the first half of 2019, the amount of money pumped into the sector was just £90m - of which £23m was from the Government.
The SMMT described this level as “pitiful”, pointing out that in 2018 the figure was £347m over the same period and £647m the year before, though even that was half the run rate ahead of the Brexit vote.
Although the UK Government talks about its desire to get motorists to drive electric vehicles, it is either unwilling or unable to put much money behind it.
Despite British policymakers looking to put an end to the sale of new vehicles without some form of electric drivetrain by 2040 under its Road to Zero initiative, there has been little acknowledgement of the issue of how the huge fleet of internal combustion engine cars and vans will be driven off the roads.
UK policy isn’t exactly welcoming to drivers of electric vehicles either. Last year the grant offered to encourage motorists into zero emission cars was slashed. The incentive was reduced from £4,500 to £3,500 for battery cars and eliminated entirely on plug-in hybrids with a range of 70 miles or less on battery alone.
For Britain, the lack of investment in batteries over the long-term could be costly. According the Faraday Institution, a government-backed research centre based in Harwell, billions of pounds will need to be pumped into battery plants at least 15GWh in size - which is a measure the total amount of energy its batteries can produce - to avoid 114,000 job losses from the UK’s automotive sector by 2040.
Neil Morris, chief executive of the Faraday Institution, believes demand will surge between now and 2023 to warrant investment in a battery plant, but current sums of money splashing around may not prove enough to get even one gigafactory up and running - a critical issue when considering the fact that the UK is expected to need eight full-scale gigafactories to meet a demand of 130GWh per year battery production by 2040.
- Telegraph UK