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Electric Vehicles turbocharging the economy – an interview with the APC’s Philippa Oldham

8 min

Vale South Wales refinery c. Vale

The potential of the passenger Electric Vehicles industry providing up to £24bn to the UK economy in the next five years will be a key opportunity as the UK recovers from the Coronavirus pandemic, according to a new report from the Advanced Propulsion Centre (APC).

In an interview with Cityscape, Philippa Oldham, head of national network programmes, highlighted that the global EV market could reach £97bn by 2025. With UK-based EV refining and minerals firms such as Philipps 66 and Vale producing key materials along the EV supply chain, the APC identified a £12bn opportunity for UK manufacturing industry in the production of batteries; a £10bn opportunity in the production of power electronics; and £2bn worth of opportunities in the electric machines market.

Philippa Oldham, head of national network programmes, APC

To fully unlock the potential of EV manufacturing in the UK, though, suppliers would need to sharply scale up their operations – up to 10 times the current rate of production – in 12 key opportunity areas.

“One of the sub-systems that goes into an electric vehicle is the battery. We know that fundamentally it’s around 50% of the cost of the vehicle, so how do we ensure that the UK has got a good play in that,” Philippa told Cityscape.

Researchers behind the report worked with British members of the chemical supply chain to understand the core elements of batteries, as well as breaking down electric machines and power electronics to their key components.

“You look at where the raw materials are coming in, how they’re refined, how they’re then manufactured, who does the assembly of it, and then what state does it need to be in to go to the OEMs (Original Equipment Manufacturer), or the Tier 1s,” she explained.

“What was really surprising to us was the core capability that we had in the UK.” A chemical supply chain report last year found that the UK has a particularly strong chemical sector yet Philippa notes that the chemical sector has yet to fully realise its potential in the EV market.

We’re talking to these firms to say: ‘where are you currently doing refining and development, where are you sending your products?’ As expected, a large percentage goes to Asia

“We thought: ‘let’s start engaging’. Especially when we look at organisations, and the capability we have, say in South Wales, with Vale and in the North East, with Phillips 66. We’re talking to these firms to say: ‘where are you currently doing refining and development, where are you sending your products?’ As expected, a large percentage goes to Asia.”

In mining and refining markets, China is largely king: according to 2018 statistics from Benchmark Mineral Intelligence on the global share from the lithium ion battery supply chain – the most commonly-used battery in EVs – China holds the majority share in mining and refining of graphite markets, as well as over 60% of the lithium ion cell manufacturing markets.

“We thought that surely we could do some of that in the UK,” the national network programmes head explained.

The supply chain’s USP

One of the key areas of potential future revenue streams for the UK could be in the magnets market. Under the electric machine and motor components for EVs, magnets represent around 40-50% of the bill of materials cost for each electrical motor – one of the three components going into an electric vehicle. Though China has a “dominant position” with a near global monopoly in rare earth oxides (the working ingredients of magnets), the report explains, the UK has the only rare earth magnet alloy powder producer, Less Common Metals (LCM), outside of China and Japan.

“Much of our role in this is bringing organisations together, and one of the things potentially that wouldn’t have happened in the past is some of the OEMs and the Tier 1 companies talking directly to manufacturers, or to alloy producers, for what they need, and what their expected growth was,” Philippa explained. “We looked at their access to materials through the whole supply chain as a key part of this.”

Philipps 66’s Humber refinery site c. Philipps 66

What researchers found particularly promising was not only the UK’s unique production of elements along the supply chain, but also the production of technologies that will reduce reliance on Asian supply streams. “We’ve also got a number of e-machine manufacturers that are looking at using motors that don’t have any rare earth magnets in them,” Philippa said.

“What you end up with is a two-pronged attack in this area, having real world-class innovation here in the UK.

“We can demonstrate that we can go down the permanent magnet route, yet there are also real developments in those motors that don’t have any rare earth elements in them; meaning that the reliance on some of the access to the Chinese mines is gone. That again is a really exciting part of this.”

Electric vehicle uptake – and how to capitalise on it

The EU’s pledge to expect all new passenger cars sold to have some form of electrification by 2030 provides the UK with enticing opportunities to bring investment into the country – and, large incentives in China and Norway to use EVs will likely be replicated worldwide to deal with air quality issues in urban areas and manage the ongoing climate crisis.

From Philippa’s perspective, the three major components in encouraging Brits to go green falls under price, range, and infrastructure. All three factors will need to continue to improve to build on the 136,000 pure-electric cars on UK roads at the end of July this year.

Countries like Norway and China are global leaders in EV usage c. Norsk Elbilforening, Flickr

“What’s interesting now is you’re starting to see the second-hand car market for the EVs, starting to strengthen,” Philippa argued.

“Some of the vehicle prices are cost-competitive. The firms that I know who have been looking at the degradation of the batteries, which was always a big concern, are actually finding that they’re still performing very well – so those second-hand option EVs are very attractive, and still have a lot of good life left in them.”

Philippa also observed that beefing up three key retail components is vital to making consumers feel confident in the new technologies. A £10m cash injection in July into R&D in the automotive sector is hoped to overcome consumers’ concerns over pricing, infrastructure, and range – and the continued development of emerging technologies in the UK, as highlighted by the APC, will be a key element in turbo-charging the economy as economic uncertainty brought about by Brexit and the Coronavirus pandemic in the years ahead.

“It’s helping those businesses that may need additional support; not only in the development side, it’s how do they quickly get their product from prototype through to that mass manufacturing,” Philippa said.

Next steps

Where, then, can decision-makers realise the potential of the UK’s EV market and supply chain? For Philippa and the APC, consistency is key: “in funding, stability, and policy,” she answered.

“It’s very difficult for the automotive sector and throughout the supply chain for people to make investment decisions, if policies keep changing. There needs to be continued long-term funding coming down the pipeline which helps de-risk development. That is essentially what we do.”

Being realistic about shortcomings in the sector is also key, Philippa explains. Challenges in using battery-powered van haulage means a range of technology solutions will need to be established to answer major questions in fleet and freight sectors. The APC recently funded the T-Rex For Transit hybrid electrification programme, allowing vans in city environments to switch to electric modes, but also being able to use other fuel sources when needing to extend its range in travelling to distribution centres, for example.

It’s very difficult for the automotive sector and throughout the supply chain for people to make investment decisions, if policies keep changing

In establishing new renewable fuel source sectors, Philippa highlighted a Concawe report assessing the use of sustainable low-carbon fuels. “What they found with those was that, by switching everything to sustainable low-carbon fuels, you actually improve the emissions by about 10% in all scenarios – so that’s looking at the mix of getting everything electric where it can in past cars and leaving things out, but that short-to-medium transition to some of those blended fuels that are out there.” E10 fuel, a biofuel made up of 90% regular unleaded and 10% ethanol, though yet to be approved, could “really help significantly reduce emissions across the industry at the moment,” Philippa claimed.

Lastly, the APC networks head called on government to support the assessment of the holistic, whole life-cycle process of EVs: “If you think about batteries, it’s very energy-intensive to produce a battery. So therefore there is embedded carbon upfront.

“It needs collaboration across a number of sectors, and collaboration across the automotive industry, to look at the total life cycle of those embedded emissions. If we don’t do that now, all we’ll have is another crisis down the line.”

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