A Gigafactory is only part of the answer… Let’s not repeat the mistakes of history

21st January 2022

The news today that Britishvolt has secured both government and private investment for the battery gigafactory in Northumberland is a fantastic boost for the region and the UK automotive industry.  It does, however, bring back memories for me of similar fanfare announcements around the opening of the Siemens Microelectronics plant just 15 miles away in North Tyneside in the mid 90’s.  This “megafactory” produced state-of-the-art 16 and 64 megabit DRAM memory chips, but was forced to close after less than 2 years in production.  We need to make sure that history does not repeat itself.

So, what went wrong with the Siemens factory?  It was well run1 and well supported through tens of millions of pounds of tax-payers’ money used mainly to fund training and skills development.

The problem lay in the nature of the product and the absence of a coherent UK microelectronics ecosystem.  You probably know who made the processor chip in your computer (likely to be Intel, Qualcomm, or AMD), and you may even be aware of who made the graphics processor (probably Nvidia), but I bet you don’t know who made the memory chips?  They are a commodity product; you know that you have 4, 8, or 16GB installed in your machine but will probably not care who they were made by.  The memory chip business is brutal with competition driven almost entirely by price.  In the case of the Siemens factory, the customer base for the chips was in Asia and there was no local (UK) market.  A combination of the Asian financial crisis and subsequent currency fluctuations in the late 1990’s meant that demand and prices fell dramatically.  With no local market, intense price pressure, and a collapse in demand from Asia, it was no longer viable to manufacture memory chips in the UK.

It’s the same with the battery in an electric vehicle…  you know who makes the car but you have no idea who makes the battery, so we face the same risk here if we don’t have a coherent ecosystem for the automotive supply chain.

We need an overall materials supply chain strategy; this gigafactory needs to fit into a UK ecosystem that supports not only the automotive industry, but also the numerous other industries that will need to store power as we replace fossil fuels with renewable electricity in more and more applications (transportation; domestic heating; steel, ceramics, and glass making; etc).  We can’t let this gigafactory stand alone and compete in an international commodity market where it could suffer as a result of import tariffs and market subsidies imposed by other governments or market forces that we have no influence over. 

There are several reasons to be optimistic:

  • Batteries are heavier and more difficult to transport than microchips, so it makes sense to have a local customer base.
  • Batteries do not have to be a commodity product; higher performance batteries can command a higher price.
  • We have a strong research infrastructure in battery technologies with organisations such as the Faraday Institute and UK Battery Industrialisation Centre (UKBIC) helping to coordinate and support the excellent work that is going on within the UK research community.
  • The UK is already taking a lead in many areas of renewable energy generation and the technologies needed to replace fossil fuels, which will drive demand for energy storage.

The need here is to make sure everything is joined up so that the UK can make the best batteries in the world and develop stable local and export markets.  Battery technologies, like many hardware based innovations, take time to develop so we need a materials and supply chain strategy that will stand the test of time. 

The government has made a good start with the 10-Point Plan and the Net Zero (Build Back Greener) Strategy; we now need to see these built upon with a materials and supply chain strategy.  Support for gigafactories, such as this, will form a vital part of this strategy; we will need to support the rest of the ecosystem if we are to be successful in the long term.

1 I should add here that for me professionally, the experience of working for 3 years at the Siemens Microelectronics plant early in my career was a great foundation.  I got to experience high-tech equipment selection, installation, start-up, tech transfer, scale-up, high-volume manufacturing, crisis mode cost saving, business sale due-diligence, and factory decommissioning… all within 3 years and done to German standards of engineering, professionalism, and efficiency!

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