There’s a problem hiding inside Britain’s clean energy ambitions that doesn’t get talked about enough. We’re installing solar panels, wind turbines, and heat pumps at increasing pace. But the batteries that store renewable energy, power electric vehicles, and balance the grid? The overwhelming majority of them are made in China.
That’s not inherently a crisis — we import plenty of things — but it creates a genuine strategic vulnerability at exactly the moment batteries are becoming central infrastructure. And it puts UK car manufacturing in a difficult position, since from 2027 the trade deal with the EU requires a growing proportion of EV battery cells to originate domestically or in approved partner countries to avoid tariffs.
The National Wealth Fund is backing domestic battery manufacturing as a result, with substantial commitments. Here’s what’s actually happening, and what it means.
Why This Matters Now
The EV transition is an opportunity for UK manufacturing or a threat to it, depending almost entirely on whether a domestic battery supply chain develops in time. The major UK car plants — Jaguar Land Rover in Castle Bromwich and Coventry, Nissan in Sunderland, BMW Mini in Oxford — need cells produced in sufficient proximity and volume to meet the rules of origin requirements that avoid EU export tariffs.
If those cells come from China, the trade deal maths doesn’t work. If they come from a UK gigafactory, it does. So the question of whether the UK can build a domestic battery industry isn’t just an industrial policy question — it has direct consequences for whether UK car manufacturing survives the transition to EVs or hollows out as production moves to where the batteries are.
The Gigafactory Landscape
The UK has a complicated recent history with gigafactory announcements. Britishvolt, which received a great deal of government attention before collapsing in January 2023, demonstrated how hard it is to build a new battery manufacturing business in a country without an established supply chain. The costs are enormous, the technical challenges are significant, and competing with Chinese manufacturers who have years of learning curve advantage and cheaper energy is genuinely difficult.
What’s emerged since is a more cautious set of projects with stronger industrial partners.
Envision AESC’s gigafactory in Sunderland is the most advanced, directly adjacent to the Nissan plant. It’s operating at small scale and expanding, with a planned capacity that would make it one of Europe’s largest battery facilities. The co-location with Nissan is crucial — battery cells are heavy and the logistics work best when the factory is next to the car plant that uses them.
Tata Energy, the battery subsidiary of Tata Group (which owns JLR), is developing a gigafactory in Somerset at the former Gravity Site in Bridgwater. This would supply JLR directly and represents the most significant new commitment of recent years. The timeline for full production is the 2026–2027 period, though large capital projects of this complexity rarely hit exactly to schedule.
Several other proposals are at earlier stages, including sites in Wales and the Midlands.
The National Wealth Fund’s Role
The National Wealth Fund exists to deploy public capital alongside private investment in exactly this kind of strategic industrial infrastructure — projects that are economically important but where private capital alone won’t move fast enough or at sufficient scale. Battery manufacturing fits the profile well.
The NWF has committed several billion pounds to energy storage and battery manufacturing as part of a broader clean energy industrial strategy. The specific mechanisms include direct loans and guarantees to manufacturing projects, investment in the upstream supply chain (lithium processing, cathode materials production), and support for the research and development ecosystem around battery technology.
The Cornish Lithium investment is an example of the upstream logic. Cornwall has lithium deposits in its geothermal brines — produced water that comes up from the hot rocks. If that lithium can be extracted economically, it would provide a domestic source of a critical battery material, reducing dependence on imports from Australia, Chile, and (more complicatedly) China. The technology to extract lithium from brines is proven elsewhere; the question for Cornish Lithium is whether the economics work at UK scale and cost.
The Honest Assessment
Even with substantial government support, catching up with China’s battery manufacturing advantage is a long-term project. CATL and BYD have years of production experience, sunk capital in factories, established supplier relationships, and cost structures that are very difficult to match from a standing start.
What the UK can realistically achieve is a domestic industry that’s large enough to meet rules of origin requirements for the vehicles built here, serving the UK and European markets rather than competing globally at the cost frontier. That’s a meaningful industrial goal — it protects the existing car manufacturing base and creates well-paid manufacturing jobs — but it’s different from the aspiration of becoming a global battery manufacturing powerhouse.
The energy cost question is important here too. Energy is a major input for battery manufacturing, and UK industrial electricity prices have historically been higher than in China and some European competitors. The offshore wind buildout should reduce industrial electricity costs over time, but this is a years-long process.
For consumers and businesses thinking about home batteries and EVs, the supply chain developments mostly affect long-term resilience and pricing rather than what’s available today. Current battery products are largely manufactured in Asia regardless of where the vehicle or storage system is assembled. The domestic manufacturing effort is about where things are going, not where they are now.
It’s genuinely uncertain whether the UK will build a battery manufacturing sector large enough to matter strategically. But not trying — at a moment when the whole energy system and transport sector are being rebuilt around batteries — would be a serious long-term mistake.