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It has been a busy few months for the British automotive industry. Developments in space-technology, gender diversity and electric vehicles (EV) have all dominated the headlines recently. This article analyses these developments and reflects on how automotive companies are gearing up for the future.

On 17 March 2023, Rolls-Royce plc (Rolls-Royce) and the UK Space Agency released plans to on a nuclear power programme for moon exploration. As part of the arrangement, Rolls-Royce have been £2.9m in funding for research and development. The backing by the UK Space Agency will be essential in helping to create ‘new skilled jobs across the UK to support the burgeoning UK space economy.’ At this stage, Rolls-Royce expects it will have a compete nuclear reactor by 2029.

In its , Rolls-Royce stated that:

‘Scientists and engineers at Rolls-Royce are working on the Micro-Reactor program to develop technology that will provide power needed for humans to live and work on the Moon. All space missions depend on a power source, to support systems for communications, life-support and science experiments. Nuclear power has the potential to dramatically increase the duration of future Lunar missions and their scientific value.’

Not only will Rolls-Royce’s nuclear technology assist in moon exploration, it will also be key to the company future proofing itself. In its 2022 released on 3 March 2023, Rolls-Royce discussed how nuclear power is a fundamental part of its mission to diversify its portfolio and assist in the transition to net-zero technology. The company noted that:

‘Our New Markets business is made up of our Rolls-Royce SMR (Small Modular Reactor) business and Rolls-Royce Electrical. As we develop greener solutions for future use, nuclear and electrification applications will play a pivotal role in our product mix and make-up. We continue to invest in these technologies along with our partners and we use our combined expertise to progress on the path to net zero.’

Rolls-Royce is currently the only automotive company in the FTSE 350 that has its sights set on outer-space technology. Rolls-Royce was also the only automotive FTSE 350 company that referred to nuclear technology, space technology, or moon exploration in its most recent annual report.

The final frontier isn’t the only recent milestone for Rolls-Royce. On 31 March 2023, the company celebrated the appointment of its first female Chief Financial Officer (CFO). McCabe’s appointment is a reflection of the success of the , which was first published in 2016 and superseded by the FTSE Women Leaders Review in February 2022 (for more information on the Review, see Practice Note: (a subscription to Lexis®PSL Corporate is required)). The Review ‘increased voluntary target for FTSE 350 Boards, and for FTSE 350 Leadership teams to a minimum of 40% women, by the end of 2025.’ After the addition of McCabe, the Rolls-Royce Board has now achieved the minimum 40% gender diversity target of female representation. The Boardroom shake-up is also a reflection of Rolls-Royce’s  to introduce a â€˜transformation programme' after a weak few years for the company.

The overall gender diversity of Rolls-Royce’s Board does not reflect its competitors. At the time of publication, there are three FTSE 350 automotive companies (Aston Martin Lagonda Global Holdings plc, Rolls-Royce Holdings plc and TI Fluid Systems plc). Of these companies, Aston Martin Lagonda Global Holdings plc and TI Fluid Systems plc have not hit the FTSE Women Leaders Review 40% target.

These positive developments ought to be a welcome reprieve for the British automotive industry after the failings of its shining star, Britishvolt. Britishvolt was identified by the UK government in early 2022 as a high-potential start-up that could solve the electric vehicle battery dilemma. As a result, the company was awarded a £100m grant from the Automotive Transformation Fund in July 2022. The was a government initiative whereby registered businesses were able to apply for a share of £1bn for projects that help to industrialise the British EV supply chain.

However, Britishvolt has been plagued with problems since the grant was awarded (see: Challenges as British industry attempts to compete with Chinese EV monopoly). Over the past couple of years, Britishvolt has been challenged by near bankruptcy, production delays, a lack of evidence for their in-house technology and tax-fraud. On 17 January 2023 Britishvolt’s woes caught up with them and  the company filed for administration at the High Court (see: Britishvolt on the brink of collapse). 300 Britishvolt employees were made redundant with immediate effect.

Soon after, Australian based battery manufacturer Recharge Industries initiated a takeover of the devastated Britishvolt. Recharge Industries bid was successful as of 27 February 2023.

Recharge Industries’ press release :

‘Under plans presented by Recharge Industries, the Britishvolt project will make the UK’s first Gigafactory a reality, creating a strategic economic and security asset which will play a critical role in the UK’s industrial and net zero strategies. The recharged Britishvolt will provide thousands of green, skilled and local jobs that will drive local and national benefits.’

Recharge Industry purchased the entirety of Britishvolt’s intellectual property in the deal. The acquisition included Britishvolt’s exclusive prototype battery. In addition, Recharge Industry has been granted an exclusivity period on the land of Britishvolt’s Gigafactory. As per the covenant on the land, Recharge Industry must build a factory on the site due to its proximity to clean energy sources, as well as port and rail links. Recharge Industry may be the spark needed to recharge the UK’s EV hopes. 

While Recharge Industry remains the best shot at revitalising battery manufacturing in the UK, the deal remains slightly precarious. Reports surfaced in late March 2023 that a contractual negotiation between Recharge Industry and the energy administrator, EY had reached a stalemate. The dispute is reportedly based on a disagreement related to transferring a grid connection contract with the utility supplier, National Grid. The deadline for Recharge Industry to pay for the land of the Britishvolt Gigafactory has passed after delays caused by these contractual issues.

Despite significant setbacks in UK battery manufacturing, the government has recently reaffirmed its commitment to EVs through its ‘.’ The consultation was published on 30 March 2023 and seeks to gather feedback on proposed plans to ‘end the sale of new petrol and diesel cars and vans by 2030 and for all new cars and vans to be fully zero emission at the exhaust by 2035.’  Underlying these goals is the recognition that widescale ZEV transitions ‘cannot happen through market forces alone.’

In the report, the government consistently emphasised the importance of electric vehicles to achieve the 2030 goal:

‘A global race to ZEVs is underway that will deliver real benefits for drivers in terms of running costs and see new investments in battery production, electric motors, power electronics and supply chains. This has the potential to create thousands of highly skilled clean jobs, support new export opportunities for UK business at the forefront of this change, reduce our reliance on fossil fuels and secure our future energy security. ZEVs can improve public health and have the potential to transform our urban realm.’

Battery electric vehicles are currently the most popular form of ZEVs on the market today. They are around 3 times more efficient than petrol or diesel vehicles as they produce significantly less CO2 emissions. The consultation strategy is closely linked to homegrown battery production in the UK. 

Along with the aforementioned , there are a variety of other government initiatives to promote the use of EVs. The aims to proactively support local authorities to enable the transition to EV, while provides capital funding to support charge point infrastructure and delivery nationwide. In addition, the seeks to invest in research and innovation projects that drive battery business in the UK. However, the definitive lack of UK based battery manufacturing (that create tangible, useable batteries) remains an underlying problem for these grandiose EV ambitions.

The government is seeking views on the final design of the UK’s ZEV mandate and CO2 emissions regulation until .

Market Tracker will continue to monitor developments in the automotive space.