Rise of electric vehicles forces Honda to close UK car plant, shift base to Asia

Honda has described “unprecedented changes” in the automotive industry – also known as the rise of electric vehicles (EV) – as the decisive factor behind closing its UK manufacturing plant in Swindon, together with its operation in Turkey by 2021.

While the Honda closure has been seen as symbolic amidst the political and social tensions of the UK-exit from the European Union, there is a much larger trend at play: the energy storage revolution and the rapid shift to EVs.

“The significant challenges of electrification will see Honda revise its global manufacturing operations, and focus activity in regions where it expects to have high production volumes,” Japan’s second largest and the world’s 6th largest car manufacturer explained.

The regions where Honda expects high production volumes will be in China , the land of the EV lithium ion battery megafactories, and Japan, from where Honda will ship its EV models to Europe.

Honda’s announcement illustrates how far behind Europe is in the global battery arms race.

Only last week, speaking to the Financial Times Umicore’s chief executive, Marc Grynberg, suggested Europe develop its own battery supply chain, saying “given the sheer size of the requirements to the European industry similar to what’s happening in Asia it makes most sense in my opinion to have a regional supply chain.”

Benchmark Minerals recently warned the US Senate that it was a bystander in the global battery arms race.

There are significant battery megafactory developments in the pipeline in Eastern Europe, principally Poland and Hungary and Sweden, but China is set to dwarf European production for the coming decade.

By 2028 we are forecasting nine European megafactories with a capacity of 248 GWh, whereas China will have 46 megafactories with a capacity of over 1,000 GWh.

Not only will China dominate battery cell production but it also dominates the supply chains in the key battery raw materials of lithium, cobalt, graphite and nickel. Europe currently has a negligible role in these critical raw materials.

Although there are small hubs of battery development within Europe, they have not developed at the scale and speed of Asia.

In order to fully engage in the fundamental shift towards EVs, European countries will have to look at their battery supply chain strategies; from critical raw materials, to battery production, and finally to EV manufacturing.

lithium ion battery production
Besides Panasonic powered Tesla, all of the top lithium ion battery makers by capacity in 2019 were based in Asia: LG Chem (Korea, Poland, China), BYD (China), Panasonic (Japan), Tesla-Panasonic (USA)

 

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