One of the UK industry's biggest constraints sits between mining and manufacturing.
Britain has potential lithium resources, an expanding recycling sector and growing cell-production capability. What it does not yet have at sufficient scale is the midstream infrastructure needed to turn raw and recovered materials into battery-grade chemicals.
That matters because every operating or planned UK gigafactory currently relies on imported refined materials. New AutoMotive notes that around 89% of hard-rock lithium refining currently takes place in East Asia, leaving British manufacturers exposed to an internationally concentrated supply chain.
Projects including Green Lithium and Tees Valley Lithium are intended to add domestic processing capacity. Their development could allow more material value to remain in the UK rather than being exported for refining and subsequently imported again as higher-value battery inputs.
The issue becomes more commercially significant from January 1, 2027, when transitional battery and electric-vehicle rules of origin under the UK-EU Trade and Cooperation Agreement are scheduled to end.
The tighter requirements are intended to increase battery manufacturing within Britain and the EU. They will also affect whether qualifying vehicles can continue to move between the two markets without tariffs.
With the UK automotive sector exporting around three-quarters of the vehicles it produces, battery sourcing is therefore becoming a market-access issue as well as a manufacturing one.
Regulation is adding another layer. EV batteries placed on the EU market will require digital battery passports from February 18, 2027, while EU battery rules will introduce recycled-content requirements later in the decade.
Manufacturers are consequently making investment decisions against a wider set of variables: local energy costs, access to refined materials, EV demand, customer commitments, regulation and proximity to European buyers.
The UK is also competing for factories at a time when Europe's battery market is being reassessed. Delays, cancelled projects and Northvolt's collapse have underlined how difficult it can be to convert large funding commitments into profitable high-volume manufacturing.
That retrenchment could create opportunities for credible UK projects, but it is also making investors more selective.
Asian battery producers bring scale, established supplier relationships and manufacturing expertise that many European startups have struggled to reproduce. New AutoMotive acknowledges that a future UK gigafactory could involve an Asian, potentially Chinese, partner.
For Britain, the relevant economic question is therefore not simply where the investor is headquartered. It is how much production, engineering capability, supply-chain activity and intellectual capital remain in the country over the life of the investment.
Recycling may offer the UK another route to strengthening its battery supply chain.
More than two million EVs are now on British roads, creating a future stock of lithium, nickel, cobalt, graphite and other valuable materials that could eventually be recovered and reused.
The structure of the UK vehicle market may also help.
Britain's island geography and right-hand-drive fleet mean used vehicles are less likely to move through neighbouring secondhand markets than cars on the European mainland. That increases the likelihood that a larger share of end-of-life EV batteries remains in the country.
Businesses including Altilium and Recyclus are developing operations designed to capture that material.
But recycling exposes the same midstream weakness facing newly extracted lithium. Britain has increased its ability to collect batteries, process them and produce black mass, yet it still has limited capacity to refine that material back into battery-grade chemicals.
As a result, recovered materials can leave the UK for further processing before returning in a more valuable form.
There is also a timing issue. Batteries are lasting longer than some early industry forecasts anticipated, meaning the first large wave of end-of-life EV packs may not become available until after 2030.
That gives the industry additional time to build recycling infrastructure, but it also means recovered material alone will not solve Britain's near-term supply needs.
New AutoMotive recommends maintaining the ZEV Mandate, lowering industrial electricity costs, accelerating permitting, securing an operator for the Coventry gigafactory site and strengthening controls around exports of valuable recycled material.
Those measures reflect the organization's position that policy certainty can support investment. Companies assessing UK projects will, however, consider a broader commercial picture that includes energy pricing, European market access, competition from Chinese suppliers, technology choices and long-term demand.
The £7 billion committed so far gives Britain a meaningful base from which to develop a battery industry. It does not guarantee that the country will capture the full economic value of the transition to electric vehicles.
The next indicators will be more practical: whether proposed refineries reach construction, whether Coventry secures a manufacturer, whether existing plants expand and whether recycled battery materials can be processed domestically rather than exported.
Britain has attracted the first wave of capital. The next challenge is building enough of the supply chain around those investments to keep manufacturing and material value in the UK.
