Electric vehicle (EV) battery tech in the UK

It’s been a dramatic few weeks for the UK’s electric vehicle (EV) battery tech ecosystem. The collapse of Britishvolt has brought perhaps more attention than ever to the industry. But in such an important and emerging area of innovation, there’s also more going on beyond the unicorns and headlines. In partnership with UKRI we’ve taken a look at the UK electric vehicle battery tech ecosystem, the twists and turns of its evolutionary journey, and its future promise beyond Britishvolt.

EV battery tech is still a nascent industry, one which has had (and will continue to have) its share of ups and downs. But it remains an massive opportunity.

"The opportunity presented in the EV battery space is enormous. "In a nominal scenario (to fulfil stated environmental policies), the world needs to build over 100 million EVs before 2030. This means we need at least 10x capacity increase in battery products related to EV application, increasing from 0.16 TWh today to 1.6 TWh in 2030. Outside a nominal scenario, it is possible the transportation sector will need to contribute much more to climate goals, which could result in over 200 million EVs and a 20x battery capacity increase before 2030. With this level of demand, the strain is placed at each part of battery supply chain, from mining to recycling.”

The path of innovation is never did run smooth

The evolution of value creation for UK EV battery startups is a complex one. At a glance the chart is dominated by the rapid rise and fall of a couple of startups. Arrival, the smart and electric vans company which went public via SPAC in 2021 at a valutation of $13B has subsequently lost ~90% of its value, and Britishvolt, which also hit unicorn status with a $1B private market valuation, before entering administration 19 months later.

But, if we do look beyond these two outliers, the rest of the UK’s EV Battery startup ecosystem is still growing. The rest of the private startup ecosystem made up for the collapse of Britishvolt between 2021 and 2022, doubling in value.

The first steps of scaling

In terms of venture capital investment for UK EV Battery startups, there is much more funding flowing into the ecosystem compared to just a few years ago. For the last three years there have been multiple rounds of $20M+ for UK EV battery startups.

Corporate investors betting on batteries

Deep pocketed corporates are taking much more of an interest in UK EV battery tech than in the overall tech and startup ecosystem. 57% of funding for the ecosystem last year came from corporate investors. These are highly strategic bets for corporates, and allow startups to access the deep capital required for long term R&D and infrastructure investment.

"A key challenge to the success of EV Battery is the transition to high volume production, and the time it takes to do so. "Challenges are availability of suitable sites with sufficient power, planning and permitting requirements, limited existing skills base along with barriers to recruit internationally in cell manufacturing, as well as access to the levels of investment required. Securing sustainable supply chains is a challenge across the industry globally.”

International investor appetite

Investors all over the world are interested in EV battery tech, and willing to invest anywhere.

Full-stack supply chain

Even within a nice such as EV battery tech, there is a lot of diversity of applications. The UK has startup representation at every stage of the EV battery supply chain, from material production to end of life.

Future promise

Half of all startup value in UK EV batteries is in companies founded since 2015. Early and mid-stage funding is also holding up well. $108M was raised in early and mid-stage rounds in 2021, and $79M in 2022, despite a global full back in venture funding.