Battery Investment Facility (BIF)
Developing and supplying the batteries to power electric vehicles is a pivotal component of decarbonising road transport. Battery manufacturing has expanded in recent years and announcements on manufacturing capacity delivered by 2030 are projected to be more than sufficient to meet the demand expected from government pledges and net zero targets.[1]
However, battery manufacturing is concentrated in certain regions, with China being the main player. In this context, other countries are looking to build homegrown EV supply chains to boost their resilience, have greater control over value chains, and ensure a consistent and affordable supply of domestically produced batteries for the growing EV market.
The UK’s automotive sector is critical to the UK the economy, turning over £79 billion a year and directly employing c. 800,000 people across the wider automotive industry. Transitioning this sector to net zero through battery electric vehicles is essential and represents a $2.7bn investment opportunity.
Blended finance innovation
The UK has the foundations to foster a thriving battery supply chain. The grant landscape has successfully driven investment to-date in UK start-ups, but to enable these businesses to scale and access long-term private finance, an innovative approach to deploying public capital is required. Without continued investment in this sector beyond grants, battery companies will fail to grow in the UK – and seek investment in other geographies.
After engaging with financiers, industry and existing government grant bodies, the GFI designed the Battery Investment Facility (BIF) – a blended finance facility with potential to crowd in 3 to 5 times initial public investment via a co-investment model. This innovative structuring allows public capital to go further for longer, with no additional cost or risk – providing the taxpayer with value for money and allowing battery companies to cross the scale-up gap to deliver on their full potential.
A BIF can invest in key building blocks across the whole battery supply chain, pivotal to securing the long-term future of both existing and future large-scale battery manufacturing plants in the UK.
