Batteries in the UK: industry profile

With batteries now widely viewed as a critical enabler of net zero, electrification and industrial competitiveness, the UK's batteries industry — which produces batteries for electric vehicles, stationary energy storage, and various specialist and industrial applications — has seen a significant increase in demand in recent years, as well as concomitant growth in turnover and gross value added (GVA).

For the UK, annual battery manufacturing demand is forecast to reach 100GWh by 2030 and approach 200GWh by 2040, meriting the sector's designation as a key 'frontier industry' in the government’s June 2025 Advanced Manufacturing Sector Plan.

Demand growth is being driven primarily by the transition to electric vehicles (EVs), with the automotive sector accounting for most of the UK's demand for batteries. As reported by the Guardian, 19.6% of new cars sold in the UK in 2024 were electric, up from 16.5% in 2023.

Over time, though, demand is expected to broaden and diversify. Grid storage, rail, maritime, aviation and defence are all expected to become more important sources of demand from the 2030s onwards, creating opportunities beyond automotive applications. Battery energy storage systems (BESS) have already expanded quickly as renewable generation has increased, with UK battery storage capacity rising by over 500% between 2020 and 2025.

Notably, this increased proliferation is opening up opportunities for businesses in repurposing and recycling used batteries, as is explored in more detail below.

Despite this encouraging demand outlook, however, commentators such as the House of Commons Business and Trade Committee have warned that the sector is lagging behind in an increasingly intense global race, and is thus facing a capacity and delivery bottleneck. Whilst there have been positive developments in this regard — for instance Tata Group’s decision in 2023 to invest £4 billion in a 40 GWh battery cell factory in Somerset — according to the Faraday Institution the UK is on track for only ~4% of Europe’s GWh capacity by 2030. Long-term competitiveness will depend on timely investment, skills development, and build-out of manufacturing and recycling capacity.

Supply chain resilience, too, is often cited as a key challenge for the industry, dependent as it is on critical minerals such as lithium, cobalt, nickel, and graphite. The government recently stressed the "need to go further to shore up the sector’s critical inputs and foundational industries".

At a high level, the UK batteries industry may be segmented in several ways — principally by end-use application and by battery chemistry/type. Here, we consider the former. It should be noted, however, that some activities (such as recycling and re-use) cut across these segments, that some battery types (such as lithium-ion batteries) have numerous applications, and that some companies are concerned with more than one segment.

This segment encompasses batteries used to power the electric motors of battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs). In the UK, demand for such batteries is rising as EV adoption grows.

Whilst most EV batteries are still imported, domestic manufacturing capacity is increasing, notably through Envision AESC’s Sunderland operations and Tata Group’s planned Somerset gigafactory for Jaguar Land Rover.

Automotive applications account for the majority of UK battery demand, making this the largest segment by some margin — a situation expected to persist through to at least 2035.

Here, rechargeable lithium-ion technologies are dominant, remaining the global standard for EVs. However, some companies are seeking to commercialise alternative technologies, such as solid-state batteries, for EV applications.

This segment covers batteries used in stationary applications, most notably for grid energy storage, but also for smaller-scale commercial/residential storage.

As renewable electricity generation grows and the electricity system modernises, battery energy storage systems (BESS) are coming to play a critical role in balancing electricity supply and demand, improving the utilisation of intermittent renewables and providing resilience during outages.

Whilst it accounts for a relatively small proportion of total battery demand, this segment has seen significant growth in recent years. Operational grid-scale battery storage capacity increased from around 1.1GW in 2020 to 6.9GW in 2025, with other projects consented or under construction. In 2023 the Department for Business and Trade predicted that "by 2040 up to one-third of UK battery demand [...] could be for energy storage".

As in the EV battery segment, lithium-ion technology currently dominates, although design priorities differ from automotive batteries, with greater emphasis on cycle life and cost per kWh. There is also growing interest in alternative chemistries, including vanadium flow batteries and emerging sodium-ion solutions.

Though deployment is expanding quickly, however, the UK currently lacks a large-scale manufacturing base for stationary storage.

Beyond electric vehicles and stationary storage, batteries have a wide range of other consumer, industrial and specialist applications. Here, chemistry/technology varies widely depending on context.

This segment includes batteries for use in consumer electronics, industrial equipment, public transport, aerospace, and defence. It also encompasses legacy markets, notably lead-acid batteries, which remain widely used in vehicle starter systems.

The UK has limited mass manufacture of consumer cells, which are largely imported, but hosts a number of niche producers and integrators supplying specialist battery packs and high-performance cells for defence, aerospace, and motorsport. For example, Raeon manufactures custom battery solutions for defence applications including UAVs.

There are notable ongoing R&D projects in this area, including one led by the University of Oxford, which aims to develop safer, more reliable, high-performance batteries for industries such as mining, transport, and construction.

Growth in this segment is slower than in EVs or grid storage, but it is nonetheless likely to present opportunities in the coming years. Recent press coverage has emphasised the potential for batteries to be used extensively in the next generation of trains, for example.

Large-scale battery production is concentrated in so-called gigafactories, and — according to the House of Commons Business and Trade Committee — the UK is engaged in a "global battery race with competitor countries" as it seeks to build up its share of these giant battery manufacturing plants.

This issue is made more urgent by upcoming changes to EU–UK rules of origin for electric vehicles and batteries. From 2027, EVs traded between the UK and EU will be required to contain a certain proportion of local battery content or face tariffs, increasing pressure to deliver new capacity on time.

The Faraday Institution estimates that EV demand alone could require the equivalent of six UK gigafactories by 2030, but until recently the country had only one operational gigafactory — Envision AESC’s Sunderland plant, with capacity of around 2GWh.

However, the past few years have marked a step-change. Most notably, Tata Group’s £4 billion investment in a 40GWh gigafactory in Somerset has been widely viewed as a turning point. Envision AESC has also expanded production in Sunderland to 15.8GWh. Together, these projects significantly strengthen the UK’s manufacturing base.

That said, the country still lags behind many of its peers in this regard: as noted above, the UK is projected to host only around 4% of Europe’s gigafactory capacity by 2030, compared with much higher shares in countries such as Germany (21%) and Hungary (16%). And despite the positive steps made by AESC and Tata, the recent collapses of Britishvolt and AMTE underline the financial and execution risks involved for businesses seeking to commence large-scale battery manufacturing operations.

Recognising the importance of this issue, the government has taken some steps to support firms engaged in battery manufacturing — seeking to bring down high electricity costs via the British Industry Supercharger package, for example.

Battery manufacturing is dependent on access to a range of critical raw materials (including lithium, cobalt, nickel, and graphite and manganese) and components (such as cathodes, anodes, and electrolytes) — many of which are produced or processed overseas. Ensuring continued access to these is a key challenge for the industry and for policymakers.

The UK, like other Western economies, remains heavily reliant on imports of such critical inputs. China in particular dominates large parts of the global supply chain, especially in lithium refining and cathode production. As is recognised in the government's Advanced Manufacturing Sector Plan, this creates strategic vulnerabilities, exposing UK manufacturers to geopolitical risk, potential trade restrictions, and market volatility.

Whilst it is generally accepted that the UK cannot be fully self-sufficient in battery materials, efforts are being made to diversify supply and safeguard access to critical minerals. The government’s Critical Minerals Strategy, for example, aims to reduce overreliance on any single country and to strengthen domestic capabilities, particularly in midstream processing and refining, and in recycling.

Here, there are some signs of progress. For example, in 2023 Cornish Lithium secured £53.6 million of investment to open Britain's first lithium mine, and the firm has plans to build a full-size lithium processing and refining plant with an annual capacity of up to 10,000 tonnes. Recycling (covered in more detail below) is also expected to become a crucial pillar of resilience, as end-of-life batteries provide a secondary domestic resource base and reduce reliance on virgin material imports.

Skills development is increasingly recognised as a decisive factor in the long-term success of the UK batteries industry. According to the Faraday Institution, if the UK is to successfully expand its battery production sector, it will require sustained, coordinated investment in workforce skills.

Jonty Deeley-Williamson, Head of Learning & Development at the UK Battery Industrialisation Centre (UKBIC), has warned that whilst universities in the UK provide strong academic foundations, there is a shortage of workers with the key level 2-5 skills that are essential to the running of a gigafactory. As a result, there is a pressing need for quality provision in further education, apprenticeships and vocational training.

A central risk is that insufficient skills availability could undermine gigafactory investment decisions, particularly as battery and vehicle manufacturing clusters intensify competition for labour.

Encouragingly, new initiatives are emerging which should go some way to meeting the industry's needs in this area. In 2025, EAL and UKBIC launched a Level 2 Award in Battery Manufacturing, with further qualifications in development, whilst University College Birmingham and partners have introduced a dedicated Battery Manufacturing Skills Pathway. These follow on from the Battery Manufacturing Technician apprenticeship standard which was approved in late 2023.

By 2040, a successful battery industry could employ 35,000 people in gigafactories. If this is to be achieved, training initiatives such as those referred to above will need to be rapidly scaled up, requiring extensive collaboration between government, industry and educational institutions.

Whilst lithium-ion batteries dominate today’s market, industry commentators such as the Faraday Institution have pointed to longer-term opportunities in technological innovation beyond established chemistries.

Next-generation battery technologies — including solid-state, sodium-ion and lithium-sulfur — are seen as offering routes to competitive advantage, particularly in applications where lithium-ion is less optimal, such as aviation, marine, rail, and long-duration energy storage. These emerging technologies could improve performance, reduce costs, enhance safety and lessen reliance on volatile critical mineral supply chains.

Here, the UK is well positioned to play a leading role, given its strengths in battery science, world-class research base and strong start-up ecosystem. Various UK firms specialise in emerging battery technologies. Ilika, for example, develops solid-state batteries which offer step changes in energy density and safety for electric vehicles. Faradion, meanwhile, continues to work to bring sodium-ion cells to market, which could provide a cost-effective solution for stationary storage or low-range vehicles, and reduce reliance on imported lithium.

Notably, businesses active in this area may obtain public investment through the Battery Innovation Programme.

However, most next-generation technologies remain at an early stage of commercial maturity, and the House of Commons Business and Trade Committee has emphasised that the UK is unlikely to "simply leapfrog into new technologies without first establishing itself in the lithium-ion battery industry". As a result, near-term innovation priorities may focus on incremental improvements in lithium-ion, for instance around advanced anode and cathode materials, or manufacturing efficiency.

In recent years, some prominent industry voices have advocated for a shift away from the traditional linear model of "take-make-dispose" toward a "circular" economic system in which battery materials and products are kept in use for as long as possible, and waste is minimised across the full lifecycle of batteries.

Policymakers and industry leaders increasingly recognise that primary mining alone cannot meet future demand and that recycling and reuse will be essential to both supply-chain resilience and environmental performance. As a result, there are potential opportunities for businesses to position themselves as trailblazers in these areas.

Notably, the government’s Critical Minerals Strategy explicitly positions battery recycling as a major future supply source, particularly from the 2030s as large volumes of electric vehicle (EV) batteries reach end-of-life, with the ambition being for the UK to become a leader in battery materials recycling.

However, whilst lead-acid batteries have a highly mature recycling system, at present there is limited domestic capacity for lithium-ion recycling. As of 2025, most end-of-life EV batteries were still being stockpiled rather than processed. Companies such as Altilium are developing the UK's lithium-ion recycling and refining capabilities, though relatively low raw material prices and high costs are said to be squeezing profit margins. That said, innovations aimed at reducing costs — such as alternative hydrometallurgy technologies — have the potential to increase commercial viability in this area.

Another opportunity lies in second-life applications. After 8–10 years of vehicle use, EV batteries can often be repurposed for less demanding purposes such as stationary energy storage. UK pilot projects — often involving automotive manufacturers and energy companies — are exploring this model, enabling greater value extraction and delaying recycling. Jaguar Land Rover, for example, have already committed to reusing EV batteries for stationary storage, creating an additional revenue stream whilst reducing waste.

The tax treatment of the UK batteries industry is complex, and a full explication of its nuances is beyond the scope of this profile.

That said, given that battery manufacturing and related activities are typically both R&D- and capital-intensive — spanning advanced materials, process innovation and large-scale manufacturing investment — it is possible to point to some elements of the UK tax system which are likely to be of particular interest to businesses operating in this sector, including:

• Research & Development (R&D) tax relief – particularly relevant for companies developing new battery chemistries, manufacturing processes, or recycling and reuse technologies.
• Patent Box – allowing profits attributable to patented battery technologies or manufacturing processes to be taxed at a reduced rate of 10%.
• Capital allowances and full expensing – providing tax relief on qualifying plant and machinery, which can be significant for gigafactories and other large-scale production facilities.
• Place-based incentives – Freeports and Investment Zones may offer time-limited benefits such as business rates relief, enhanced capital allowances and employer NICs relief; eligibility depends on current scheme rules and local designations.

The size and diversity of the UK batteries industry means that any list of notable players will not be fully representative or comprehensive.

That said, some examples of noteworthy players are set out below.

• AESC UK – part of the global AESC Group; a major battery manufacturer operating the UK’s first gigafactory in Sunderland, supplying lithium-ion cells for Nissan EVs.
• Agratas (Tata Group) – battery arm of India’s Tata; building a landmark 40 GWh gigafactory in Somerset to provide cells for Jaguar Land Rover and others.
• Altilium – UK clean-tech company recycling end-of-life EV batteries into low-carbon cathode active materials using its proprietary EcoCathode process.
• Connected Energy – global leader in transforming electric vehicle batteries into powerful battery energy storage systems.
• Faradion – noted innovator in sodium-ion battery technology.
• Hyperbat – UK-based battery manufacturer delivering battery systems to automotive standards.
• Ilika – spin-out from the University of Southampton specialising in solid-state batteries.
• Invinity Energy Systems – London-headquartered manufacturer of vanadium flow batteries for large-scale energy storage.
• Raeon - developer of highly customisable lithium battery products for a range of applications, including defence, motorcycles, and aerospace.

ICAEW’s Library & Information Service can provide information on UK and Irish participants in the batteries industry via its wide range of company information services. This includes:

• Information on company acquisitions in the sector
• Company data
• Beta values
• P/E ratios

For more information, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com to discuss your requirements.

• Advanced Propulsion Centre (APC) UK
• British Battery Industry Federation (BBIF)
• British & Irish Portable Battery Association (BIPBA)
• Critical Minerals Association (CMA)
• Electricity Storage Network (ESN)
• Faraday Institution
• UK Battery Industrialisation Centre (UKBIC)

• Consortium for Battery Innovation (CBI)
• European Battery Alliance (EBA)
• Global Battery Alliance (GBA)