"Large scale production of batteries takes place in gigafactories. The UK faces a gigafactory gap, because of insufficient domestic manufacturing capacity to satisfy UK industry's demand for batteries," the committee said in a report.
If the UK fails to attract investors into battery manufacturing over the next three years, it could see a gradual decline in the automotive sector and hundreds of thousands of job losses, according to the report.
There is only one gigafactory in the country, with a production capacity of less than 2 gigawatt hours (GWh). The UK will need 100 GWh of battery production capacity by 2030 and 200 GWh by 2040, the report said.
"More gigafactories are under development, albeit at different stages of planning and construction. At best, announced plans satisfy a little over half the capacity the nation needs by 2030," the report read.
The UK government must boost investment in the industry and reduce dependence on imports from China, which dominates the electric vehicle battery supply chain, according to the report.
The United Kingdom's central bank on Thursday downgraded its forecast for the country's GDP growth in the third quarter of 2023 from 0.4% projected in August to 0.1%, forecasting a significant slowdown in inflation in the near future.