Electric vehicle (EV) battery production must be incentivized to prevent the UK car industry from declining, MPs have warned.
A report by the cross-party Business and Trade Committee said hundreds of thousands of jobs are at risk if the issue is not addressed.
The commission argues that the UK could become a “leader” in the manufacture of “sustainable and ethical batteries”.
Many of the world's gigafactories, where batteries are produced, are currently located in China.
The report said: “The UK faces a huge gap, due to insufficient domestic production capacity to meet UK industry's battery demand.
“Meeting demand from the UK automotive industry and other sectors will require 100 GWh (Gigawatt hours) of battery manufacturing capacity by 2030.
“This requirement will increase to 200 GWh by 2040.”
He warned that the UK's only existing gigafactory, near Nissan's car factory in Sunderland, has a capacity of less than 2 GWh.
“At best, the announced plans meet little more than half of the capacity the nation needs by 2030,” the report added.
The government has informed the committee that it plans to publish an Advanced Manufacturing Plan and Battery Strategy this week.
Labor MP Liam Byrne, who chairs the committee, said: “Power was at the heart of the industrial revolution and will be at the heart of the green industrial revolution.
“But at the moment, the UK is on track to secure just half the electric battery capacity needed by the domestic car industry alone.
“If we don't fix this quickly, we risk the industry simply moving to Europe or the US or becoming dependent on imports from China and elsewhere.
“This puts 160,000 jobs and a jewel in the UK's industrial crown at risk. Now is the time to act.”
A spokesman for the Department for Business and Trade said: “In recent months the Government has secured a £4bn investment from Tata in a new gigafactory and £600m to build the next generation of electric Minis.
“This is in addition to a previous £1bn investment in an electric vehicle hub in Sunderland by Nissan and battery supplier AESC.
“Combined, these major investments show that our plan for the automotive industry is working and continues to deliver results.
“Later this week we will publish a wide range of Advanced Manufacturing Plans and the UK's first Battery Strategy, which will ensure we continue to place the UK at the forefront of global supply chains.”
In July, Tata Son, the company behind the Tata Group, announced it would build a new £4 billion battery factory in Somerset.
Gigafactory start-up Britishvolt, which had a site in Northumberland, collapsed in January after running out of money.