UK-backed battery firm Britishvolt considers entering administration
The UK government-backed battery startup Britishvolt is on the brink of entering administration with the potential loss of almost 300 jobs, after it struggled to find investors willing to fund its effort to build a giant £3.8bn “gigafactory” in north-east England.
The company had considered an administration as early as Monday, two sources with knowledge of Britishvolt’s operations told the Guardian. Britishvolt has lined up the accountancy firm EY to carry out the administration if it goes ahead.
However, one source cautioned that Britishvolt was also still examining other options to try to find a last-ditch rescuer, with administration possible later in the week if those talks failed.
The company is thought to have cash reserves left to last a few weeks at most without further support.
Late on Monday night the BBC reported that Britishvolt had secured funding of an unspecified amount, citing unnamed company sources. The Guardian understands that Britishvolt had been seeking to take on debt to avert the collapse.
A source told the Guardian there was uproar from employees on Monday afternoon after the company cancelled a staff meeting without informing them of what would be happening following the reports it could enter administration. A Britishvolt spokesman declined to comment on the report that funding was secured.
The London Electric Vehicle Company (LEVC), a maker of electric taxis widely used in the capital, separately on Monday announced that it would cut 140 jobs, capping a difficult day for the UK automotive industry.
The Coventry-based business, which is owned by Chinese automotive group Zhejiang Geely, had about 500 employees in total at the start of 2020. The cuts, planned to be achieved via voluntary redundancies, came in response to the pandemic, disruption to supply chains and “significant global economic challenges”, LEVC said in a statement.
Britishvolt was founded less than three years ago with the ambitious aim of building an enormous factory that would be able to supply batteries to carmakers.
It quickly became a flagship project for the UK automotive industry, and gained the support of the former prime minister Boris Johnson, who repeatedly cited the project as an example of Britain leading the way in the shift away from fossil fuels.
The government eventually promised the company £100m in financial support, while the current prime minister, Rishi Sunak, was chancellor. However, Britishvolt has not yet received the money, which was earmarked for tooling equipment within the factory, which has not been bought.
A collapse for the business could nevertheless prove embarrassing for the Conservative government. The Labour MP Ian Lavery on Monday told the BBC that Britishvolt’s chairman, Peter Rolton, had asked the government to bring forward £30m of the support, but that the business secretary, Grant Shapps, had refused the request.
Labour, which has pledged to support investment in at least three gigafactories in the UK, said the government’s lack of support for growing industries relative to other countries was a “scandal”.
Jonathan Reynolds, the shadow business secretary, said: “This disastrous news is a further reminder that the economic crisis made in Downing Street is costing jobs and investment.
“It is a sight that has become all too familiar – businesses going under, jobs being lost, and investment in the industries of the future going abroad rather than to the UK.”
Britishvolt has struggled with disruption for months. Its cofounder Orral Nadjari left the company in July and the Guardian revealed in August that it had put building work for its factory on “life support” to conserve cash.
That was followed by several months of increasingly urgent talks with potential investors to help cover Britishvolt’s rapidly growing costs until it was able to start producing batteries and receive its first revenues.
Britishvolt has acknowledged the financial difficulties, although blamed them on deteriorating market conditions after Russia’s invasion of Ukraine.
Graham Hoare, a former executive at US carmaker Ford who took over after Nadjari’s departure, told the Financial Times the business needed to raise £200m in funds to survive until next summer.
Britishvolt has managed to attract tens of millions of pounds of investment from prominent companies including the miner Glencore and the equipment rental company Ashtead, both members of the FTSE 100. It also gained a promise of support from Tritax, a property investment company majority-owned by the FTSE 100 investor abrdn.
However, it has struggled to secure the next stage of investment, leaving it burning £3m a month to pay the salaries of 300 people, according to the Financial Times.
EY declined to comment. A Department for Business, Energy and Industrial Strategy spokesperson said: “We do not comment on speculation or the commercial affairs of private companies.”