Britishvolt staves off collapse with extra funding and steep staff pay cut
Britishvolt has said it has secured a few weeks of funding and its 300 staff have agreed to take a steep pay cut, as the UK government-backed battery startup races to find a buyer or new longer-term investor to avoid collapse.
The company, which planned to develop a £3.8bn “gigafactory” creating 3,000 jobs in the north-east of England, had been preparing to appoint administrators on Monday after the government turned down a request to bring forward £30m in previously promised grant funding.
Britishvolt, launched less than three years ago with the lofty ambition of becoming the UK’s champion in the global race to create next-generation electric batteries for carmakers, said it has secured a funding lifeline to allow it to survive at least until next month. It declined to give details of the amount of the funding, how long it will last or the identity of any investors.
“We have now secured the necessary near-term investment that we believe enables us to bridge over the coming weeks to a more secure funding position for the future,” a company spokesperson said. “To further reduce our near-term costs, our dedicated employee team has also voluntarily agreed to a temporary salary reduction for the month of November.”
Britishvolt’s executive team will work unpaid for November, while directors will receive 25% pay and most of the rest of the workforce will receive 50%, the Guardian understands. The pay cuts were “purely voluntary”, a Britishvolt spokesperson said.
However, a failure to achieve the necessary payroll cuts would probably leave administration as the only option, a source with knowledge of Britishvolt’s operations said.
Britishvolt, which is backed by the FTSE 100 mining group Glencore and the equipment rental company Ashtead, has held talks with a number of potential buyers including the Jaguar Land Rover owner, Tata Group. However, talks with some potential investors fell through last week.
“While the weakening economic situation is negatively impacting much business investment at present, at Britishvolt we are continuing to pursue positive ongoing discussions with potential investors,” the spokesperson said. “In addition, we have also received promising approaches from several more international investors in the past few days.”
The government had committed £100m in total to back Britishvolt’s factory project but the release of funds is contingent on reaching construction milestones that have failed to be met.
Britishvolt has struggled with disruption for months and its co-founder Orral Nadjari left the company in July.
Graham Hoare, a former executive at the US carmaker Ford who took over after Nadjari’s departure, has said the business needs to raise £200m in funds to survive until next summer but the company is burning through as much as £3m a month in salaries alone after a hiring spree. It is not expecting to start production at its main factory until at least 2025 – two years later than initially planned.
Britishvolt has acknowledged its financial difficulties, although blamed them on deteriorating market conditions after Russia’s invasion of Ukraine.
The proposed site of Britishvolt’s factory in Blyth, Northumberland, is being keenly eyed by rivals as it is said to be one of the best locations in Europe for battery manufacturing because of its deep seaport, rail links and clean energy.