The collapse of Britishvolt
The great hope of a revival in British manufacturing led by green technologies is looking rather hopeless after a much-hyped battery start-up went into administration. Simon Wilson reports
What is Britishvolt?
It’s a would-be battery-maker once touted by the Boris Johnson government as a “fantastic” and crucial plank in the UK’s strategy for transitioning to a car industry based on electric vehicles (EVs). But it went bust last month without ever producing a commercially viable battery
– or even, by some accounts, a working prototype. Britishvolt, founded in 2019, was developing a £3.8bn gigafactory at Blyth in Northumberland that promised to create about 3,000 jobs and deliver 30 gigawatts of capacity by 2030. According to the Faraday Institution, a battery research group, it would have accounted for more than half of the UK’s currently planned capacity, and would have produced enough cells each year for more than 300,000 battery packs, or 25% of current UK vehicle output. Instead, the company went into administration last month, after its latest attempt to raise emergency funding failed.
Where did it all go wrong?
Some analysts think the whole project was misconceived: a long-odds punts that if you build it they will come. “If you look at all the cell factories all over Europe, they are being built on the back of having at least one launch customer,” Ian Henry, an automotive manufacturing expert, told the Financial Times. Chinese battery giant CATL, for example, built its plant in Hungary only after winning a contract to supply the Mercedes-Benz plant in the same country. By contrast Britishvolt had no customers and inexperienced management. Britishvolt’s founders were Orral Nadjari, a former banker in Abu Dhabi with no automotive background, and Swedish entrepreneur Lars Carlstrom, an ex-sales manager for Saab who left Britishvolt in 2020 after it emerged he’d been convicted of tax fraud in Sweden in the 1990s. For all their talk, the firm never earned any revenue, but spent lavishly on staff and equipment. The only silver lining for the UK government is that it never actually handed over the promised £100m of public money. Their investment was contingent on hitting investment, customer and construction milestones that Britishvolt never came close to achieving.
What’s the current state of play?
The administrator EY has named another start-up, the Australian battery group Recharge Industries, as the “preferred bidder” for Britishvolt’s assets, including the site near Blyth and some intellectual property. Recharge is backed by Scale Facilitation, a New York-based investment outfit led by former PwC partner David Collard. The company’s main calling card, says Alistair Osborne in The Times, is that it has a contract for a similar factory of up to 30 gigawatt hours (GWh) in Geelong, Victoria, where the first 2GWh of construction is due to begin this year. It also has its own patented technology that doesn’t use cobalt or nickel to create battery cells. So Recharge is a couple of steps ahead of Britishvolt, but it’s no Northvolt, for example – the Swedish group, with $55bn of orders and the likes of Volkswagen as investors. “It’s in Britain’s interests that Collard succeeds. Yet there are lots of potential roadblocks ahead.”
Why does this matter so much?
Because home-grown battery power is essential to the future of Britain’s car industry, forecast to need 96GW of annual capacity by 2030. So far, the country is building just 38GW via the Chinese-backed Envision plant in Sunderland, supplying the local Nissan factory. More broadly, the Britishvolt collapse raises questions about the future of skilled manufacturing in Britain, and the government’s ability to level up deprived regions. Nor is it the only recent blow to Britain’s EV prospects. BMW is moving production of electric Minis to China. Arrival, a UK maker of electric delivery vans, has moved production from Oxfordshire to North Carolina to benefit from Joe Biden’s subsidies and tax breaks.
How’s the UK car industry doing?
It’s rapidly shrinking, due to a combination of Brexit, pandemic disruption and the shift to battery power, for which the UK is ill-equipped and under-prepared. As recently as 2016, 1.7 million cars rolled off UK production lines. Last year that number fell to 775,014, the lowest total since 1956. Carmaking is still a big business in the UK, directly accounting for 182,000 jobs and revenues of £67bn in 2021, or 3% of GDP. Car manufacturing is a multinational business, but not an especially profitable one, says Matthew Brooker on Bloomberg. Most UK producers earn about £450 on a £15,000 car. The extra costs due to trade frictions arising from Brexit mean slim profit margins can easily disappear. Given that batteries account for such a large chunk of EV production, carmakers that operate in Europe are deciding to put both battery and vehicle-making operations inside the EU.
Any glimmers of hope for the UK?
Investment is flowing in, but in an industry that will spend $1.2trn globally by 2030, the sums involved are trifling, says The Economist. More than 40 “gigafactories” are up and running or being built in Europe – some by start-ups like Britishvolt and others in joint ventures between carmakers and the battery giants of China, Japan and South Korea. So far, the plant in Sunderland is Britain’s only one. To put that in context, if Britishvolt had successfully met its targets, the UK would still have accounted for only 0.6% of the world’s lithium-ion cell capacity by 2031, according to Benchmark Mineral Intelligence. With Britishvolt gone, it’s down to 0.2%, says Simon Moores, the research firm’s CEO. This is a “stark reminder” of how the UK is “not really a part of this global battery arms race”. The obvious way ahead, says Ben Marlow in The Telegraph, is to “admit defeat, give up on our efforts to nurture a plucky national underdog and instead focus on luring established global players to do the work for us”. Britain is deluded to think it has any chance of creating a competitive homegrown electric car industry.
“Britishvolt had no product, no customers, no revenue and inexperienced management”