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Britishvolt administration questions viability of Britain’s EV market

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Battery startup Britishvolt has collapsed into administration, raising questions over the development of an electric vehicle (EV) market in the UK amid issues in establishing a supply chain.

  • Britishvolt, which was planning a Gigafactory plant in the North East of England, has entered administration.
  • The £3.8 billion project was intended to provide batteries for EV carmakers in the UK, creating thousands of jobs in a deprived area.
  • Without a solid supply chain in Britain, carmakers could decide to move production to other countries, hitting the country’s economy and hampering its net zero amibitons.

Britishvolt administrators seek buyers

Dan Hurd, Jo Robinson and Alan Hudson of EY-Parthenon’s Turnaround and Restructuring Strategy team were appointed joint administrators of Power by Britishvolt Limited. They are now seeking buyers of the business and its assets.

The company made most of its nearly 300 employees redundant with immediate effect. EY said this was due to insufficient equity investment for both the ongoing research and the development of its sites in the Midlands and the North East of England.

Power by Britishvolt was set up to build and operate a Gigafactory site in Northumberland that was estimated to cost £3.8 billion to start production. It was intended to make sustainable, low-carbon batteries primarily for the UK motor industry, creating up to 3,000 jobs in the immediate area and more in the supply chain. The plant had been hailed as a key project for the Conservative Party’s ‘levelling-up’ strategy, devised to revive the local economy in regions that had been struggling for decades, such as the North East of England.

No other entities in the Britishvolt Group, including a number of UK entities, are in administration, EY said. Jaguar Land Rover owner Tata Motors (NSE:TATAMOTORS) has expressed interest in the site, the Financial Times reported, alongside other carmakers and wind turbine manufacturers. Tata Motors was contacted for comment. 

Britishvolt had secured £100 million under the UK Government’s Automotive Transformation Fund (ATF), however, it struggled to meet the targets required to unlock the funding, including sufficient investment commitments from the private sector and beginning construction. As of summer 2022, the company had only raised £200 million. In November 2022, it said it had received short-term capital to stay afloat from an unnamed investor while, days before the administration, Reuters reported that it was in talks with a consortium of investors for the sale of a majority stake.

A spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) said: “We remained hopeful that Britishvolt would find a suitable investor and are disappointed to hear that this has not been possible, and therefore no ATF grant has been paid out.”

Jonathan Reynolds, the business shadow secretary, commented: “Conservative economic failure is costing working people and British business. The Government’s long-term failure on industrial strategy means we’re losing the global race for electric vehicle battery manufacturing putting our world-famous car industry at risk.”

UK government launches inquiry

Following the news, the BEIS Committee launched an inquiry into the supply of batteries for EV manufacture and the viability of battery production in the UK, ahead of the ban on the sale of petrol and diesel vehicles in 2030. 

The country’s only active manufacturer is Chinese-backed Envision’s site in Sunderland that supplies Nissan (TYO:7201), after BMW (GER:BMW) announced it will end production of the electric Mini in Oxford in October 2022. So far, there are commitments from other carmakers: Stellantis (BIT:STLA) has allocated £100 million to its Ellesmere Port site, while Ford (NYSE:F) will invest a total of £380 million to make Halewood its first EV components site in Europe.

“The future of car manufacturing in the UK is dependent on our ability to make electric vehicles, and to be able to export them into the EU,” said Committee chair Darren Jones. “That means we need local supplies of electric vehicle batteries – something we’re falling significantly behind on compared to other parts of the world.”

Blow to UK economy

As well as having an impact on jobs in Northumberland, the Britishvolt collapse is reverberating across the whole country’s economy. The project was hoped to turn Britain into a key EV market following Brexit, positioning it as a leader in the energy transition.

There are fears, however, that this vision will not materialise if its flagship project fails before even starting. Britain is under pressure to build a viable domestic market ahead of the combustion engines ban at the end of the decade, but carmakers may decide to move production elsewhere if they do not have easy access to a solid supply chain.

Speaking at the World Economic Forum in Davos, Former Conservative leader William Hague told The News Agents Brexit was to blame. He said: “What do you need in it for some of these technologies? You need scale, you need to know there’s a big market. If they’re going to succeed with batteries you need big manufacturers to be in the same market, using those batteries. That’s part of the damage that has been done by leaving the EU.”

Not all is lost, according to GlobalData analyst Martina Raveni. She thinks that either private investors or the government will invest in Britishvolt and try to make the ‘green industrial revolution’ happen, given the importance of the startup in the decarbonisation of the automotive sector, not only in the UK but also in continental Europe. The value of the chosen site also remains attractive, as it is well connected via land and sea to receive raw materials and has access to plenty of renewable energy produced locally. Saving the project, however, remains key.

Raveni concluded: “Without Britishvolt, it would be challenging for the UK automotive industry to realize the shift from petrol-fuelled cars to EVs needed to meet government targets. Indeed, without this project, the UK battery supply chain would be penalized as UK car manufacturers would need to rely on foreign battery suppliers. Therefore, this is a big moment for the UK, where it will show how serious it is about decarbonization via electrification.”

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