Failure of planned £3.8bn EV battery gigafactory in Northumberland is a 'big bump in the road' for British green industrial revolution
Plans for a flagship electric vehicle (EV) battery manufacturing plant could be approaching the end of the road, after the start-up behind the ambitious project entered administration on Tuesday.
Britishvolt confirmed yesterday that EY has been appointed administrator of the embattled firm, after talks about a rescue bid from a coalition of foreign investors that would have sustained plans for a £3.8bn 'gigafactory' failed.
On a call with staff, Britishvolt chair Peter Rolton explained the company had secured a last minute takeover offer from a group of shareholders, but the offer had been rejected by the firm's creditors, according to a report in the Financial Times.
EY said the company had entered administration "due to insufficient equity investment for both the ongoing research it was undertaking and the development of its sites in the Midlands and the North East of England".
The majority of Britishvolt's 300 staff have been made redundant "with immediate effect", it said.
The news will be seen as a major blow to the government's plans to lead a "green industrial revolution" and establish the UK as a leader in electric vehicle manufacturing. There is currently just one EV battery plant under construction in the UK, a plant in Sunderland being built by Chinese company Envision.
Colin Walker, transport analyst at the ECIU think tank, said the UK risked seeing its economic competitors seize the commercial opportunities associated with the global transition to EVs.
"Experts have been clear that the government needs to recognise that we are in a global race to build the clean technologies of the future. Without action to bolster sectors like electric vehicles, the UK risks being stuck on the starting line," he said.
Founded in 2019, Britishvolt secured investment from a number of high profile firms, including mining giant Glencore, with whom it had brokered a supply deal for cobalt, financial services giant Abrdn, and industrial equipment company Ashtead. It also secured a promise of £100m of funding from the government, which was contingent upon the project reaching certain construction milestones.
However, in the autumn Business Secretary Grant Shapps reportedly declined a request to provide the cash-strapped company with an advance on the multi-million pound grant, with insiders claiming the government had grown concerned about the company's "chaotic" management and its failure to meet certain targets.
Labour has previously criticised the government for failing to provide more support to the ailing firm. Reacting to reports the firm was close to entering administration last autumn, Jonathan Reynolds, Shadow Secretary of State for Business and Industrial Strategy, said: "The blame here lies with a Conservative government that has run Britain's economy down over twelve years, failed to back growing industries as other countries have, and has completely failed to grow our economy."
Reacting to the news on Twitter, Labour MP Matt Western said: "This is a huge concern and one the government is not facing up to. It was naive to believe that Britishvolt, a property company, was the solution to this challenge. Shameful failure. And underlines their absence of an industrial strategy."
The Department for Business, Energy and Industrial Strategy (BEIS) had not responded to a request for comment on the news of Britishvolt's collapse by BusinessGreen.
Susannah Streeter, senior investment and markets analyst at Hargreaves Landsdown, said the collapse of Britishvolt was a "big bump in the road" for battery making in the UK.
"New gigafactories closer to car manufacturing hubs are considered important at a time when global supply chains have turned more brittle, but it shows how difficult it is for a battery start-up to enter this space," she said.
"The government's reticence to offer more funding for the project shows that ministers lost confidence in the company offering a long-term solution to the lack of battery manufacturing capability. There will be hopes a big motor-manufacturing name will sweep in like a knight in shining armour to keep the dream alive, but for now it seems they are holding their horses."
EY said it would explore a range of options for the business and its assets, which includes its site at Blyth in Northumberland, its intellectual property, and R&D assets. Hopes will remain that with the global auto industry accelerating investment in the EV transition and multiple major companies keen to expand the battery supply chain some parts of the project could yet be revived.
Dan Hurd, joint administrator and partner at EY-Parthenon, said: "Britishvolt provided a significant opportunity to create jobs and employment, as well as support the development of technology and infrastructure needed to help with the UK's energy transition. It is disappointing that the company has been unable to fulfil its ambitions and secure the equity funding needed to continue."
This article was first published in BusinessGreen.