Britishvolt bankruptcy exposes Britain’s battery bluff

The saying goes that if you build it, they will come.

But in the case of the U.K.’s upstart electric vehicle battery cell industry, the plants aren’t getting built because nobody is coming.

The country’s efforts to transform itself into a post-Brexit clean car haven — based on a century of automotive know-how and an influx of foreign majors — are floundering, which is dampening demand for locally made EV batteries.

That’s finally driven the speculative startup Britishvolt to the wall this week.

“The collapse of Britishvolt into administration is in no uncertain terms a disaster for the U.K. car industry,” Labour’s Shadow Business Minister Jonathan Reynolds told the U.K. parliament on Wednesday, responding to the company’s collapse.

Britishvolt, launched in 2019, had become a flagship clean mobility project for a country aiming to maintain its position as a global automotive hub.

But the company had no product and no fixed sales plan to back up rendered design graphics for a £3.8 billion factory in Northumberland, England that could have employed 3,000 by the end of the decade to churn out 300,000 cells a year.

It failed to secure significant investment to continue, prompting a formal collapse into administration on Tuesday.

“This news is a blow, especially for Britishvolt’s 300 employees,” said Mike Hawes, who runs the Society of Motor Manufacturers and Traders industry lobby.

John Armitt, chair of the National Infrastructure Commission, which advises the government, put some of the blame on Brexit. He told the BBC that investment in the U.K. was “probably declining” in part because of concern over regulatory changes with the EU.

Contrast the U.K. company’s fate with that of Northvolt, a Swedish business launched by a former Tesla executive in 2015 that has now opened a plant at Skellefteå supplying carmakers like VW and Volvo, with further sites planned.

While the U.K. is still home to car plants owned by the likes of BMW, Nissan and Ford, along with legacy luxury brands such as Bentley and Aston Martin, the industry is facing significant headwinds.

Honda left its Swindon plant last year and Tesla opted out of a direct investment in favor of Berlin. BMW has said it will shift production of its electric Mini abroad.

According to the Faraday Institution, a clean mobility research group, the U.K. will need to build five gigafactories by 2030 just to maintain the needs of the remaining national industry that’s going electric; by 2040, it will need 10.

But so far, only one such factory is being built — by Chinese multinational Envision, to serve Nissan’s car plant in Sunderland.

Clean car countdown

The clock is ticking for the U.K. to up its game. The country has already legislated for a 2030 ban on the sale of new petrol and diesel cars and plans to extend that to hybrid models from 2035.

The EU — still a top destination for British auto exports — has agreed a zero-emissions mandate for cars and vans from 2035, and other major global markets are going the same way, starting with the U.S. state of California.

While subsidies totalling more than €20 billion have been used to kickstart cell factory projects across the Continent, with similar amounts now flowing in the United States under the Inflation Reduction Act green cash splurge, far less has been forthcoming in the U.K.

The U.K.’s so-called Automotive Transformation Fund has earmarked just £1 billion for all kinds of industry projects.

“These [cell] factories are being built in competitor countries,” Labour’s Reynolds said this week. “That is because they have governments with the vision and commitment to be the partner that private firms need to turn these factories from plans on paper into a reality.”

The U.K. government said it had committed “significant support” to Britishvolt in the form of a £100 million investment that was contingent on management hitting certain milestones. That didn’t happen, so no public funds were spent on the project, the Department for Business, Energy & Industrial Strategy said.

The search is now on for another company to take over the site.

With battery-makers sniffing around for subsidies and qualified staff for new plants to serve surging demand from electric carmakers, juicier incentives from the U.K. government could attract interest.

For example, Sweden’s Northvolt is in talks with the German government about a plant near Hamburg, while Slovakia’s InoBat has plans for expansion. The world’s biggest battery player, China’s CATL, has global ambitions beyond its projects in Germany and Hungary. The U.K. could fit into that picture.

“The U.K.’s promise as an EV battery production location remains, with strong demand, a skilled workforce, and attractive manufacturing sites, all providing a compelling investment proposition,” said industry lobbyist Hawes.

There have been glimmers of good news for Britain’s electric automotive hopes. Stellantis announced in 2021 that it would invest £100 million in its Ellesmere Port electric van plant and Ford committed in December to building power units for EVs at its Halewood site near Liverpool.

But Britain’s battery prospects are made more complicated by the global competition for investment and raw materials needed to make cells. Some major manufacturers, including Tesla and Northvolt, are mulling how to allocate finite resources between big markets.

“Our choice is between Europe and America right now,” said one industry executive. “The U.K. just doesn’t fit into that at the moment.”

This article has been updated to add comment from an industry executive.