Britishvolt, the company that had hoped to spark a revolution of building batteries in the UK, has collapsed into administration.
The company had hoped to set up the UK’s first Gigafactory, having chosen a site in Blyth, Northumberland, where it expected to produce over 300,000 lithium-ion batteries a year by 2027. Despite the bold promises, however, the company has struggled with cash flow in recent months.
On Tuesday, staff were informed that the company would be entering administration, having been left with no other choice as financing dried up for the firm. While the UK Government had committed to financing part of the project to a tune of £100 million, it was only willing to invest after the company hit key construction milestones. Having missed those milestones, the Government refused to lend Britishvolt a lifeline.
Up until Tuesday, Britishvolt had around 300 staff members working on making large-scale manufacturing of lithium-ion batteries in the UK a reality. However at its peak, the company hoped to employ 3,000 people at its £3.8 billion factory in Blyth, but without fresh funding, it was a non-starter.
The company’s collapse isn’t a complete surprise for the industry, as Britishvolt consistently pushed back its construction plans. It was expected that the first lithium-ion batteries would roll off the production line by the end of 2023, with the firm partnering with Siemens to make that a reality. That date was later pushed to mid-2025 due to a factory redesign, as well as “rampant inflation and rising interest rates.”
What happened at Britishvolt?
Britishvolt jumped onto the scene in December 2019, prior to the Covid-19 pandemic. Despite the pandemic, however, the company announced bold plans, including a headquarters in the West Midlands and a location for its factory in Wales. It later ditched plans for the Welsh gigafactory due to the fact that the site would not be ready for construction before Summer 2021, forcing it to look elsewhere. It eventually found that site in December 2020, selecting Blyth, Northumberland, but construction has been on pause at that site since Summer 2022.
The cost of constructing the gigafactory was originally estimated at £2.6 billion, although that was raised significantly to £3.8 billion given the construction delays and rampant inflation. Despite this, construction began in September 2021, with Britishvolt mulling a listing on either the New York or London Stock Exchange as part of a special purpose acquisition company (SPAC) to help raise the funds needed to pay for construction.
While the stock listing didn’t go ahead, the company was able to raise significant capital from a range of investors, including Anglo-Swiss mining giant Glencore, as well as asset management company Abrdn and its property investment arm Tritax. A big win for the project came when the UK Government committed £100 million towards the project in January 2022, although the funding was contingent on hitting key milestones.
Unfortunately 2022 had a string of issues facing Britishvolt, including investment money drying up, rampant inflation and the dramatic exit of the company’s largest shareholder and CEO Orral Nadjari. There were also concerns about the company’s accounting practices, as well as its ability to raise funds, with many worried about its future.
Earlier this month, the company was thrown a lifeline, as it was reported to be the target of two rival rescue bids. Those bids were to be discussed in a board meeting last week, although one of the bidders was deemed unsuitable, while the other was rumoured to be mulling a bid up until January 16.
For Britishvolt’s management team, the bids were not enough to keep the company afloat. On January 17, the company announced that it would be entering administration and laying off the majority of its 300-strong staff. This is despite one investor telling the BBC, “It’s madness, I have been offering a variety of possible solutions. Falls on deaf ears. It appears, to me, that management wants the company to go into administration. A real shame.”
What’s next for the UK’s battery manufacturing market?
The UK is lagging behind the rest of the developed world when it comes to setting up factories that can manufacture lithium-ion batteries, which are seen as key to the transition to net zero – not just for electric vehicles, but also stationary energy storage.
Currently there is just one battery plant in the UK, a small site located next to the Nissan factory in Sunderland. That won’t put much of a dent in China’s reported 90% share of the market when it comes to the manufacture of lithium-ion batteries.
It also compares poorly to other markets around the world. Take the United States, which has its own ‘battery belt’, where more than 15 lithium-ion battery gigafactories or expansions have been announced in the region. The European Union is also off to a good start, with 35 plants planned or already under construction across the continent.
The UK can’t afford to rely on supplies from elsewhere, however. The former boss of Aston Martin, Dr Andy Palmer, has previously warned the UK Government that at least four gigafactories would be needed in the UK if the country hopes to keep the last remnants of its automotive manufacturing. With Britishvolt entering administration, it is a major casualty to the UK’s plans.
However, there are some bright spots on the horizon. The West Midlands Gigafactory received approval from a variety of West Midlands authorities in January 2022, while Eurocell was eyeing the UK for its first gigafactory in the region. Unfortunately for that latter project, the company eventually chose a site in The Netherlands, another major blow to the UK’s hopes of having a sizeable share of global lithium-ion production.
For Britishvolt, it’s possible that the firm’s battery technology and site in Blyth could still have a future, with Dan Hurd, Joint Administrator and Partner at EY, noting that the administrators will be looking at selling either the full business or its assets. With time running out for the UK’s motor manufacturing industry, a new gigafactory will be needed sooner rather than later, and there’s a site in Blyth ready and waiting.