Britishvolt's collapse seen as 'an unmitigated disaster' for UK auto industry

UK startup Britishvolt filed for the UK’s equivalent of bankruptcy on Tuesday, letting go of all but a couple dozen employees as the three-year-old company struck a major blow to the country's hopes of building a home-grown battery industry.

“I would call it an unmitigated disaster for the auto industry in the UK,” Andy Palmer, the former Aston Martin CEO, said Wednesday on BBC radio.

“Ultimately, British car manufacturing will migrate to where the battery factories are, which is going to be in central Europe.”

The startup, which struggled to raise funds for a major electric-vehicle battery factory in northern England, failed to get past the stage of developing prototypes for an industry that is vital for the UK’s prospects in the global race to become self-sufficient in EV technology.

It has left the UK sorely lacking the battery manufacturing capability that would be absolutely critical to the auto industry’s future. Industry experts estimate Britain needs four to six large battery plants to sustain a healthy car industry. Currently it has one small 1.9 gigawatt-hour Nissan plant in Sunderland, northeast England.

Nissan is building a second 9 GWh plant at the same location with Chinese partner Envision AESC, which could expand to 25 GWh.

In the wake of Britishvolt’s downfall, a House of Commons select committee opened an inquiry into the viability of EV battery manufacturing in the UK.

The committee will find little reason for optimism.

BMW ceased making electric Mini hatchbacks at its 110-year-old facility near Oxford in October, shifting production to China.

When Tata Motors-owned Jaguar Land Rover — the UK’s top car producer — laid out ambitions in early 2021 to electrify its lineup within a few years, the manufacturer warned that its Castle Bromwich plant employing almost 2,000 people may be left without any models to make.

The lone major manufacturers to have announced sizable investment in UK battery and EV making are Nissan and Envision AESC.
The two are setting up a 1 billion pound ($1.2 billion) hub in Sunderland, home to one of the Japanese car company’s biggest plants in the world, to produce as many as 100,000 electric crossovers and the cells powering those vehicles.

Britishvolt had grander plans for an enormous 3.8 billion pound plant that it said would create about 3,000 jobs.

Then-Prime Minister Boris Johnson hailed his government’s pledge a year ago to contribute 100 million pounds as emblematic of the “green industrial revolution” that would take shape in the former industrial heartlands that voted him into office.

    Fantastic news that EV battery pioneer @BritishvoltUK will build a Gigafactory in Northumberland, creating thousands of jobs in our industrial heartlands and boosting electric vehicle production as part of our Green Industrial Revolution. https://t.co/l7Uhiii9fb
    — Boris Johnson (@BorisJohnson) January 21, 2022

In the end, that funding never came. After Ian Lavery, a Labour member of parliament representing the area home to Britishvolt’s factory site, criticized Johnson’s administration in July of last year for sending the company “not a single ha’penny,” then-Business Secretary Kwasi Kwarteng responded that the government had extended a final grant offer.

What Britishvolt was never able to give the government was the assurance of firm orders from car manufacturers.

The company reached preliminary deals last year to work with Aston Martin and Lotus, but the two low-volume automakers merely committed to research and development tie-ups.

The “considerable” support the government offered Britishvolt was conditional on the company also receiving private investment, Prime Minister Rishi Sunak said Wednesday during his weekly parliamentary question session.

“Unfortunately, that did not materialize,” he said. “We stand ready to support those impacted.”

‘Not giving up’

Within days of Sunak becoming Prime Minister in October, the auto industry’s trade group called on the government to improve the UK’s business environment while reporting another monthly contraction in production.

The Society of Motor Manufacturers and Traders specifically asked for measures to bring down electricity costs that the group has said are the highest in Europe.

As of November, about 786,000 cars were built in the country during the trailing 12 months, less than half the roughly 1.7 million made in the period preceding the 2016 referendum.

While new-vehicle sales have slumped to a 30-year low, the UK remains one of Europe’s largest auto markets.

EVs also have been a bright spot, seizing a record 17 percent share of registrations last year, and their momentum will only accelerate as the government seeks to phase out the internal combustion engine.

The challenge for Sunak’s government will be luring investment to a country that is increasingly losing the critical mass of automaking needed for battery manufacturing to be viable.

Adrian Hallmark, CEO of Bentley, said last month that the Volkswagen Group-owned company will ship cells into England from elsewhere.

“We are not giving up on the automotive industry,” UK Climate Minister Graham Stuart said Wednesday in the House of Commons. “On the contrary, our ambition to scale up the EV industry on our shores is greater than ever.”