Lotus explores EV battery tie-up with Britishvolt

Group Lotus and Britishvolt have signed a preliminary agreement to explore teaming up on battery manufacturing, research and development, according to people familiar with the matter.

The companies plan to share details of their memorandum of understanding next week, said the people, who asked not to be identified ahead of the announcement.

Representatives for Lotus and Britshvolt declined to comment.

The deal is the first official tie-up with an automaker for Britishvolt and an important step for the company, which is looking to cement its credibility with prospective investors.

The startup has done two rounds of fundraising and said last year it's considering a listing on the London Stock Exchange.

Britishvolt has started work on a 2.6 billion-pound ($3.5 billion) factory site in Blyth, England, that the company has said will eventually create about 3,000 jobs. At full capacity, the plant will produce enough battery cells for more than 300,000 electric vehicle battery packs a year.

The British government said on Friday that it will back the project with an unspecified amount from its Automotive Transformation Fund, a 1 billion-pound program to help build factories that can produce batteries at scale.

Prime Minister Boris Johnson’s government is trying to avoid falling behind in a transcontinental competition to chip away at the dominance of Asian battery manufacturers. Johnson has committed 1 billion pounds to help build factories that can produce at scale.

Britishvolt has said its factory will be operational by the end of 2023.

The UK auto industry trade group SMMT has warned that the country's automakers have little time to scale up its battery-making sector before the Brexit deal reached in late 2020 subjects vehicle trade to stricter content requirements for tariff-free trade.

The UK is banning sales of gasoline and diesel new cars by 2030.

Nissan said last year it will create a 1 billion pound EV-making hub in northern England. The Japanese automaker is partnering with a unit of China's Envision Group, which is planning to build a battery factory in the region that will be ready in 2024 at the earliest.

Lotus owner Zhejiang Geely Holding Group is trying to bolster the iconic brand in China's burgeoning EV market while keeping a manufacturing base in Britain. Its long-awaited Emira sports car -- which is set for delivery this year -- will be the company’s last gasoline-only model.

With the Emira, alongside a plan to build electrified SUVs in China, Lotus is making progress on expanding beyond selling just a handful of cars each year that appeal to racing fans.