Britishvolt collapses into administration: where does this leave the UK’s hopes of a green industrial revolution?

Posted on 18 Jan 2023 by Lanna Deamer

Britishvolt, a battery technology startup that was planning to build the UK's largest electric vehicle battery manufacturing facility in Northumberland, has announced that it is has gone into administration, resulting in the majority of the company's staff being made redundant.

The Britishvolt news is a disappointment for the UK’s hopes to strengthen its electric vehicle supply chain and raises questions about the country’s progress towards an electric future. It also comes at a time when there is a clamour within UK industry to introduce green energy alternatives to break the UK’s reliance on volatile energy imports. Recently, David Hall, VP Power Systems at Schneider Electric UK & Ireland said: “Our American and European counterparts are building up a head of steam in the green energy transition. Without decisive action, the UK will quickly find itself falling behind.

“As a collective, we must take a more active role in facilitating the switch from costly and unsustainable fossil fuels to cheaper, home-generated green energy. Central to this is harnessing a smarter, decentralised grid that is flexible enough to withstand more complex energy demands and resilient against increasingly frequent extreme weather.

“With the long-standing impacts of the pandemic, coupled by the war in Ukraine, there has not been a more pressing time to ease the country’s dependence on volatile gas imports. Without an urgency to drive green reform, we are not unleashing the full environmental and financial gains possible to us.”

The UK currently only has one Chinese-owned battery plant next to the Nissan factory in Sunderland. The future of UK car manufacturing is closely tied to the development of the electric vehicle market, as well as the ability to export these vehicles to the EU. To achieve this, the UK must secure a local supply of electric vehicle batteries, an area in which the country is currently lagging behind other regions of the world. The failure of Britishvolt highlights the challenges facing the industry in the UK and the importance of addressing these issues to protect jobs in this sector.

“A grim day”

The Unite union described Britishvolt’s collapse as “a grim day for the Northeast”. Its national officer for the automotive sector, Steve Bush, said: “It is extraordinary that despite the UK automotive sector being required to move to the production of electric vehicles, there are still no UK stand-alone factories making the batteries that are required.

“The demise of Britishvolt means there are not even any in the pipeline. The government’s strategy seems to be to cross their fingers and hope that everything will be OK. The workers are frankly enraged at this dreadful and total abdication of leadership.”

The £3.8bn gigafactory was said to be creating 3,000 jobs in Blyth but with most of the firm’s near 300 staff being made redundant, many of the residents expressed their concern for employment around the area.

Speaking to the BBC, Linda Rumsby, 63, of Blyth, said her “forgotten” town desperately needed the highly skilled jobs that the project would have brought to the area. And more residents explained it was a blow to an already “bad area” where there is plenty of unemployment to start with. This is further bad news for the manufacturing sector after last week’s announcement at LIBERTY Steel, where 440 jobs across its UK plants will be at risk under restructuring plans to mothball at least two factories and reduce production at a third.

Mike Hawes, SMMT Chief Executive, said, “Yesterday’s news is a blow, especially for Britishvolt’s 300 employees, but the UK’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.”

The government has come in for some criticism over its lack of support for the project, despite the fact that the project was touted as being a major cog in the UK’s EV revolution as we head toward a ban on combustion engine cars in 2030. Despite this, local MPs have stressed the ideal nature of the site’s location for such a gigafactory and stated that they will continue to strive to find investors to ensure an appropriate project goes ahead.

Is the UK further behind in a race it was already losing?

However, the confirmation of Britishvolt’s demise could place the UK further behind in a race it was already losing. Speaking to the BBC, Jim Holder, Editorial Director at What Car?, said that while Britishvolt’s factory would have taken years to build, “the truth is we need at least five such facilities by the turn of the decade to remain a competitive country to build electric cars in.

“The only positive will come if it spurs government into action to secure a partnership between itself, the industry and battery manufacturers that can succeed into the long-term.”

Member of Parliament, Darren Jones told BBC Radio 4’s World at One programme: “There is a case to be made here in the UK for ministers and the government to be much more closely involved in delivering a successful battery manufacturing factory. If we want cars to continue to be made in the UK, we’re going to have to build electric vehicle batteries here as well. So ministers needs to roll up their sleeves, not just write cheques.”

However, it’s not all doom and gloom for Britain’s battery sector, as Australian billionaire Andrew Forrest told Sky News, he will be opening an advanced battery plant in Oxfordshire later this year, creating up to 300 new jobs.

While this new Fortescue plant will focus on high density batteries for larger trucks and have a considerably lower output than Britishvolt’s promised batteries, the unexpected news will reassure those worried about the country’s aspirations of developing an EV industry.

As part of a recent industry webinar, Rob Labinski, Head of Electrification, Octopus Energy Group, spoke about the seismic evolution around electric vehicles stating that they are here to stay and in December last year, battery EVs outsold any other form of vehicle, making up 32.9% of all vehicles.

He highlighted an ongoing and significant shift from energy companies, fuel operators and fleets towards electric as the total cost of ownership is now proven to be around 11% lower than running an internal combustion engine (ICE) fleet. While not all vehicles can be swapped out, a significant proportion of fleets, cars, LCVs, vans and even buses are now at cost parity or below that of internal combustion engines. Read more about his thoughts here.

Increasing demand for EVs

At a time when the demand for EVs is rapidly increasing, with a total of 267,000 pure electric cars hitting UK roads in 2022 (a 40% increase when compared to 2021’s volume), it’s a real shame that Britishvolt has gone into administration. Not least because the company was seen as a landmark project to boost the country’s production of EV components. Although it had never secured any customers for its proposed battery technology, there was signed memorandums of understanding with Aston Martin and Lotus.

The UK electric vehicle industry still has the potential to be a major player in the global electric car revolution, but every failure to establish a gigafactory, makes it more vulnerable. The development of gigafactories in the UK not only creates jobs and economic growth, but also supports the transition to a low-carbon economy and helps the UK meet its climate targets.

It is vital that the government and private sector work together to support the development of more gigafactories in the UK by providing the needed support. There will no doubt be more challenges to overcome in the UK’s journey to a green industrial revolution, but by investing in more gigafactories, as well as more collaboration, the UK can remain a competitive player in the global EV market.