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| Fri, 20th Jan 2023 5:40:00 |
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Britishvolt: how Britain’s bright battery future fell flat |
Startup that hoped to transform UK car production was once valued at more than £800m, but collapsed worth a tiny fraction of that
When Britishvolt, a startup hoping to transform UK car production by making batteries for electric vehicles, rented a seven-bedroom £2.8m mansion with a swimming pool and Jacuzzi-style bath for workers, some employees were uncomfortable with the impression it gave of lavish spending.
Founded in 2019, Britishvolt began with grand ambitions – hailed by the then prime minister, Boris Johnson – to become the first domestically owned battery factory in a car industry that employs tens of thousands of British workers, but where the big manufacturers are all overseas companies. The planned factory would have been able to supply 30 gigawatt hours (GWh) of batteries a year, enough for hundreds of thousands of cars.
That ambition gave way last year to a desperate scramble for investment. Fundraising efforts ended on Tuesday, with the company entering administration with the loss of more than 200 jobs. The planned site for its plant, at Blyth in Northumberland, is now up for sale.
A Britishvolt presentation given to investors in June laid out the scale of the opportunity it had seen. In 2028, it thought European battery demand would outstrip supply by 554GWh – enough for 15 Britishvolts, or millions of electric cars. With that giant opportunity came a giant valuation: it achieved the coveted “unicorn” status of being worth more than $1bn (£809bn). Backers included Ashtead, Glencore and the abrdn-owned Tritax from the FTSE 100.
By the end, Britishvolt was worth a tiny fraction of that. DeaLab, an Indonesia-linked suitor, considered a bailout but the talks did not lead to agreement. Its offer would have valued the whole company at only £32m, according to a letter sent by the executive chair, Peter Rolton, to shareholders. That was equal to the £32m Britishvolt spent on the May 2022 purchase of a German battery cell maker.
Many of those who supported Britishvolt have chosen to remain in the background, but filings searched by the data company AlphaSense/Sentieo show Ashtead invested $39m, while the British investment trust Law Debenture Corporation had £5m. Norway’s Carbon Transition invested $1.7m in August 2021, and the valuation more than doubled by 2022. As late as 27 June 2022, the Indonesian battery company VKTR joined the backers.
Yet within a month of that investment, Britishvolt was in trouble. Documents revealed by the Guardian showed that by late July Britishvolt had put construction of its gigafactory on “life support” until it could find more funds. That was made more difficult by the financial market turmoil caused by Russia’s invasion of Ukraine and rising interest rates.
The mood got steadily worse as the year went on, according to former insiders. After a hiring spree during late 2021 and early 2022, spending was reined in, and a company aiming to employ 3,000 people within two years stopped hiring.
By late October, the company was in serious trouble, amid evidence of chaotic management. When the Guardian approached Britishvolt before a report that it was considering administration, an external media lawyer hired by the company forcefully questioned the accuracy of the Guardian’s sources and referenced a risk of defamation. Within hours it became clear that Britishvolt was indeed considering administration – a fate it only escaped after a last-minute cash injection from the mining company Glencore.
The cash allowed Britishvolt to continue for 10 weeks, but none of the three bids it received would guarantee the hundreds of millions of pounds it still needed.
The financial difficulties irked insiders who claimed to have seen evidence of an extravagant approach early on. As well as the mansion, the company had hired a fitness instructor to take yoga lessons over video call, while executives travelled on a private jet owned by a shareholder. (The company said company money was never spent on the jet.) Many staff were provided with top-of-the-range curved 4K computer monitors at considerable expense, said a former employee, who declined to be named.
“Money was being spent recklessly, really badly,” they said. “There was a lot of bad management at this organisation.”
Britishvolt was spending heavily on consultants as it considered how to launch products for boats, planes and drones – all promising opportunities, but ones likely to rely on different types of battery. Among the key consultants was EY, which earned millions of pounds in fees while Britishvolt was still operating, two people said. The company has since been tasked with carrying out the administration, despite being owed money as an unsecured creditor.
An EY spokesperson declined to detail how much money it is owed, saying: “EY was an unsecured creditor of the company at the time of the appointment of administrators, but will not vote on any creditor resolutions that may be required as part of the administration process. Creditors of Britishvolt and moneys owed will be disclosed in due course as part of the administrators’ report.”
Britishvolt also paid £3.2m to Rolton Group, an engineering consultancy of which Peter Rolton is a director, during the year to September 2021. When asked in September about the spending and how Britishvolt had managed the potential conflict of interest, the company said: “The board of directors supports the company’s latest business plan which has been refocused and sharpened given the negative global economic situation and continues to have full confidence in the senior management team and in the company’s robust governance processes.”
Rolton denied, through the same lawyer as Britishvolt, that there had been bad management. He said “high-spec monitors were purchased if required for specific tasks/roles”, and that fees for all consultants “were entirely proportionate to the scale and complexity of the project and in line with accepted industry benchmark standards”.
Rolton Group said the £3.2m was “for design services provided on a highly complex and innovative project”.
EY declined to comment on the company’s management style on behalf of Britishvolt.
The collapse will also affect companies that were hoping for a big new customer. South Korea’s Hana Technology and Creative & Innovative Systems reported contracts with Britishvolt worth £74m apiece, while Germany’s Manz will miss out on a “major order”.
The collapse also raises questions for Aston Martin Lagonda, the British sportscar maker which, along with its Chinese-owned rival Lotus, signed a non-binding memorandum of understanding to work with Britishvolt. In a prospectus last year Aston Martin suggested that Britishvolt’s “failure could affect the group’s ability to maintain its electrification timeline”.
This week, Aston Martin said the collapse “will have no impact [on] electrification timings, with the launch of the first battery electric Aston Martin targeted for 2025”.
The administration has left the UK with only one large-scale gigafactory planned: the Chinese-owned Envision’s plant in Sunderland. It also leaves big questions over the future of the UK automotive industry.
Andy Palmer, the former Aston Martin boss who is now chair of InoBat, a Slovakian battery company, said Britishvolt’s collapse was an “unmitigated disaster” and “certainly not good for the UK”.
Palmer has been outspoken about the need for better government support, and InoBat had been deciding between sites in Teesside and Spain for its own plants.
There is still hope for the Blyth site. InoBat could be a contender to switch its interest there, while EY confirmed it was “liaising with a number of interested parties” for a sale of the Britishvolt assets – the site and its intellectual property. Tata, the Indian owner of Jaguar Land Rover, the UK’s largest carmaker, is thought to be among interested companies, the Financial Times reported.
Glen Sanderson, the Conservative leader of Northumberland county council, said he was “quite positive” a buyer could be found.
“I think there’s still hope for the site,” said David Bailey, the professor of industrial strategy at the University of Birmingham. He said there was “a deal to be done” between the government and Tata – which declined to comment – possibly in exchange for government support for upgrading Tata’s steel plant in south Wales. Yet the collapse should be a wakeup call for the UK government to match the support on offer in Europe, he said.
“We’re lagging very far behind the EU,” he said. “It requires a much more active industrial policy. At the moment we don’t have one.”
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