BritishVolt in administration is major threat to UK’s automotive manufacturing sector

BritishVolt, the company behind the proposed electric vehicle battery gigafactories in Northumberland and the West Midlands, has gone into administration with the majority of its 300 staff made redundant with immediate effect.

Last year the company received funding from the UK government to build its North East battery factory and it was hoped this plant would form part of a long-term growth in the UK’s manufacturing sector.

Failure to establish UK gigafactories has serious implications for the country’s automotive industry. Under the Brexit-related “rules of origin” agreed in the EU-UK trade agreement, batteries for electric vehicles will need to be made in the EU or the UK from 2027 in order for electric vehicles to benefit from tariff-free trade between the EU and the UK.

Furthermore batteries are flammable and hazardous to transport over long distances which is expected to result in EV manufacturing being located close to battery manufacturing. UK-based electric vehicle manufacturing would be at a disadvantage if the country does not have battery manufacturing capacity.

According to a statement from EY, which is now responsible for managing BritishVolt’s financial affairs, this business failure can be attributed to “insufficient equity investment for both the ongoing research it was undertaking and the development of its sites in the Midlands and the North East of England.”

The accountancy body will now begin examining the company’s assets, including its intellectual property and research, in order to pay creditors and close other business affairs.

Just before the announcement, Britishvolt said it was having discussions concerning a “majority sale” of the company but these talks appear to have fallen through.

Dan Hurd, joint administrator and partner at EY-Parthenon, said, “Britishvolt provided a significant opportunity to create jobs and employment, as well as support the development of technology and infrastructure needed to help with the UK’s energy transition.

“It is disappointing that the company has been unable to fulfil its ambitions and secure the equity funding needed to continue. Our priorities as Joint Administrators are now to protect the interests of the company’s creditors, explore options for a sale of the business and assets, and to support the impacted employees.”