When Britishvolt, a startup hoping to transform UK car production by making batteries for electric vehicles, rented a £2.8m, seven-bedroom mansion with a pool and Jacuzzi-style bathroom to workers, some employees were uncomfortable with the impression it gave of lavish spending.
Founded in 2019, Britishvolt started with grand ambitions, hailed by then-Prime Minister Boris Johnson, to become the first domestically owned battery factory in an automotive industry that employs tens of thousands of British workers, but where big manufacturers They are all foreign 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 fight for investment. Fundraising efforts ended Tuesday, when the company went into administration with the loss of more than 200 jobs. The planned site for their plant, at Blyth in Northumberland, is already up for sale.
A Britishvolt presentation given to investors in June laid out the scale of the opportunity it had seen. By 2028, he thought European demand for batteries would exceed supply by 554 GWh, enough for 15 British volts, or millions of electric cars. With that giant opportunity came a giant valuation – it achieved the coveted “unicorn” status of being worth over $1bn (£809bn). Backers included abrdn-owned Ashtead, Glencore and Tritax of the FTSE 100.
In the end, Britishvolt was worth a small fraction of that. DeaLab, a suitor with ties to Indonesia, considered a bailout, but talks failed to reach a deal. His offer would have valued the entire company at just 32 million pounds, according to a letter sent by Chief Executive Peter Rolton to shareholders. That was equal to the £32m Britishvolt spent on its May 2022 purchase of a German battery cell maker.
Many of those who supported Britishvolt chose to remain in the background, but documents consulted by data firm AlphaSense/Sentieo show that Ashtead invested $39 million, while British investment fund Law Debenture Corporation had $5 million. sterling pounds. Carbon Transition of Norway invested $1.7 million in August 2021 and the valuation has more than doubled by 2022. On June 27, 2022, Indonesian battery company VKTR joined the backers.
However, within a month of that investment, Britishvolt was in trouble. Documents disclosed by The Guardian showed that, at the end of July, Britishvolt had put construction of its gigafactory on “life support” until it could find more funding. That was made more difficult by financial market turmoil caused by Russia’s invasion of Ukraine and rising interest rates.
The mood steadily worsened as the year progressed, according to former informants. After a wave of hiring in late 2021 and early 2022, spending was reined in and a company that intended to employ 3,000 people in two years stopped hiring.
By the end of October, the company was in serious trouble, amid evidence of chaotic management. When approached by The Guardian ahead of a report that the administration was considering, an external media lawyer hired by the company strongly questioned the accuracy of The Guardian’s sources, citing a libel risk. Within hours, it became clear that Britishvolt was considering administration, a fate it only escaped after a last-minute cash injection from mining company Glencore.
The cash allowed Britishvolt to continue for 10 weeks, but none of the three offers it received would guarantee the hundreds of millions of pounds it still needed.
The financial difficulties irritated experts who claimed to have seen evidence of an extravagant approach early on. In addition to the mansion, the company had hired a fitness instructor to take yoga lessons via video call, while the executives traveled on a private jet owned by a shareholder. (The company said the company’s money was never spent on the plane.) Many employees were provided with high-end 4K curved computer monitors at considerable cost, said a former employee, who declined to be named.
“Money was being spent recklessly, really badly,” they said. “There was a lot of mismanagement in this organization.”
Britishvolt was spending heavily on consultants as it considered how to launch products for ships, planes and drones, all promising opportunities but likely to depend on different types of batteries. Among the key consultants was EY, which earned millions of pounds in fees while Britishvolt was still in operation, two people said. Since then, the company has been in charge of carrying out the administration, despite the fact that it is 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 the directors were appointed, but it will not vote on any creditor resolution that may be required as part of the the administration. process. Britishvolt’s creditors and monies owed will be disclosed in due course as part of the directors’ report.
Britishvolt also paid £3.2m to the Rolton Group, an engineering consultancy of which Peter Rolton is a director, for the year to September 2021. When asked in September about the expenses and how Britishvolt had managed the possible conflict of interest, the company said: “The board of directors supports the company’s latest business plan, which has been refocused and refined given the negative global economic situation, and continues to have full confidence in the senior management team and sound processes of company governance”.
Rolton denied, through the same Britishvolt lawyer, that there had been any mismanagement. It said that “high specification monitors were purchased if required for specific tasks/roles”, and that all consultants’ fees “were fully commensurate with 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. Hana Technology and South Korea’s Creative & Innovative Systems reported contracts with Britishvolt worth £74m each, while Germany’s Manz will miss out on a “major order”.
The collapse also raises questions for Aston Martin Lagonda, the British sports car 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 the “failure of Britishvolt could affect the group’s ability to stick to its electrification schedule.”
This week, Aston Martin said the collapse “will have no impact [on] electrifying times, with the launch of the first battery electric Aston Martin planned for 2025”.
The administration has left the UK with only one large-scale gigafactory planned: the Chinese-owned Envision plant in Sunderland. It also leaves big question marks over the future of the UK auto industry.
Andy Palmer, the former Aston Martin boss who is now chairman of InoBat, a Slovak battery company, said Britishvolt’s collapse was an “absolute disaster” and “certainly not good for the UK.”
Palmer has been outspoken about the need for better government support, and InoBat has 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 shift its interest there, while EY confirmed it was “in contact with various interested parties” for the sale of Britishvolt’s assets – the site and its intellectual property. Tata, the Indian owner of Jaguar Land Rover, the UK’s biggest carmaker, is believed to be among the companies interested, the Financial Times reported.
Glen Sanderson, the Conservative leader of Northumberland County Council, said he was “pretty sure” a buyer could be found.
“I think there is still hope for the site,” said David Bailey, a professor of industrial strategy at the University of Birmingham. He said there was “a deal to be made” between the government and Tata, which he declined to comment on, possibly in exchange for government support to upgrade Tata’s steelworks in south Wales. However, the collapse should be a wake-up call for the UK government to match the support being offered in Europe, he said.
“We are way behind the EU,” he said. “It requires a much more active industrial policy. At the moment we don’t have one.”
