Britain’s hope for the £3.8 billion gigafactory in Blyth has now gone down the drain as Britishvolt has entered administration. The factory was expected to be the phoenix emerging from the ashes of northeast England and aimed to provide an economic blanket for the area.
Back in 2019, the company gained £100 million in funding from the UK government and had also signed preliminary deals to supply batteries to Aston Martin and Lotus. The electric vehicle battery factory was expected to create 3,000 highly skilled jobs and 5,000 indirect jobs through the wider supply chain. Then-prime minister Boris Johnson described the facility as “a strong testament to the skilled workers of the Northeast and the UK’s place at the helm of the global green industrial revolution.”
However, not even nine months after the factory hit the ground running, it had gone into administration in August 2022.
The manufacturing facility had plans to produce up to 300,000 electric car batteries a year, with the company beginning battery production in late 2024. This was announced as delayed in the middle of 2022. Its collapse has left staff, analysts, and policymakers scrambling to understand how it could have gone so wrong so quickly and what this means for the UK’s battery business.
The UK currently only has one Chinese-owned plant next to the Nissan factory in Sunderland, while 35 plants are already under construction within the EU. Britishvolt offered an opportunity for jobs and the development of technology and infrastructure that Britain needs to help with the UK’s energy transition. The UK needs an industrial strategy to build more gigafactories in order to see progress towards net zero but also to save the UK’s car industry from plummeting any further.
The collapse is a big hit for the UK’s desire to become a global leader in the EV business, which was already a stretch. Had Britishvolt continued, the UK would have still only accounted for 0.6 percent of the world’s lithium-ion cell capacity by 2031, according to Benchmark Mineral Intelligence. Britain’s gigafactory would not have closed the gap between the west and China, Korea and Japan. Although Europe has 35 gigafactories in the pipeline, in China alone, 125 battery gigafactories are already active according to FDI intelligence.
The SMMT’s Full Throttle report has calculated that by 2030 the UK auto industry will require at least 60 gigawatt hours of locally sourced batteries. This would support the assembly of 1 million new cars, below today’s 1.3m capacity. The year 2030 marks the year that ex-Prime Minister Boris Johnson’s ban on new combustion vehicles kicks in, meaning that the UK really needs to get itself in gear.
Gigafactories are a huge investment for any company entering into the business and on top of this, the UK will need to source raw materials. China has great control over the supply chain as its production costs are very low. Britain will need to transform its existing supply and manufacturing chain from combustion to electric; this could be an incredibly expensive process.
The government has set aside £1 billion for the country’s transition however, many warn that this is a rich man’s game, and this amount is belittled by the likes of Germany, France and the USA. The FDi Market reported that between 2017 and 2021, China had attracted more than $31bn worth of foreign direct investment. This is more than double what the US made, which was $15.4bn, and three times as much as Germany who made $10.8bn.
China’s dominance in lithium processing is expected to continue and many companies will need to create a presence in China for success. However, for the UK, the global arms race is underway, and it needs to start producing battery plants that can produce thousands of battery packs as the auto industry goes all electric.
Some experts have noted that it would take five more gigafactories for the UK to reach its targets but how long before that happens we don’t know. One thing the country has learned is to not throw money at the ground so the UK doesn’t take a huge step back in the EV industry ever again.
