The future of the UK's flagship battery gigafactory developer Britishvolt remains uncertain despite the company securing short-term financing and agreeing other measures that give it time to put in place "a more secure funding position for the future".
The government-backed start-up had been struggling to secure funding to continue the construction of its £3.8bn ($4.4bn) gigafactory at Blyth in northeast England, and had been in emergency fundraising talks for the past two weeks. But funding to "bridge over the coming weeks" had now been secured, Britishvolt said on Wednesday.
"We have now secured the necessary near-term investment that we believe enables us to bridge over the coming weeks to a more secure funding position for the future," a company spokesperson told Argus. "To further reduce our near-term costs, our dedicated employee team has also voluntarily agreed to a temporary salary reduction for the month of November."
The UK government had promised Britishvolt £100mn in financing once construction of the Blyth plant progressed to a defined — but as yet unreached — milestone. Recent political instability in the UK — the country now has its third prime minister in less than two months — meant the government was not in a position to help, despite the ringfenced funding, sources familiar with the situation said.
"We are determined to ensure the UK remains one of the best locations in the world for automotive manufacturing as we transition to electric vehicles, while ensuring taxpayer money is used responsibly and provides best value," a spokesperson from the UK's business, energy and industrial strategy ministry said, without commenting directly on the Britishvolt situation.
Unkept promises and market forces
Blame for Britishvolt's predicament "lies squarely at the feet of the government", according to Ian Lavery, the opposition Labour member of Parliament for the Wansbeck constituency where the company is planning its gigafactory.
"I asked [former prime minister Boris Johnson] about the delay in receiving the £100mn of funding that was promised to Britishvolt [on 6 July], to which he assured me that the ‘letter was in the post'," Lavery told Argus. "Despite this, Britishvolt are yet to receive that money today."
Lavery added that he had been in constant contact with the senior members of Britishvolt's team while they tried to secure funding for the project: "Unfortunately, Britishvolt has been met with a brick wall by the government who have been embroiled in their own chaos, leaving them with no accountable decision makers and ministers in jobs for a matter of weeks unable to get anything done."
Market forces, including the steep rise in prices for construction materials and battery metals such as lithium, as well as the cost of financing debt, also seem to have played a role in the troubles at the firm.
"We have previously spoken about the need to evolve our business strategy in response to challenging external factors," the Britishvolt spokesperson said. "While the weakening economic situation is negatively impacting much business investment at present, at Britishvolt we are continuing to pursue positive ongoing discussions with potential investors."
Britishvolt co-founder Lars Carlstrom, who left the company in December 2020 after a previous conviction for tax fraud in Sweden came to light, argued in a recent radio interview that the current management's decision to develop its own production technology, rather than buying ready-made technology off the shelf, had been a costly mistake — a charge the company rejects.
"Britishvolt is creating intellectual property to help push the UK ahead in the energy transition and race to zero, securing the industry and employment of the future," the Britishvolt spokesperson told Argus. "Simply buying in technology would have little, or zero, value add for the country."
When asked what financing was needed to be in place to have a successful gigafactory operating in Blythe for Britishvolt, Carlstrom put the figure at around £3bn — around £1bn to build the factory, another £1bn from capital markets and investment banks and a further £1bn in normal funding secured from credit lines, which is secured once offtake agreements are signed with customers.
"You don't need to have this money from day one, this is something which you have to ramp up over a number of years," he added.
