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Britishvolt’s bankruptcy is the death knell for the UK’s battery industry

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Man in Britishvolt vest looks out at construction site.
Image Credits: Britishvolt (opens in a new window)

Britishvolt, a battery manufacturer startup, announced Tuesday that it was declaring bankruptcy, dealing a punishing blow to the United Kingdom’s automotive sector.

The company had been championed by U.K. leaders, who had hoped it would provide a laundry list of benefits: good paying jobs, advanced manufacturing know-how and homegrown battery packs to support the domestic automotive industry. But Britishvolt was beset with delays, and it never came close to its goal of opening a factory that could crank out 38 gigawatt-hours of lithium-ion batteries every year.

In some ways, Britishvolt’s story echoes that of A123 Systems, the U.S. startup that went bust over a decade ago. The upstart battery company pitched a grand vision for bringing large-scale, cutting-edge manufacturing on shore. Politicians latched onto the idea, supporting a company that could provide jobs in a politically advantageous region. They piled on praise and promised lavish subsidies if the company could deliver. But the startup put the cart before the horse, beginning work long before firm demand materialized.

A123 went bankrupt in 2012, and while its collapse was tragic, it didn’t kill the U.S. battery sector. The same might not be true of Britishvolt.

In some ways, equating Britishvolt with A123 is unfair to A123. The American startup had developed its own battery chemistry, and it was entering a market that was far less mature. It had to create a supply chain from scratch, which is no simple task.

In some ways, that was hard to avoid. There wasn’t a ton of demand for lithium-ion batteries a decade ago, and large automakers like GM were hesitant to place orders with companies that didn’t have the experience or current production capacity to fulfill them. In fact, GM had initially considered using A123 for batteries for its Chevrolet Volt plug-in hybrid, only to demur and buy from LG instead.

Other A123 deals also soured, including one with Chrysler, which went bankrupt during the Great Recession, and another with the previous incarnation of Fisker. The Fisker deal proved fatal. One of the automaker’s Karma plug-in hybrids died during Consumer Reports testing, the result of a faulty A123 battery pack. That recall alone cost A123 over $50 million.

Government grants and loans — over $160 million worth — weren’t enough to keep A123 afloat. As it fell further behind, it missed out on further subsidies. By October 2012, the company declared bankruptcy and was soon scooped up by Chinese auto parts supplier Wanxiang.

Britishvolt never even made it that far. It never produced a single cell. Construction on its $4.7 billion factory was delayed several times, most recently to 2025. Closing up shop appears to be a relatively straightforward task. The factory site is already up for sale, and nearly all of Britishvolt’s employees have been laid off.

It’s possible that those employees will start their own companies in an effort to build the U.K.’s battery sector, much like the A123 employees who went on to start or join new companies like Our Next Energy, Solid Power, SES and Quantumscape. While none of those U.S. startups have yet to achieve the scale of an LG or SK Innovation, they have novel technologies and a wealth of experience that might enable them to do so.

On the other side of the pond, the situation is bleaker. Britishvolt doesn’t have a core technology to set itself apart from competitors. Instead, it was positioned as a British alternative to the manufacturing operations of companies like LG and SK. That might have helped rally the politicians, but it needed to execute everything else to win over customers. The company seemed little more than a business plan and a small office. The impact on British industry is probably more psychological than anything.

What’s more, Britishvolt’s bankruptcy comes at a time when global battery supply chains are starting to solidify. In the U.S., after the passage of the Inflation Reduction Act, companies have committed to about a dozen gigafactories. In the EU, a whopping 35 are planned or under construction, according to the BBC.

The story might have been different if Brexit hadn’t happened, as a former Conservative leader pointed out. But it did, and now the prospects for a British battery industry are looking dimmer by the day.

Had Britishvolt tanked a decade ago, when EVs were still a curiosity, the U.K. battery industry might have had time to recover. Instead, it’s failing today, when EV sales are skyrocketing and fossil fuel vehicles are on the regulatory chopping block. The market is ready, but the U.K. is not.

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