The collapse of Britishvolt into administration this month has sparked a wave of dismay among those invested in the UK’s automotive industry. When the vehicle-battery startup was first announced, there was plenty of optimism and hype surrounding the company and its potential to “secure Global Britain’s position on the sustainable battery production map”. However, this optimism was ultimately misplaced and the company’s failure is a stark reminder of the challenges that Brexit poses to the country’s industrial ambitions.
The government had pledged £100 million to Britishvolt, contingent on it attracting private investors. This goal was never achieved, and the company’s grandiose plans for a £3.8 billion gigafactory in Northumberland never came to fruition. This was an unmitigated disaster for the UK auto industry, particularly given that the plant was estimated to produce enough cells for more than 300,000 battery packs, equivalent to 25% of the country’s total vehicle output.
The immediate question is why such grandiose hopes were invested in an unproven project to begin with. The reality is that Britishvolt had no major customers, and had agreements with Group Lotus Plc and Aston Martin Lagonda Global Holdings Pl was unclear if the company ever reached the point of supplying prototypes. The failure to attract private investment suggests that there was always more hype than reality to the project.
Brexit has also been a major factor in the company’s demise. Elon Musk has been candid about his decision not to invest in the UK, citing the uncertainty around Brexit as “too risky”. This feeling is echoed by many other companies, who are wary of the additional costs associated with customs paperwork and border delays imposed by Brexit.
Furthermore, European Union rules that specify how much of a vehicle must be locally sourced pose an even more critical threat. This means that auto manufacturers will have to decide whether to site plants to make batteries in the UK and pay tariffs when exporting finished vehicles to Europe, or to continue importing most of them from Asia.
The failure of Britishvolt is a salutary lesson in the limitations of hype and the challenges that Brexit poses to the UK’s industrial ambitions. It is a reminder that in an increasingly interdependent world, fantasies of independence are rarely enough to ensure success.