UK government-backed battery start-up Britishvolt is set to enter administration with the potential loss of almost 300 jobs, after it struggled to find investors willing to fund its effort to build a giant £3.8bn ‘gigafactory’ in North East England.
The company had already considered administration on Monday, two sources with knowledge of Britishvolt’s operations told the Guardian. Britishvolt has set up the accounting firm EY to take care of the administration if it goes off the rails.
However, a source warned that Britishvolt was still exploring other options to try to find a last-ditch rescuer, with administration possible later this week if those talks failed. The company is believed to have cash reserves left to last a few weeks at most without further support.
A Britishvolt spokesperson said: “The company’s policy is not to comment on market speculation.”
The London Electric Vehicle Company (LEVC), a maker of electric taxis widely used in the capital, announced separately on Monday that it will cut 140 jobs, capping a difficult day for the UK car industry.
The Coventry-based business, owned by Chinese automotive group Zhejiang Geely, had a total of around 500 employees at the start of 2020. The cuts, planned to be achieved through voluntary redundancies, came in response to the pandemic, supply chain disruptions and “significant global economic challenges”. , LEVC said in a statement.
Britishvolt was founded less than three years ago with the ambitious goal of building a huge factory that could supply batteries to car manufacturers. It quickly became a flagship project for the British car industry and was supported by former Prime Minister Boris Johnson, who repeatedly cited the project as an example of Britain leading the way in the transition away from fossil fuels.
The government eventually promised the company £100 million in financial support, while the current prime minister, Rishi Sunak, was chancellor. However, Britishvolt has yet to receive the money, which was earmarked for tooling equipment within the factory, which has not been purchased.
A collapse of the business could still prove embarrassing for the Conservative government. Labor MP Ian Lavery told the BBC on Monday that Britishvolt’s chairman, Peter Rolton, had asked the government to bring forward £30m of the support, but that business secretary Grant Shapps had rejected the request.
Labour, which has pledged to support investment in at least three gigafactories in the UK, said the government’s lack of support for growing industries relative to other countries was a “scandal”.
Jonathan Reynolds, Labour’s shadow business secretary, said: “This catastrophic news is yet another reminder that the economic crisis in Downing Street is costing jobs and investment. “It’s a sight that has become all too familiar – businesses going under, jobs being lost and investment in the industries of the future going overseas rather than Britain.”
Britishvolt has been struggling with outages for months. Its co-founder Orral Nadjari left the company in July and the Guardian revealed in August that it had put construction work for its factory on “life support” to save money. That was followed by months of increasingly urgent talks with potential investors to help cover Britishvolt’s rapidly growing costs until it could start producing batteries and earn its first revenues.
Britishvolt has acknowledged the financial difficulties, but blamed them on deteriorating market conditions following Russia’s invasion of Ukraine.
Graham Hoare, a former executive at US carmaker Ford who took over after Nadjari’s departure, told the Financial Times the company needed to raise £200m in cash to survive until next summer.
Britishvolt has managed to attract tens of millions of pounds of investment from prominent companies including miner Glencore and equipment rental company Ashtead, both members of the FTSE 100. It also received a pledge of support from Tritax, a property investment company majority-owned by FTSE 100 investor abrdn.
However, it has struggled to secure the next stage of investment, burning through £3m a month to pay the wages of 300 people, according to the Financial Times.
EY declined to comment. The business department has been contacted for comment.
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