When Britishvolt entered administration on Tuesday after failing to secure adequate financial backing, hopes for the first electric vehicle (EV) battery gigafactory on British soil took a massive step back.
The Northumberland-based start-up, which was trying to develop a lithium iron plant in northeast England, had previously pleaded with the government to support the venture from a promised £100mln from the Automotive Transformation Fund established by former prime minister Boris Johnson.
But in a foreshadowing of the austerity measures likely facing the country in the years ahead, Britishvolt’s pleas fell on deaf ears.
The Britishvolt project sits in stark contrast to the success of Swedish start-up Northvolt, which may be poised to capture a greater share of the EV battery market following its would-be competitor's insolvency.
Northvolt was already sending batteries out of its production facility in northern Sweden at the end of 2021, to customers including BMW, Volkswagen, Volvo Cars and Polestar.
Presently, the company is developing manufacturing capacity to deliver on US$55bn in orders from its extensive client base.
Northvolt’s success stems from its ability to raise the requisite amount of capital required for cutting-edge manufacturing.
In a bid to reduce the influence of Asia-based producers, the European Investment Bank stumped up a US$350mln loan to get Northvolt off the ground, as part of a multi-billion-euro subsidy programme across seven member states.
A tidy US$8bn has been raised through a combination of equity and debt funding since the group was founded in 2016.
Its most recent debt round in July 2022 comprised US$1.1bn in convertible notes from a syndicate that included AMF, Goldman Sachs (NYSE:GS), ATP and Baillie Gifford.
But there is no doubt that, as EVs become the mainstay of the automotive sector in the decades ahead, the market for batteries will not be satisfied by one or two start-ups alone.
Britain’s EV battery sector shouldn’t be written off just yet, but it will require a bit of forward thinking from the powers that be.