Britishvolt shows the battle for batteries is a tough one | Hotter on metals

The descent of UK-based battery manufacturer Britishvolt into administration this week is a timely reminder that the path to achieving the electrification of mobility and the broader energy transition is not going to be easy

Britishvolt, which was building a gigafactory in northeastern England, was pushed into administration due to insufficient equity investment in both the ongoing research it was undertaking and the development of its sites. In other words, it ran out of money, and – after efforts to raise cash and secure lifelines – had to concede defeat.

Gigafactories such as the one Britishvolt broke ground on in July 2021 are at the heart of the world’s push to secure the batteries they need for the growth in electric vehicle (EV) demand that is to come.

A joint report released this week by consultancy McKinsey and a multi-stakeholder organization, the Global Battery Alliance, estimated that at least 120 to 150 new battery factories will need to be built between now and 2030 globally to meet the demands of the energy transition.

As it stands, Britishvolt’s £3.8 billion ($4.6 billion) technology battery cell gigafactory in Northumberland might not be one of them. At full production, the site would have produced enough battery cells for more than 300,000 lithium-ion batteries for EVs a year.

Now, its administrators are waiting to see whether they can find buyers for the intellectual and physical assets owned by Britishvolt in an effort to pay down the company’s debts. The gigafactory will only go ahead at the site if another developer buys the land and pursues the project.

Setback for UK EV supply chains

It is a real setback for the auto sector’s ambitious plan to ramp up production of EVs, given that the Britishvolt plant was to have been the UK’s sole large-scale battery gigafactory.

According to the Faraday Institute, a research organization, the UK will need 10 gigafactories by 2040 to meet EV battery needs.

That demand is in part being driven by British auto companies, which have pledged to move away from diesel and become electric. Jaguar, for example, has said it will be all-electric by 2025, while Aston Martin and McLaren are working on EV models. Bentley, meanwhile, has said it will phase out diesel-powered cars by 2030.

Britishvolt, which was focused on producing nickel-rich batteries, had partnerships with Aston Martin and UK sports company Lotus.

There are, of course, numerous other auto companies with car assembly plants across the UK and abroad that need batteries too. According to data from the International Organization of Motor Vehicle Manufacturers, the UK was the 18th-largest auto manufacturer in the world in 2021. Its auto production was still a fraction of the size of China and the United States, the top two manufacturers respectively, but not insignificant.

As well as a blow to the UK manufacturing sector, the demise of Britishvolt is also a potential constraint on the country’s target of reaching net-zero carbon emissions by 2050, which has electromobility at its heart.

Race is on to nearshore production of battery materials

As with many countries around the world, the race to achieve net-zero and the supply chain constraints evidenced by the Covid-19 pandemic has triggered an effort by the UK to near-shore production of key raw materials and components such as batteries.

The UK government launched its critical minerals strategy in July 2022, creating a list of 18 minerals that it considers to have high criticality for the country amid economic vulnerability and supply risk.

As demand for raw materials increases, so do their prices, with the cost of key critical minerals soaring as competition heats up.

It is why, Britishvolt co-founder Orral Nadjari told Fastmarkets in an interview last year, the battery manufacturer made supply deals a priority.

Britishvolt had a supply deal with Glencore for cobalt and was working to establish a recycling ecosystem in the UK.

It also had a joint venture with VKTR for the development of a nickel sulfate facility in Indonesia, one of many such agreements between automakers and EV battery producers to secure raw material supply from the Asian country, which has some of the world’s largest deposits of nickel in the form of laterite ore.

Britishvolt also had a partnership with POSCO Chemical Co to supply cathode and anode active battery materials, as well as a deal with China’s BTR New Material for the supply of synthetic graphite and silicon oxide.

Funding ended Britishvolt dream

In the end, the money Britishvolt was promised by the UK government did not materialize.

Britishvolt had been given an in-principle pledge of around £100 million ($135.6 million) a year ago; funding was confirmed to be coming in July, although the amount was not specified.

The funding was based on firm orders from car manufacturers, which Britishvolt did not have; stop-gap rescue support was to be provided if the company could get private investment, which did not happen either, UK Prime Minister Rishi Sunak said in Parliament this week.

It is unclear whether the administrators will be able to sell the land and salvage the UK gigafactory project from extinction.

What is clear is that, in the push to electrify transportation, ambition is one thing, but reality is another. Few could doubt Nadjari’s commitment and enthusiasm for the project, which he frequently referred to in conversation as “my baby.” But gigafactories are, as their name suggests, enormous. Designing and iterating new cells on such a vast scale is clearly a challenge, or it would be happening more widely already.

To date, much of the world’s battery manufacturing has been located in China, South Korea and Japan. But things are changing: The US Inflation Reduction Act is spurring momentum for gigafactory investments in that country, and there are now multiple plants planned across Europe, with the Nordics appearing to become something of a Silicon Valley equivalent for sustainable technologies.

These projects, along with the likes of the Britishvolt dream, will all be needed as the race to net-zero accelerates.

Visit our dedicated battery materials page to discover more insights on the factors at play in the industry in 2023 and beyond.

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