Britishvolt Is a Monument to Global Britain’s Empty Hype

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The name should have been a clue: Britishvolt. Those of a certain vintage will remember that the last major automotive enterprise to brand itself in such patriotic fashion was British Leyland, which became a byword for manufacturing decline and failed industrial strategy. So the portents were never good.

Britishvolt’s collapse into administration this month was hardly a surprise; the vehicle-battery startup had been teetering on the edge for months. Yet the company’s failure still produced a bout of hand-wringing and existential angst. Former Aston Martin Chief Executive Officer Andy Palmer called it an “unmitigated disaster” for the British auto industry, sentiments that were echoed by the shadow business secretary, Jonathan Reynolds. Parliament’s cross-party Business, Energy and Industrial Strategy Committee has started an inquiry into UK battery supply and manufacturing.

Not all the UK’s industrial ills can be traced to Brexit. But its fingerprints are all over this fiasco. While the company talked up its technology, its inability to draw private investors suggests there was always more hype than reality here. The startup had no major customers. It had agreements with the high-end sportscar makers Group Lotus Plc and Aston Martin Lagonda Global Holdings Plc, though it’s unclear whether the company ever reached the point of supplying prototypes.

The immediate question is why such grandiose hopes were invested in an unproven project to begin with. Britishvolt went under without ever producing a commercially viable battery. The startup was developing a £3.8 billion ($4.7 billion) gigafactory in Northumberland, in the northeast of England, that promised to create about 3,000 jobs and have 30 gigawatt hours of capacity by 2030. It would have been the largest of three such plants in the UK, accounting for more than 50% of the country’s planned capacity, according to figures from the Faraday Institution, a battery-research group.

The gigafactory was predicted to produce enough cells each year for more than 300,000 battery packs, equivalent to 25% of current UK vehicle output. How could a project of such vital national infrastructure, promising such significant contributions and dedicated to “securing Global Britain’s position on the sustainable battery production map,” fail to attract the funding to keep going? The government pledged £100 million, dependent on the company achieving certain milestones, including attracting private investment. It didn’t achieve them, so it’s no surprise the government balked.

What it did generate in abundance, in finest Brexit fashion, was plenty of optimistic buzz. “Fantastic news,” then-Prime Minister Boris Johnson wrote on Twitter in January 2022, calling the company an “EV battery pioneer.” The planned gigafactory was testament to “the UK’s place at the helm of the global green industrial revolution.” That was an impressive demonstration of faith in a startup that had no track record in the development of electric-vehicle battery technology.

Britishvolt was feted because it was almost all the government had. What has been overlooked in the aftermath of its demise is why this was so. Britain doesn’t need to reinvent the electric-vehicle battery. It might be nice to be a global pioneer that owns the intellectual property to a critical future technology, but it isn’t essential. Most of the country’s automotive industry is already in foreign hands. All that is needed is for battery makers to produce in Britain.

Where are Tesla Inc., China’s Contemporary Amperex Technology Co., or South Korea’s LG and SK groups?

In Europe, is the answer. Tesla is building a gigafactory in Berlin that is planned to have 100 GWh of capacity by 2030, according to Faraday. CATL, the world’s biggest EV battery maker, is also building a plant in Germany that will have 60 GWh. SK Innovation Co. will have three in Hungary. LG Energy Solution Ltd. is in Poland. Elon Musk was candid about his reason for passing on the UK. Uncertainty around Brexit “made it too risky” to put a gigafactory in the country, the Tesla CEO said in 2019.

Brexit also explains why the loss of Britishvolt is such a blow. Car manufacturing is a highly integrated multinational business, and a not particularly profitable one, at least in Britain. On average, most UK car producers earn only around £450 on a £15,000 car, according to a 2022 report by the UK in a Changing Europe project based at King’s College London. The report cites the example of a driveline system that incorporates specialist-forged parts from Spain, Italy, France and Germany. So if automakers face increased costs because of customs paperwork, border delays and other trade friction imposed by Brexit, their profit margin can easily disappear.

European Union rules that specify how much of a vehicle must be locally sourced pose an even more critical threat. These haven’t fully taken effect following the UK’s departure from the bloc. Since batteries constitute such a large chunk of the cost of electric-vehicle production, auto manufacturers will need to decide whether to site plants to make batteries in the UK, or continue importing most of them from Asia and face paying tariffs when exporting finished vehicles to Europe. The alternative, needless to say, is to put both battery- and vehicle-manufacturing operations inside the EU.

Auto manufacturing shows more than most industries how Brexit is a fantasy of independence in an interdependent world. Hype can only carry you so far. Sooner or later, reality hits.

More From Bloomberg Opinion:

• Sorry, UK — Brexit Was a Bigger Mistake Than Trump: Ian Buruma

• UK Firms Don’t Want to Talk About You-Know-What: Matthew Brooker

• Sparks Will Fly in the Electric-Car Trade War: Lionel Laurent

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Brooker is a Bloomberg Opinion columnist covering finance and politics in Asia. A former editor and bureau chief for Bloomberg News and deputy business editor for the South China Morning Post, he is a CFA charterholder.

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