Huge UK electric car battery factory Britishvolt site grinds almost to a halt to manage costs

According to internal documents, the construction of an enormous electric car battery factory has attracted tens and millions of pounds in taxpayer cash.

  • Britishvolt’s 95-hectare Northumberland site has been placed on “life support” and construction will be severely curtailed until February 2023 in order to limit spending.
  • Leaked internal documents indicate that Britishvolt also considered and rejected other options such as making redundancies, ending all contracts, and delaying any works except electricity infrastructure until June 2023.
  • An “infrastructure gap” could have delayed the installation of steel infrastructure that was to be purchased from British steel company Severfield. Earthworks were also delayed due to a “lack of payments”.
  • Britishvolt already has backing from Glencore, Ashtead, and Tritax, an arm of Abrdn, a major institutional investor, with backing announced so far that could eventually be worth more than £1.7bn.
  • Britishvolt will receive the money in stages if it reaches certain milestones.
  • A start-up with ambitious growth plans would not have short-term funding issues. However, if delays or problems are to build up, it might impact Britishvolt’s stated goal of starting production by 2024.

Britishvolt’s 95-hectare Northumberland site has been restricted to a minimum of work until February. This was in order to limit spending and allow it to focus on its next round of funding.

Britishvolt and ISG were the main contractors for the project. They said that the pause only affected certain parts of the project, while they waited for the final designs, which are due in October. Britishvolt stated that “life support” was only for specific “packages to work as we optimize the design.”

The UK government considers battery factories for electric cars essential to preserve high-volume car production in Britain. Kwasi Kwarteng, the minister of business, confirmed last month that state support was worth tens to millions of pounds for the factory. The factory is expected to employ 3,000 people in 2028 in an area that has been neglected by the industry.

Britishvolt has attracted a growing number of investors, including FTSE 100 commodities traders Glencore, FTSE 100 equipment rentals company Ashtead and Tritax, which is an arm of Abrdn. Aston Martin, Lotus and other institutional investors have expressed interest in purchasing batteries from Britishvolt.

It claims that its factory will be the fourth largest building in the UK, and the sixteenth in the world.

Britishvolt claims that the support announced thus far may eventually amount to more than £1.7bn. This is a substantial share of the estimated £3.8bn required. The company will receive the money only in stages as it reaches milestones.

Tony Laydon, Britishvolt’s chief UK project officer, stated to the Guardian that work was still being done at the site but that some contractors had left as packages of work had ended, including moving soil to prepare it.

Although he stated that the company was ahead in building work, he acknowledged that it was focusing on certain priority areas.

He insisted that any delays would have a “fairly minor” financial impact on the project and not affect its viability. He stated that he has the line-of-sight funding to continue his current plans.

Although the government funding will eventually provide an important injection of cash and reassure other investors, there are concerns about delays. Johnson was confronted last month by Ian Lavery, Labour MP for Wansbeck. He asked Johnson about the delay in parliament. According to a government source, officials did extensive due diligence on the project.

Britishvolt was established in 2019 and received the government’s approval. It has had its share of controversies. The most notable was the sudden departure of Lars Carlstrom, co-founder, in 2020, after it became known that he had been convicted in Sweden of tax fraud in the 1990s.

A start-up with ambitious growth goals would not have to face short-term funding difficulties. Britishvolt may be unable to meet its stated goal of producing by 2024 if there are delays or problems with suppliers.

According to documents, delays in the installation of steel infrastructure from British steel company Severfield may have been caused by a “funding hole”. They also suggest that Earthworks was delayed due to a “lack of payments”.

Laydon stated that “we’re a start-up company, so we are not in a unique situation”, but added that he didn’t recognize the term “funding gap”.

Britishvolt also rejected the “life support” plan. The documents indicate that Britishvolt considered and rejected other options such as making redundancies, ending all contracts, and delaying any works other than electricity infrastructure up to June 2023.

Britishvolt and ISG stated in statements that workers and subcontractors were paid for all work done so far and that the works were moving according to schedule.

Britishvolt stated that it would continue to spend on Hams Hall’s separate research and development facility as it tries to deliver the first battery cells to customers.

A spokesperson stated that “We are ahead of our enabling works in Northumberland at the gigasite.” This has allowed us to concentrate on the site’s design and reschedule construction work to optimize the build process for each phase. We can also better source materials due to current supply constraints and improve our cost efficiency.

ISG stated that they are now halting work on-site until the design is complete. They remain a passionate and committed partner in this transformational scheme for the people of Northumberland.

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