At a critical moment, Britain has no plan for its car industry

The start-up Britishvolt had ambitious £3.8bn plans for a giant factory in Northumberland to make batteries for electric vehicles. But yesterday (17 January) it collapsed and fell into administration. Hopes of 3,000 skilled jobs in a deprived part of the north were dashed as a result and almost all the company’s 300 staff have been made redundant.

Britishvolt’s failure is an important story not just because of the immediate disappointment – the project may yet be revived in some form – but because it reveals a hard truth about Rishi Sunak’s government: there is no strategy for the British car industry at a moment of profound change.

The sale of new petrol and diesel vehicles will be banned by 2030. Demand for batteries, one of the most valuable components of the electric vehicles that supposedly everyone will soon be driving, will be immense, in the UK and overseas. There is just one battery plant in Britain right now: the Chinese-owned Envision AESC, near Nissan’s factory in Sunderland.

In the EU, there are 35 either under construction or planned. China is predicted to have the greatest gigawatt production capacity in Europe by 2031, followed by South Korea, France, Sweden, the US (Tesla has a base in Berlin), Germany and Norway. The UK is languishing in eighth and may slip further now. Battery plants are needed, and Britishvolt was expected to make 300,000 battery units a year, supplying around one in four vehicles sold on the British market.

So, what are we doing wrong? Britishvolt was clearly a troubled company. It had no established customers or product and was struggling to attract private investment to transform the £3.8bn dream into a reality. The government had pledged £100m of investment but refused the firm a £30m advance last year as certain milestones had not been hit.

But there is a bigger picture. Back in 2019, when MPs were squabbling over how hard Brexit should be, Germany’s government agreed a €1bn battery fund for production at home and in Europe in part of an attempt to take 30 per cent of the market share.

Companies like Britishvolt will struggle to get off the ground with private sector investment alone when competitors receive huge subsidies. And given the mega-plant was predicted to create a further 5,000 jobs in the supply chain, the rewards for the government in giving it a boost could have been worth it.

The promise that British manufacturing would be reborn during the switch to a green economy is something that some Brexit voters believed they had endorsed in 2016. Joe Biden’s US and leading EU countries are pumping cash into firms aiding the transition to net zero. The UK may be required to do more than throw a few quid at the odd pet project to keep pace.

Labour would create an £8bn national wealth fund and back eight new gigafactories as part of a wider industrial strategy to move to a green economy. The UK may be late to the party but, with such a plan, at least we’d be in the game.

Boris Johnson hailed Britishvolt’s plans as “fantastic news” a year ago, and an example of levelling up in action. If Sunak wants his electoral coalition to include Red Wall seats in the north and Midlands, his government has to recognise that the country’s car industry needs a reliable future.

This piece first appeared in the Morning Call newsletter; subscribe here.

Topics in this article :