Australian startup Recharge Industries has been selected to buy Britishvolt out of administration.
- Britishvolt is being acquired by Australian startup Recharge Industries for an undisclosed sum.
- The deal is vital to make progress on the planned gigafactory, considered a crucial building block of the UK’s net zero economy.
- There are concerns, however, that the collapse of Britishvolt means that, despite energy transition pledges, an effective support framework is not in place.
Britishvolt, which was set up to build and operate a gigafactory site in Northumberland, went into administration in January 2023. The plant, estimated to cost £3.8 billion to start production, was intended to make sustainable, low-carbon batteries primarily for the UK motor industry, creating up to 3,000 jobs in the immediate area and more in the supply chain.
As well as reviving an impoverished area in the North East of England, it was considered a critical element of keeping electric vehicle (EV) production onshore. Lack of a local supply chain might see carmakers from moving production abroad, slowing the development of a net zero economy in the UK.
Administrators find buyers
The joint administrators from EY-Parthenon have agreed that Recharge Industries, a portfolio company of Scale Facilitation Partners, will acquire the majority of the business and assets of Power by Britishvolt. EY said this follows a process whereby it considered “multiple approaches from interested parties” and it received “numerous offers”.
David A. Collard, managing partner and chief executive of Scale Facilitation and Founder of Recharge Industries, said: “We’re thrilled to be progressing with our proposed bid for Britishvolt and can’t wait to get started making a reality of our plans to build the UK’s first gigafactory.”
The startup is establishing a large-scale lithium-ion battery cell production and research capability in Australia. So far, it has secured equipment for the initial manufacturing of annual battery cell production equivalent to 2GWh. The factory is expected to come online in 2024 and scale up to 6GWh of annual production by 2025. Longer term the goal is to scale up to production of 30GWh annually by 2028.
The acquisition was agreed upon for an undisclosed sum. It is not clear what plans the Australian startup, which has yet to take a project to completion, has in mind to kickstart the Britishvolt gigafactory. Recharge Industries declined to comment.
What does the deal mean for the UK market?
Britishvolt was seen as a flagship project in the UK’s green energy transition, receiving millions in taxpayer money, as well as praise and support from political groups. Its control, however, is now being relinquished to an Australian company – taking the ‘British’ out of Britishvolt.
Some market observers consider this a good thing. Indeed, Australia holds resources of the critical minerals that are needed for building batteries and EVs, such as lithium, so linking the UK industry to the Australian supply chain could ensure security of supply in times of high demand.
“Foreign investors, especially those from a close partner like Australia, share the same goals Britishvolt initially had for the UK automotive industry. The involvement of an Australian company would help the UK car industry become less reliant on China for battery materials,” said GlobalData analyst Martina Raveni. “It is vital that this deal goes through. Britishvolt is a key part of the UK’s energy transition plans; without it, the future of the UK’s car manufacturing industry would look bleak. The acquisition of Britishvolt by an Australian company should not stop the UK from investing in and progressing towards net zero.”
UK losing credibility in energy transition plans
There are concerns, however, that it is a sign that the UK is failing to show leadership in support of the green transition. In fact, the news came as bodies representing over 750 energy companies warned that the country risks losing its competitiveness as a clean energy hub without financial support from the government.
Zoe Avison, a policy analyst at Green Alliance, echoed this sentiment: “Establishing gigafactories in the UK is vital to futureproof our automotive industry. Recharge Industries’ rescue of Britishvolt is therefore welcome, but we’re concerned about the UK’s hands off approach to industrial strategy. As the EU and the US race to the top, targeting investment subsidies at emerging green industries, the UK is languishing amid policy uncertainty and a lack of direction.”
Indeed, Britishvolt had secured £100 million of taxpayer funds to develop its project. The release of funds was linked to the achievement of particular targets, which included finding sufficient investment commitments from the private sector and starting construction. As of summer 2022, the company had only raised £200 million.
It is not clear whether this was due to management failures or the unfortunate timing of a pandemic, an energy crisis and rampant inflation. Nonetheless, it was a hugely ambitious project touted as the poster child of the energy transition by the UK Government – whose support for the project is now being questioned.
Given the historical difficulty in raising finance for the transition of technologies from lab to market in the UK, the news is raising doubts over the country’s leadership in the green transition, despite numerous pledges, which could scare away investors and derail net zero plans.