It can be revealed that Britishvolt, a battery startup, owed creditors as high as £120m when it collapsed last Wednesday. This was a significant blow to the hopes of supporting the British car industry.
According to a source familiar with the matter, creditors are only expected to recover a small portion of the debts. However, there are believed to be multiple bids for the company’s assets and the company. The administration is being handled by EY, a professional service firm.
EY hopes to find a buyer of the remaining business, which still has 26 employees on its payroll, and of the Northumberland site. Tuesday evening was the deadline for first offers on Britishvolt assets.
After a difficult year of car industry decline, Britishvolt was forced to close its doors. According to data released Thursday by the Society of Motor Manufacturers and Traders, a lobby group, only 775,014 British cars were built in 2022. This is the lowest annual number since 1956.
Production declined 9.8% in 2021 and by 41% in 2019, just before the pandemic. Jaguar Land Rover (JLR), an Indian-owned carmaker, also lost its title as the largest UK carmaker in volume to Japan’s Nissan.
Three years ago, the UK’s car industry was struggling to cope with the effects from the coronavirus pandemic. First, production was disrupted by lockdowns. Then, supply chain problems, including severe shortages of computer chips worldwide and disruptions in supplies of parts from Ukraine, caused by Russia’s invasion, also affected output.
Mike Hawes, chief executive of SMMT, stated that 2020 was bad, 21 was worse, and 22 was even worse.
The closure of Honda’s Swindon plant was the main reason for the collapse in production. Industry analysts believe Brexit played a significant role in the decision, despite Honda’s denials. Hawes stated that uncertainty about the future of the UK’s EU trading relationship would make it more difficult to attract investment to the UK.
The industry is also preparing to produce battery-electric cars. Boris Johnson, the former prime minister, hailed Britishvolt as an “electrical vehicle battery pioneer” and considered it a key project of the government. Attracting battery production was key to the retention of automotive industry jobs. The government promised Britishvolt PS100m funding if it reached milestones in equipment purchases.
Britishvolt received support from FTSE 100 companies Glencore and Ashtead, as well as abrdn’s subsidiary Tritax. Despite revelations of excessive spending, Britishvolt ran out of money before it could build the factory. Hawes stated that the collapse of the factory was disappointing, if not surprising.
He said, “Maybe some from the ashes will rise.”
A number of companies expressed an initial interest in the company and its assets. Tata, an Indian conglomerate, is also considering purchasing the site. DeaLab, an obscure private equity firm with Indonesian connections, made an offer to purchase the company just before it was placed into administration.
Recharge Industries, an Australian startup has expressed interest in purchasing assets from the administration. The company is run by a former employee of PwC (a professional services firm) and is looking to build a battery plant in Geelong, southern Australia.
According to the Australian Financial Review, which first reported the offer, Recharge submitted its bid after Ian Botham, a former England cricketer, assisted it. Lord Botham was given a peerage by Johnson and is now a UK/Australia trade envoy.
“The UK is home of the most innovative, exciting companies in the world.” Botham stated in a statement to AFR that it was great to see an Australian company wanting to invest in UK-Australian trade and investment opportunities. Botham was contacted for comment.
EY declined comment and refused to give a list to Britishvolt’s creditors, until it publishes the administrator’s report within six to seven weeks. After confirming it was one of the smaller creditors, EY said that it would not vote on creditor resolutions.