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Wednesday 15 March 2023

Britishvolt: The sorry tale of the Gigafactory that never was

logoThe report issued a couple of days ago by EY, the Administrators handling the collapse and sale of UK gigafactory-hero-that-never-was, Britishvolt (see Britishvolt: Out of the frying pan, onto the barbie and work back), makes interesting reading.

According to the report, Britishvolt’s R&D was largely carried out by partners. They had provided samples and prototypes to certain OEMs with hope of winning orders – indeed they had already signed MOUs with two UK-based OEMs and were pitching for joint development agreements with others. Britishvolt had not registered any IP nor had any formal premises, with the majority of its staff working 'remotely'. Nonetheless, Britishvolt ran a fleet of 83 vehicles for its employees' use.

Britishvolt management had set up a string of subsidiary companies (ten, to be precise), including one in Canada and one in Japan, both with just one member of staff. These were mostly dormant bar BVPM, which had purchased a property in Northumberland slated to become Britishvolt’s training facility, and BVP, which was to acquire the site on which the Gigaplant was to be built. Private debt boutique Katch Fund Solutions held a lien on BVP’s property and is currently owed some £9.7m after Britishvolt defaulted on the loan.

During the course of its short life, Britishvolt had accumulated losses of over £154m and had yet to generate any revenue. The expectation was that losses would increase until the construction of the Gigaplant was complete, which EY estimated would cost a further £3bn-£6bn.

Since incorporation, Britishvolt had raised £167.5m in equity funding and nearly £40m in debt funding, against plans to raise £800m in 2022 and a further £1.7bn in later years. The UK Government had pledged £100m subject to milestones which, thankfully for the UK taxpayer, were never achieved.

Britishvolt’s failure to secure equity funding inevitably triggered a cash crisis, or ‘liquidity pinch points’ as so eloquently described by EY, who were brought back in, and here I quote verbatim, “to undertake financial advisory, liquidity analysis and high-level contingency planning work to understand its potential restructuring and insolvency options as a fallback plan, should the investor activity continue to underperform Management’s expectations.”

Needless to say, investor activity continued to underperform Management’s expectations and the rest is history.

EY’s estimated remuneration as Administrator tallies over £3.4m. Purely for your interest (and envy), EY is charging between £350 per hour for Analyst work and £950 per hour for Partner effort, with various other grades in between, including Director, Assistant Director, Manager, and Executive (!). I can find no reference to the fees EY was previously paid as advisors to Britishvolt on its strategy.

The search for a UK Gigafactory hero continues.

Posted by: Anthony Miller at 08:52

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