John Kerry boasted at Davos last week that the Inflation Reduction Act already has prompted the creation of 70 new battery companies in the U.S.
The United Kingdom, meanwhile, boasts one fewer battery company after its green industrial-policy star failed last week.
Power by Britishvolt Ltd. entered administration on Tuesday and will be wound down at a cost of several hundred jobs. The startup, founded in 2019, was central to London’s green ambitions. [emphasis, links added]
Britishvolt was going to build a factory in northern England where 3,000 employees would produce lithium-ion batteries to support Britain’s electric-car industry. That industry doesn’t exist yet, and now neither will Britishvolt.
Britishvolt had faced financial troubles for a while and was undone by “insufficient equity investment for both the ongoing research it was undertaking and the development of its sites” in England, according to EY-Parthenon, the administrator winding down the firm.
This happened despite the promise of subsidies of £100 million from the British government.
Britishvolt came to be at the center of former Prime Minister Boris Johnson’s green industrial policy, encapsulated by his plan to achieve net-zero carbon emissions by 2050.
The company demonstrated the U.K.’s position “at the helm of the global green industrial revolution,” Mr. Johnson rhapsodized a year ago.
The subsidies didn’t arrive in time, however, and the government last year refused a request for a £30 million advance when it said Britishvolt had failed to meet certain milestones.
The company also suffered from higher interest rates and Britain’s escalating energy costs. Fortunately for overtaxed Britons, the failure happened before anyone in London could write the subsidy check.
The climate brigade will argue this means London needs to throw more money faster at more startups to compete with eastern Europe and China.
The real lesson is that the electric-vehicle market is so thin and so dependent on government mandates that not even the promise of government cash was enough to make such a company viable.
The main business case for Britishvolt or any other British battery firm is that the U.K. government plans to ban new internal combustion-engine cars and vans by 2030 and hybrids by 2035.
Yet as battery technology fails to advance enough to replace conventional engines, there’s growing reason to doubt London will stick to that mandate.
If the government might not force consumers to buy a product that doesn’t drive as far as conventional cars or “refill” (recharge) as fast, why invest in producing it?
Yet even if London comes to its senses, this industrial policy will still harm Britain’s economy.
Britain currently is home to a conventional auto industry that includes component manufacture and final assembly and employs some 156,000 in manufacturing.
Those carmakers are on notice that London intends to push their current product off the market, and high land prices, wages, taxes, and energy prices make it an uncompetitive place to produce battery replacements.
This risks shifting investment decisions within the next few years, even if politicians drop the electric-vehicle mandate.
The big winner so far is China, which may emerge as a competitive location to manufacture conventional cars, produces many of the rare earth minerals necessary for EVs, and also still can afford to throw capital at battery plants in the West—such as the only currently operating battery factory in the U.K.
If politicians insist on driving down this EV road, Britishvolt won’t be the last industrial-policy failure.
Read more at WSJ
That Britishvolt building could be a home for the homeless. Triple decker bunk beds. Efficient.
I was thinking maybe the UN facility would make great Homeless Shelter think of all the room there and the UN has become a total failure