Britain should give up on plans for gigafactories making batteries for electric cars and accept that it cannot compete with countries with lower labour costs, according to an energy expert.
Britishvolt, a start-up that planned to build a huge factory in Blyth, Northumberland, went into administration earlier this month owing £100 million to creditors.
Andy Mayer, chief operating officer and energy analyst at the Institute of Economic Affairs (IEA), said Britishvolt was always a “highly risky project” and he said the government should walk away from it or risk a repeat of the DeLorean affair.
Mayer told The Epoch Times: “Britishvolt didn’t just fail because it doesn’t make any sense to try and lead the world in battery manufacturing from the UK. It failed because their specific expression of that technology wasn’t good enough. It wasn’t ready. Nobody really wanted to buy it. So the government money doesn’t change that.”
Britishvolt planned to build £3.8 billion gigafactory on the site of a former coal-fired power station in the far north of England and said it would employ 3,000 people and produce batteries for 300,000 cars and vans a year.
In January 2022 the government announced plans to pump £350 million into its Net Zero Strategy, on top of the £500 million it invested into its 10 Point Plan as part of its levelling up agenda—which means investing in deprived areas of the north of England and the Midlands so they do not fall further behind London and the south east.
Former Prime Minister Boris Johnson said the Britishvolt factory would become part of Britain’s “global green industrial revolution” and he said it would be as transformational as Nissan’s car factory in Sunderland, which opened in 1986 and employed thousands of people in a region of high unemployment.
‘Risk of Politicians Making Terrible Economic Decisions’
Mayer said: “With the levelling up agenda, one of the dangers of it is this narrative that you can’t let anything fail in an area. And then you do have the risk of politicians making terrible economic decisions on the basis that they have made promises they cannot keep, and we get into something of a sunk cost fallacy that they throw good money after bad trying to prove the point and never succeeding.”He said the Britishvolt affair had echoes of what happened in Northern Ireland in the early 1980s.
In 1982 the DeLorean car company went bust, after sucking up £80 million of government money to build a factory in Northern Ireland to produce U.S. entrepreneur John DeLorean’s futuristic sports cars.
Mayer said DeLorean was a “really passionate guy who could talk the hind leg off a donkey,” and he said: “You’ve got the levelling up story of Northern Ireland, a troubled region that needed the jobs, that needed the growth and needed a success story. Then you have politicians pouring in money to make the dream happen.”
But he said the result was an “utter disaster.”
British industrial history is littered with stories of manufacturers who could not compete globally but employed so many people that it was deemed politically crucial for them not to fail.
In the early 1970s the Conservative government, led by Edward Heath, came under immense political pressure to prop up Upper Clyde Shipbuilders, a consortium of Glasgow shipyards.
Thirty years later Tony Blair’s Labour government lent MG Rover millions in a desperate attempt to keep the company, and its giant Longbridge factory in Birmingham, going but it ultimately collapsed with the loss of thousands of jobs.
Tony Woodley was the general secretary of the powerful TGWU trade union at the time and he met with Blair and the then-chancellor of the Exchequer, in a bid to get more government support for the failing MG Rover.
He has since retired and been made a peer, and last week Lord Woodley called on Prime Minister Rishi Sunak’s government to nationalise the company and press on with the gigafactory.
He added: “It’s not nostalgic to nationalise Britishvolt, it is strategic, irrespective of the relatively small but very important battery production by some car companies taking place now.”
But Mayer disagreed and urged the government and private investors to cut their losses and give up on Britishvolt, and instead put funding into research and development for cutting-edge technology.
He said: “If the government is going to throw money at problems it is better they throw a small amount of money at universities and advanced manufacturing centres to test the technologies of the future and if we’ve got a political goal in there, such as we think it would be a good thing to tackle climate change and provide technology that does that, then there is a social purpose behind that money.”
Warning of Demands From ‘Sad-Eyed Company Executives’
“The last thing you want, is your public purse being dictated by sad-eyed company executives, who have not been able to deliver a business plan and want the government to bail them out,” he said.Woodley, speaking in the House of Lords last week, said: “If we failed in battery megafactories, what’s the government’s strategy now for the industry? Without investment, without strategy, we’ll have no industry in 25 years’ time.”
Lord Callanan, a minister in the Department for Business, Energy and Industrial Strategy, replied: “The future is not state control, the future is what we are doing, which is to incentivise manufacturers to move to the UK. The case of Britishvolt is very disappointing, but the money that we had available remains on the table. We very much hope that other companies will show interest in what is an excellent sight in Cambois near Blyth, and we continue to do all that we can to encourage investment in the UK.”
The British government has said new petrol and diesel cars will be banned from 2030 and Mayer said in order to produce affordable electric vehicles manufacturers would need to import them.
Mayer said: “The things that you need to engage in what can be described as commodity primary manufacturing are cheap land, cheap energy, and cheap people. On all three counts, the UK has none of those things. Our comparative advantage in manufacturing tends to be in high-value complex systems and the financing of them and the services that are attached to them.”
Mayer said: “If the German government decides that it’s going to do what the Americans are doing, and what the Chinese are doing, and pour money into creating a German battery champion, that’s great. I mean, it’s bad news for the German consumer and it’s bad news for German business generally, because they'll be paying for it, but that’s brilliant news for us in the UK because we get cheaper batteries and then use them for producing our then cheaper cars and don’t have to buy locally made batteries at vast cost.”
He said: “The risk of the government’s approach is not that they will miss the environmental targets, which they certainly will, but that they will produce a situation where something that the British population has taken for granted for going on 50 years now, that they can afford the right to own an automobile, will disappear.”
