A tale of two gigafactories…
As the name suggests, an EV battery gigafactory is truly colossal with a price tag to match – we’re talking billions rather than millions.
A couple of years a go a business associate asked me whether I would join with him to pitch our joint services to the proposed Britishvolt gigafactory in Blyth, just a few miles up the road. My immediate response was “hmmm, let’s wait and see whether they can make it work because I have serious doubts.”
My scepticism came from a mix of past experience – I’ve seen at least three other noisy pitches for huge green business start ups in the North East of England, none of which ever came to fruition (one appeared to be an outright criminal scam) – and the fact that Britishvolt itself didn’t seem to have anything of substance. Of the original board, no-one seemed to have much/any experience of mass produced vehicles or battery technology, the company had no obvious intellectual property to exploit and, most importantly, no customers had signed up. The business plan seemed to be “Demand for EV batteries will soon be huge, so we will build a huge factory to make them. Give us money, lots of it.” Would an investor or investors risk hundreds of millions or billions on that prospectus?
As I type, Britishvolt is teetering on the edge of bankruptcy having apparently only secured tens of millions of investment. The BBC reports the board has asked the UK Government for £30m to continue the project but apparently this hasn’t been forthcoming. Talk of investment from potential customer TATA remains just talk for now.
Meanwhile, down the road at Washington, another gigafactory is quietly being developed. Chinese battery manufacturer AESC has gone into partnership with Nissan who will be building EVs at their Washington site. AESC have been making EV batteries since 2007 so they know what they are doing – and have a history of partnering with Nissan. With a product to sell and an anchor customer/investor to buy/fund it, this one looks as if it is going ahead (the only hurdle of note is planning permission which should be straightforward).
Many have tried to blame Britishvolt’s woes on Government inaction, inflation or Brexit-inspired boosterism, but to me the simple explanation is this: the green economy is not immune from normal business gravity. No product, no customers, no business. Simple as.