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China has a long history of dominating the electric vehicle (EV) market. However, its monopoly on EV supply may be starting to wane due to an exploratory deal entered into between luxury British car manufacturer Aston Martin and battery maker Britishvolt.

After they became the biggest car market in the world in 2009, China has steadily increased its stronghold over the automotive industry. An EV battery is primarily made from a cocktail of precious materials like lithium, graphite, cobalt, nickel, and manganese. The International Energy Agency (IEA) that ‘over half of all lithium, cobalt and graphite processing refining capacity is located in China,’ meaning that  China possesses a near total market dominance over EV battery production worldwide. The IEA found that ‘China dominates production at every stage of the EV battery supply chain downstream of mining, with three-quarters of battery cell production capacity based in China.’ Goldman Sachs Europe and the US would need to invest over £133bn ($160bn) in capital expenditure to compete even remotely with China. Despite this, for the UK, this sea change may already be under way.

In early March 2022, Aston Martin and Britishvolt to develop high performance battery technology. The exploratory deal was premised on bolstering the capabilities of two innovative British automotive giants. Britishvolt is a start-up founded in 2019 by former banker Orral Nadjari and Swedish entrepreneur Lars Carlstrom. The deal was a welcome reprieve for Aston Martin from their EV woes. Aston Martin first announced their idealistic plans for a high performance EV, Rapid E, in 2016, entering into a with Chinese tech conglomerate LeEco to produce the vehicles. In 2017, LeEco hit financial difficulties that resulted in it pulling out of the project. Aston Martin was left scrambling and ultimately produced only 155 of the EV sportscars (a third of the original plan) in 2019. Aston Martin returned to its plan in 2021 to produce trail blazing, high performance vehicles. This time, battery giant Contemporary Amperex Technology Co (CATL), and a Chinese automotive manufacturer approached Aston Martin. Aston Martin rejected these approaches and instead opted for a memorandum of understanding with Britishvolt. The deal was premised on two British pioneers combining to collaborate on the design of battery technology. 

Britishvolt was identified by the UK government as a high-potential start-up that could solve the EV battery dilemma. As a result, the company was awarded a £100m grant from the in July 2022. The Automotive Transformation Fund is a government initiative whereby registered businesses were able to apply for a share of £1bn for projects that help industrialise the British EV supply chain. The promises of the Automotive Transformation Fund grant paved the way to Britishvolt also securing investment funding from Abrdn and Tritax for construction, in addition to pre-existing backing by Glencore plc and Ashtead plc.    

The grant was intended to fund Britishvolt’s Northumberland factory, which is projected to produce over 300,000 batteries annually. The comapny was initially aiming to reach full production potential at the Northumberland factory in 2024, however, the factory is still under construction.  The company has since experienced further challenges.  In August 2022, Nadjari , failing to cite any particular reason why. In September 2022, co-founder Carlstrom promptly distanced himself from Britishvolt after he was convicted of in Sweden, to avoid tainting the reputation of the growing company.

Significant problems continued to mount throughout October 2022. The company narrowly missed bankruptcy when it secured 5 weeks of funding from investor, Glencore. However, this funding is set to expire in the coming days. Britishvolt cited the deteriorating market as the main cause. Although, shortcomings within the Blyth factory, the loss of Nadjari, as well as the wider post-Brexit climate a rumoured to have played a significant part.

Britishvolt has released the following on the matter:

‘We have previously spoken about the need to evolve our business strategy in response to challenging external factors and continue to explore both short and long-term funding streams that will enable us to deliver on our plans to build a thriving localised, sustainable battery ecosystem… While the weakening economic situation is negatively impacting much business investment at present, at Britishvolt we are continuing to pursue positive ongoing discussions with potential investors… The result is we have now secured the necessary near-term investment that we believe enables us to bridge over the coming weeks to a more secure funding position for the future. To further reduce our near-term costs, our dedicated employee team has also voluntarily agreed to a temporary salary reduction for the month of November.’

As of the time of publishing, there have been no changes to the memorandum of understanding between Aston Martin and Britishvolt. Aston Martin have made no formal comment on Britishvolt’s recent problems.

In a post-Brexit Britain, the time is nigh to invest in homegrown industry. The UK risks enduring significant tariffs if it continues to rely on importations from key international players like China, Japan, America, and Europe. As per the 2021 terms, EV batteries must be comprised of no more than 50% internationally sourced materials. Otherwise, the UK will be burdened by significant tariffs at the point of exportation. Time is certainly running out for a thriving, profitable, internationally acclaimed, British-based automotive industry. Although Britishvolt was initially presented as a shining star of this massive sea change, recent events have shown us that the automotive industry remains in a very precarious position.

Britishvolt belatedly – and with some trepidation - disclosed the first example of their batteries to the government in September. Yet there has been no evidence of how it secures orders nor how they actually use their in-house technology. This is a pressing concern for a company who publicly maintains it will produce 300,000 battery packs per year by 2025.  Britain needs a strong industrial strategy to effectively compete with China and fulfil the promises of Brexit. Yet the misfortunes of Britishvolt show us that despite progress, the British automotive industry has a long way to go.

Market Tracker will continue to monitor developments in this space.