Rishi Sunak must resist pressure to bail out green 'losers' like Britishvolt
London, 1 November – Net Zero Watch has warned that the Government’s strategy of green interventionism is a recipe for disaster, in light of the news that lauded battery start-up Britishvolt is on the verge of administration, with media stories creating pressure on the government to bail the company out in spite of clear signs that it has no future.
Described as a ‘Gigafactory’, the planned EV battery factory was meant to be a symbol of levelling-up and would show how a green “planned economy” could herald an industrial renaissance.
The then Prime Minister, Boris Johnson, said in January that “Britishvolt’s plan to build a new gigafactory in Northumberland [was] a strong testament to the skilled workers of the North East and the UK’s place at the helm of the global green industrial revolution.” Those plans now look unfeasible.
UK Government ministers had committed £100 million to a project, apparently without a sound business plan, because it aligned with official rhetoric on Net Zero. The company used the promise of state funding to secure significant further financing but has been unable to raise the full amount required to trigger the government injection of funds. In the meantime, the company has racked up significant costs hiring new staff and demanded £30 million from the Government up-front, in order to stem its losses.
The company has plausibly blamed “ballooning energy costs” for its decision to delay planned production of new batteries from 2023 to mid-2025.
At the same time, BMW has announced it is moving manufacturing of the electric Mini from the UK to China where manufacturing is powered by cheap coal while Tesla may drop plans for a German battery plant, in part because of high energy costs. But questions about the fundamental viability of Britishvolt remain to be answered.
Net Zero Watch Director of Energy, John Constable, said:
Stunningly high energy costs resulting from nearly two decades of failed low carbon energy policy clearly haven’t helped Britishvolt, but the government’s attempt to pick a green winner was probably doomed from the outset. Like all planned economies, a planned Green economy is almost certain to fail, and in spite of the best of intentions. The Prime Minister should resist calls for a bailout. Taxpayers already have enough on their plates.”