Champagne flowed freely as Orral Nadjari courted bankers and potential business partners in a private box, against a soundtrack of V12 supercar engines, at the Goodwood festival of Speed.
Nadjari had hit the big time: his Britishvolt battery startup was gatecrashing the annual petrolheads’ gathering at the historic West Sussex circuit in June with plans to power cars of the future using British-made batteries.
Britishvolt’s pricey sponsorship of the “Electric Avenue” battery car showcase at the festival was not the only instance of the fledgling company’s extravagant approach, according to insiders.
The Guardian understands it leased a seven-bedroom £2.8m mansion with an indoor swimming pool and Jacuzzi for executives, and hired a Dubai-based fitness instructor to conduct yoga classes for staff over video. Britishvolt executives even travelled in a private jet owned by one of its billionaire shareholders for work purposes – although Britishvolt says no company money was used to fund the journeys.
Nadjari’s moment in the spotlight did not last. In late Julythe 40-year-old was removed as a director. The company was in serious financial trouble, and the Guardian revealed in August it had put building work for its factory on “life support” to conserve cash.
The turmoil has cast doubt on the future of a three-year-old company hailed by former prime minister Boris Johnson as a cornerstone of his “global green industrial revolution”.
This article, the first in a series exploring the UK’s efforts to save its car industry by building an automotive battery industry, will examine whether Britishvolt’s growing pains could prove terminal for one of the UK’s flagship green technology projects.
Cash crunch
Britishvolt has never been short on ambition. The enormous £3.8bn “gigafactory”would produce batteries for 300,000 cars and vans a year and employ 3,000 people in a relatively deprived part of the UK.
Built on a vast site near Blyth in Northumberland, it would become the fourth-biggest building in the UK and the sixteenth-biggest in the world. Britishvolt now has 300 staff.
Crucially, it would help the UK wean itself off petrol and diesel cars, giving hope to the hundreds of thousands of workers whose jobs are tied to the internal combustion engine.
Those plans have started to fray. Britishvolt has publicly acknowledged “challenging” conditions and admitted that it will not be able to start production until at least 2025 – two years later than it initially promised. It blames increased costs caused by Russia’s invasion of Ukraine, but insists that it is still on track to build a full-scale gigafactory.
However, people familiar with the situation say the company is facing further problems that are making fundraising difficult. It has called in consultancy EY to look at options on how to get through the funding squeeze. Several sources, speaking on condition of anonymity, have raised concerns over the startup’s management and warn of its increasingly urgent attempts to secure financial support from investors and local and national government.
Britishvolt’s main asset is its 93-hectare site at the former Blyth power station. It paid £4.8m for the land from Northumberland county council, which had just bought the site from RWE, an energy company, according to Land Registry documents.
The sale came with strings attached from the council, which was wary after Britishvolt backed out of a similar deal with the Welsh government for a site in the Vale of Glamorgan. The council retains a covenant which means it can demand the site back after Britishvolt failed to meet some of those conditions, according to several people with knowledge of the deal.
Britishvolt is lobbying the council to release it from the covenant. That could allow it to raise money backed by the site, a source said. However, it is understood that local politicians have opposed removing the covenants.
Another financing problem relates to Britishvolt’s other key asset: a promise of £100m in government funding. The then business secretary Kwasi Kwarteng revealed in July that the government had made a “final grant offer” – albeit one much lower than the £200m Britishvolt hoped for at the beginning of the talks.
That support will only arrive once Britishvolt has secured battery manufacturing equipment supplied from Korea and Germany, Britishvolt’s executive chair, Peter Rolton, said in an interview last month. Britishvolt has pushed for the government to provide the money sooner to see it through its funding shortfall.
One person with knowledge of the talks said the government had insisted on the conditions because of concerns about reputational risk if the project failed. A government source said that it had carried out extensive due diligence.
However, a source familiar with Britishvolt’s operations questioned whether the company had indeed secured the equipment from suppliers, thought to be Korea’s Hana Technology and Germany’s Manz. A person close to Britishvolt strongly denied that suppliers had not been paid, but it is understood that the payment plan with Manz has been rescheduled. Neither supplier responded to requests for comment.
The cashflow problems have also affected other suppliers, according to two sources. Steel company Severfield and construction firms Keller and Careys have been impacted by cancelled or postponed works after contracts had been agreed, according to documents seen by the Guardian. Severfield and Keller declined to comment, while Careys did not respond.
Lender support
The difficulties Britishvolt has faced in its early stages have not surprised some car industry experts, given it is taking on established giants such as China’s CATL and South Korea’s Samsung and LG.
Ian Henry, director of AutoAnalysis, a consultancy, said: “I would like nothing better from a UK plc perspective than for the company to succeed but, as an external observer of a company without proven, working products or volume customers, I just do not understand how its plans can work.”
Britishvolt has secured some serious backers. FTSE 100 companies Glencore and Ashtead are thought to have invested about £40m and more than £10m respectively.
Signing up anchor customers is proving more tricky. British sports carmakers Aston Martin and Lotus have signed non-binding memorandums of understanding with Britishvolt, but both are also exploring other options with more established players. Those MoUs are a stamp of approval on Britishvolt’s efforts so far, but a senior automotive figure said they are “meaningless” for the purposes of raising money to construct the factory.
Britishvolt has this month belatedly sent its first sample batteries (made at a UK government-funded development facility) for testing to seven potential customers – a significant achievement for a company started in 2019. Those included a large German carmaker, according to a source.
Britishvolt also has backing from Tritax, a property development company owned by UK pension fund giant Abrdn. Tritax has said it will deliver £1.7bn in total funding to construct the factory building under a sale and leaseback arrangement. However, it will do little to dig Britishvolt out of a financial hole: no money will be invested directly in the startup, and it is understood no money has yet been committed.
If Britishvolt were to fail, Tritax would have to find another tenant.
Growing pains
Britishvolt’s short existence has been a bumpy one. Co-founder Lars Carlstrom was an early casualty, leaving in late 2020 after it emerged he was sentenced to eight months in prison and handed a four-year trading ban for tax fraud in the late 1990s. This was later reduced by a higher court to a conditional sentence and 60 hours’ community service.
Carlstrom at the time told the Press Association it was a “minor allegation” from 25 years earlier, and that it was always his intention to pass on chairmanship once the company had been established. “I don’t wish to become a distraction so I am stepping aside with immediate effect”, he said. The businessman, who now has no links with or shares in Britishvolt, has since started an unrelated but extremely similar Italian venture: Italvolt.
Nadjari, the other co-founder who is still thought to own more than a third of Britishvolt’s shares, spent most of his career at corporate bond seller Jool Capital Partner, in Gothenburg, and Abu Dhabi. He was replaced by respected ex-Ford executive Graham Hoare. Hoare’s fellow ex-Ford product development chief Joe Bakaj has joined the board, and Britishvolt has also bolstered its ranks with a significant number of senior hires, particularly those with battery development expertise.
Britishvolt also has some unusual governance features. William Harrison, the 36-year-old billionaire son of a late Texan oil baron is a shareholder in Britishvolt through Cathexis Holdings, which has significant oil-drilling operations.
Harrison’s private jet has transported executives and investors – although a person close to the company said it saved on air fares and emissions on flights.
Harrison also owns UK-based ISG, Britishvolt’s main contractor leading construction of the site.
Britishvolt’s executive chair, Peter Rolton, joined from Rolton Group, an engineering consultancy. Rolton has remained a director of Rolton Group, which still works with Britishvolt.
Britishvolt said its board had full confidence in its “robust corporate governance processes”.
ABC: Abu Dhabi, Blyth, Canada
Some of Britishvolt’s spending has raised eyebrows internally. The company rents a serviced office in London’s exclusive Mayfair district, and Newfield House, the £2.8m mansion near Blyth.
The latter property, featuring a swimming pool, its own bar area and a gym, is described by estate agents as “a luxury appointed modern mansion finished to an exacting standard”. It is understood that Newfield House is now being used as office space.
Britishvolt recently closed an upmarket office in Abu Dhabi, where Nadjari lived, but it retains a small team in Canada to pursue an identical plan to the UK. That effort – including lobbying for Canadian government support – is led by Philippe Couillard, who was Quebec’s premier between 2014 and 2018. Britishvolt did not say if Couillard receives a salary.
Ben Kilbey, Britishvolt’s chief communications officer, said: “The board of directors supports the company’s latest business plan, which has been refocused and sharpened given the negative global economic situation, and continues to have full confidence in the senior management team and in the company’s robust governance processes.
“We have been working collaboratively with the UK government and we thank them for their continuing confidence in the Britishvolt business as we actively work on several potential scenarios offering the stability needed to enable us to carry on building a strong and viable British battery cell R&D and manufacturing business.”
Nadjari said: “Never more than now has the need to switch to clean, renewable, energy been more evident. Britishvolt can help power the industry of the future and deliver the jobs of the future.
“Domestic battery cell production is essential for the country’s net zero 2050 ambitions.
“Why are people not celebrating this true champion of UK plc and its hopes of a successful energy transition?”
A business department spokesperson said: “We remain dedicated to securing UK gigafactories across the country and continue to work with investors to progress plans to mass-manufacture the batteries needed for the next generation of electric vehicles, ensuring taxpayer money is used responsibly and providing the best value.”
There are differing views as to whether Britishvolt will be able to complete its ambitious vision, but everyone who spoke to the Guardian agreed that it is crunch time for the young company.
Britishvolt will have to “step up or step away”, said one person with knowledge of the project. “They need to prove they’ve actually got a clear business plan. It’s not without risk, but that’s the nature of Britishvolt.”
• This article was amended on 29 September 2022. An earlier version said the South Korean company LG was from Japan.
