Lotus and Britishvolt boosted by UK government backing for battery technology

British car maker Lotus is set to announce a potential partnership with battery maker Britishvolt after the UK government on Friday revealed a state-backed funding package for a billion-pound battery factory in northern England.

The Lotus deal, to be officially announced next week, is Britishvolt’s first official tie-up with a car maker and an important step for the company looking to cement its credibility with prospective investors.

Britishvolt has begun work on a £2.6 billion ($3.5 billion) battery plant in Blyth, England, that it has said will create about 3,000 jobs. The scheme is benefiting from support from the UK government's Automotive Transformation Fund.

The programme is designed to help build factories that can produce batteries at scale. The grant will unlock a £1.7 billion investment from asset manager abrdn Plc and logistics real estate investor Tritax Group.

Britishvolt has announced its intention to build on a 93-hectare site where Britain’s largest coal-burning power station once stood.

Prime Minister Boris Johnson said the project would provide a strategic boost for the UK's industrial ambitions. “Britishvolt’s plan to build a new gigafactory in Northumberland is 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,” he said.

“Backed by government and private sector investment, this new battery factory will boost the production of electric vehicles in the UK, while levelling up opportunity and bringing thousands of new highly skilled jobs to communities in our industrial heartlands.”

Britishvolt has said its factory will be operational by the end of 2023 and eventually produce enough cells for more than 300,000 electric vehicles a year.

Nissan Motor said last year it will create a £1 billion electric vehicle making hub in northern England. The Japanese car maker is partnering with a unit of China’s Envision Group, which is planning to build a battery factory in the region that will be ready in 2024 at the earliest.

Lotus owner Zhejiang Geely Holding is trying to bolster the iconic British racing brand in China’s burgeoning electric car market while keeping a manufacturing base in Britain. Its long-awaited Emira sports car — which is set for delivery this year — will be the company’s last conventional engine model.

With the Emira, alongside a plan to build electrified sport utility vehicles in China, Lotus is making progress on expanding beyond selling just a handful of cars each year that appeal to racing fans.

Major local employer

A stock market listing is on the cards for Britishvolt as the project moves to completion. “This announcement is a major step in putting the UK at the forefront of the global energy transition,” Britishvolt executive chairman Peter Rolton said in a statement.

A representative said Britishvolt's Blyth plant will be built in three phases and will reach peak production as a 30 GWh plant capable of producing battery packs for over 300,000 vehicles in 2027.

The start-up says at full capacity the plant will directly employ about 3,000 people.