The collapse into administration of Britishvolt will rekindle concerns for the long-term future of the British car-making industry.
The sector is under extreme pressure to pivot from making cars powered by the internal combustion engine to electric vehicles (EVs). To that end the UK government has decreed that, from 2030, no new petrol or diesel cars will be sold in the UK.
Central to that transition to EVs is the need for a number of new ‘gigafactories’ – plants that could produce electric car batteries at scale – and the Johnson government had targeted at least seven or eight of them.
The assumption among industry analysts is that, due to the weight of EV batteries and the expense of transporting them, they need to be located near to the carmakers. Hence the need to build them in the UK.
That need for local sourcing is amplified by ‘rules of origin’ provisions in the UK’s Brexit deal with the EU which require that 70% of a battery must be built in either the UK or the EU for the EV it powers to be sold tariff-free in the bloc. Four in every five British-built cars are exported and just over half of them are sold to countries in the EU.
It is why Britishvolt was promised £100m from the Automotive Transformation Fund, the £850m taxpayer-backed programme aimed at supporting the electrification of Britain’s automotive supply chain.
So the failure of Britishvolt will be seen as a severe setback to the country’s ambitions for EVs. It casts doubt over what is one of only two gigafactories in the UK towards which meaningful progress was being made, the other being built at Sunderland by the Chinese battery maker Envision, which is partnering Nissan locally.
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Yet some will argue it is premature to extrapolate Britishvolt’s woes to wider prospects for gigafactories in the UK.
Britishvolt has been seemingly cursed from the off.
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Its co-founder, Lars Carlstrom, left the company nearly three years ago after it emerged he had been convicted for tax offenses in his native Sweden. There was then confusion when the company announced its factory would not be in Bridgend in south Wales, as originally intended, but at Cambois near Blyth, in Northumberland, where it had been offered more attractive financial incentives to locate.
In the meantime, the company continued to rack up costs, with the monthly salary bill for its 300 employees reported to be £3m.
Britishvolt then pushed back the planned start date for production to 2025, blaming Russia’s invasion of Ukraine for pushing up costs, while a request for government support was made. It later emerged that management had put the company on what was described as ‘life support’ in July.
Then, in August last year, Mr Carlstrom’s co-founder, Orral Nadjari, unexpectedly resigned.
The Guardian newspaper subsequently reported details of his extravagant spending, revealing that the company had leased a seven bedroom £2.8m mansion with a swimming pool and jacuzzi for executives, as well as hiring a Dubai-based fitness instructor to conduct yoga classes for staff remotely.
Lack of firm supply deals with carmakers
Graham Hoare, the respected former head of Ford of Britain, was hired in his place as an interim chief executive and, in November, the company secured an emergency lifeline from Glencore, the commodities trading and mining giant, which was one of its shareholders.
But at the heart of its problems was that it had never signed firm supply deals with carmakers sufficient to guarantee future revenues of the kind that potential investors would have wanted to see.
All it had were preliminary agreements with two luxury carmakers, Aston Martin and Lotus, to design batteries for their EVs.
Last week, the company said it was in talks to sell a majority stake in itself to a consortium of investors in order to secure its future, but those came to nothing.
Today brought the news, which had seemed increasingly inevitable, of administration.
That need not be the end of the story.
Britishvolt’s main asset, the site at Cambois, is well-located close to a deep-water port and enjoys both good rail links and access to clean energy from Norway. It is highly likely to attract potential buyers.
India’s Tata Motors, the owner of Jaguar Land Rover, has been suggested as a possible buyer although it is hard to see why it would want to own a site in Blyth when a site in Coventry, much closer to the bulk of its manufacturing facilities elsewhere in the West Midlands, remains possible for development.
The bigger questions and concerns
Perhaps the bigger question – and concern – is how many car manufacturers will be in need of British-made EV batteries come the end of the decade.
Honda has already closed its plant at Swindon in Wiltshire while Stellantis, the Fiat, Peugeot and Citroen combine, is ending volume car production at Ellesmere Port in Cheshire and converting production there to electric vans and cars whose battery cells will be sourced on mainland Europe.
Mini’s owner, BMW, has confirmed the next generation of the model’s electric version will be built not at Cowley in Oxfordshire but in China. And it is not yet clear from where the luxury British carmakers Rolls-Royce and Bentley, respectively owned by BMW and Volkswagen, intend to source their batteries as they switch to EV production. Nor are Toyota’s intentions clear for its site at Burnaston in Derbyshire.
The biggest question of all concerns Jaguar Land Rover which, it seems, is likely to be relying on European production for at least some of the batteries powering its UK-built vehicles.
So perhaps the bigger worry is not the lack of gigafactories but whether they will actually be needed amid declining output from British-based volume car producers.
Potential suitors have again begun circling ITV, Britain’s biggest terrestrial commercial broadcaster, after a prolonged period of share price weakness and renewed questions about its long-term strategic destiny.
Sky News has learnt that a number of possible bidders for parts or all of the company, whose biggest shows include Love Island, have in recent weeks held early-stage discussions about teaming up to pursue a potential transaction.
TV industry sources said this weekend that CVC Capital Partners and a major European broadcaster – thought to be France’s Groupe TF1 – were among those which had been starting to study the merits of a potential offer.
The sources added that RedBird Capital-owned All3Media and Mediawan, which is backed by the private equity giant KKR, were also on the list of potential suitors for the ITV Studios production arm.
One cautioned this weekend that none of the work on potential bids was at a sufficiently advanced stage to require disclosure under the UK’s stock market disclosure rules, and suggested that ITV’s board – chaired by Andrew Cosslett – had not received any recent unsolicited approaches.
That meant that the prospects of any formal approach materialising was highly uncertain.
The person added, however, that Dame Carolyn McCall, ITV’s long-serving chief executive, had been discussing with the company’s financial advisers the merits of a demerger or other form of separation of its two main business units.
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Its main banking advisers are Goldman Sachs, Morgan Stanley and Robey Warshaw.
ITV’s shares are languishing at just 65.5p, giving the whole company a market capitalisation of £2.51bn.
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The stock rose more than 5% on Friday amid vague market chatter about a possible takeover bid.
Bankers and analysts believe that ITV Studios, which made Disney+’s hit show, Rivals, would be worth more than the entire company’s market capitalisation in a break-up of ITV.
People close to the situation said that under one possible plan being studied, CVC could be interested in acquiring ITV Studios, with a European broadcast partner taking over its broadcasting arm, including the ITVX streaming platform.
“At the right price, it would make sense if CVC wanted the undervalued production business, with TF1 wanting an English language streaming service in ITVX, along with the cashflows of the declining channels,” one broadcasting industry veteran said this weekend.
“They would only get the assets, though, in a deal worth double the current share price.”
Takeover speculation about ITV, which competes with Sky News’ parent company, has been a recurring theme since the company was created from the merger of Carlton and Granada more than 20 years ago.
ITV said this month that it would seek additional cost savings of £20m this year as it continued to deal with the fallout from last year’s strikes by Hollywood writers and actors.
It added that revenues at the Studios arm would decline over the current financial year, with advertising revenues sharply lower in the fourth quarter than in the same period a year earlier because of the tough comparison with 2023’s Rugby World Cup.
Allies of Dame Carolyn, who has run ITV since 2018, argue that she has transformed ITV, diversifying further into production and overhauling its digital capabilities.
The majority of ITV’s revenue now comes from profitable and growing areas, including ITVX and the Studios arm, they said.
By 2026, those areas are expected to account for more than two-thirds of the group’s sales.
This year, its production arm was responsible for the most-viewed drama of the year on any channel or platform, Mr Bates versus The Post Office.
In its third-quarter update earlier this month, Dame Carolyn said the company’s “good strategic progress has continued in the first nine months of 2024 driven by strong execution and industry-leading creativity”.
“ITV Studios is performing well despite the expected impact of both the writer’s strike and a softer market from free-to-air broadcasters.”
She said the unit would achieve record profits this year.
ITV and CVC declined to comment, while TF1, RedBird and Mediawan did not respond to requests for comment.
The family which has owned Ann Summers, the lingerie and sex toy retailer, for more than half a century is to explore options for the business which could include a partial or majority sale.
Sky News has learnt that the Gold family is close to hiring Interpath, the corporate advisory firm, to work on a strategic review which could lead to the disposal of a big stake in the chain.
Retail industry sources said this weekend that Ann Summers had been in talks with Interpath for several weeks, although it has yet to be formally instructed.
The chain, which was founded in 1971 and acquired by David and Ralph Gold when it fell into liquidation the following year, trades from 83 stores and employs over 1,000 people.
The family continues to own 100% of the equity in the company.
Sources said that some dilution of the Golds’ interest was probable, although it was far from certain that they would sell a controlling stake.
In a statement issued in response to an enquiry from Sky News, Vanessa Gold, Ann Summers’ chair, commented: “We, like many other retailers, are dealing with the unhelpful backdrop to business of the decisions announced by the government at the Budget and the rising cost to retail.
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“As a family-owned business, we are in a fortunate position and have committed investment for over 50 years.
“This has created a robust and resilient business.
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“We are exploring a number of options to further grow the brand into 2025 and beyond.”
Ms Gold is among many senior retail figures to publicly criticise the tax changes announced in the Budget unveiled by Rachel Reeves, the chancellor, last month.
The British Retail Consortium published a letter last weeks signed by scores of its members in which they warned of price rises and job losses.
Private equity firms and other retail groups are expected to express an interest in a takeover of Ann Summers.
One possible contender could be the Frasers billionaire Mike Ashley, who already owns upmarket rival Agent Provocateur.
Any formal process is unlikely to yield a result until next year, with the key Christmas trading period the principal focus for the shareholders and management during the next month.
Ann Summers is one of Britain’s best-known retailers, with a profile belying its relatively modest size.
In the early 1980s, Jacqueline Gold, the then executive chairman who died last year, conceived the idea of holding Ann Summers parties – a key milestone in the company’s growth.
At its largest, the chain traded from nearly twice the number of shops it has today, but like many retailers was forced to seek rent cuts from landlords after weak trading during the COVID-19 pandemic.
This week, The Daily Telegraph reported that the Gold family had stepped in to provide several million pounds of additional funding to Ann Summers in the form of a loan.
Vanessa Gold – Jacqueline’s sister – also asked bankers to explore the sale of part of the family’s stake in West Ham United Football Club last year.
That process, run by Rothschild, has yet to result in a deal.
Bosch will cut up to 5,500 jobs as it struggles with slow electric vehicle sales and competition from Chinese imports.
It is the latest blow to the European car industry after Volkswagen and Ford announced thousands of job cuts in the last month.
Cheaper Chinese-made electric cars have made it trickier for European manufacturers to remain competitive while demand has weakened for the driver assistance and automated driving solutions made by Bosch.
The company said a slower-than-expected transition to electric, software-controlled vehicles was partly behind the cuts, which are being made in the car parts division.
Demand for new cars has fallen overall in Germany as the economy has slowed, with recession only narrowly avoided in recent years.
The final number of job cuts has yet to be agreed with employee representatives. Bosch said they would be carried out in a “socially responsible” way.
About half the job reductions would be at locations in Germany.
Bosch, the world’s biggest car parts supplier, has already committed to not making layoffs in Germany until 2027 for many employees, and until 2029 for a subsection of its workforce. It said this pact would remain in place.
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The job cuts would be made over approximately the next eight years.
The Gerlingen site near Stuttgart will lose some 3,500 jobs by the end of 2027, reducing the workforce developing car software, advanced driver assistance and automated driving technology.
Other losses will be at the Hildesheim site near Hanover, where 750 jobs will go by end the of 2032, and the plant in Schwaebisch Gmund, which will lose about 1,300 roles between 2027 and 2030.
Its remaining German plants are also set to be downsized.
While Germany has been hit hard by cuts, it is not bearing the brunt alone.
Earlier this week, Ford announced plans to cut 4,000 jobs across Europe – including 800 in the UK – as the industry fretted over weak electric vehicle (EV) sales that could see firms fined more for missing government targets.