Electrical storm
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
The image above looks like a nondescript warehouse in the middle of an industrial estate. But in reality it is the future of the automotive industry and one of the most significant investments in the UK in recent years.
The image is an artist’s impression of the factory that Tata will construct in Somerset, south-west England, to produce batteries for electric vehicles. Agratas, the name on the factory, is the name of Tata’s battery business. Tata also owns Jaguar Land Rover, of course. The gigafactory will initially make batteries for Jaguar and Land Rover vehicles before supplying other businesses too.
Tata has confirmed today that it will build the gigafactory Gravity Smart Campus in Puriton. The investment was initially announced last summer, but there has been months of silence since then, sparking concerns about the future of the project (which we flagged in Off to Lunch earlier this month here)
The map below is where the gigafactory will be located. It is actually just 15 miles from the new Hinkley Point C nuclear power station. This area is going to be a real hub for the future of British industry….
Here are some facts about the new gigafactory that underline the size of the project:
-£4 billion is being invested in building the factory
-More than 4,000 jobs will be created at the plant, including many more than that in the supply chain
-Battery production is scheduled to begin at the factory in 2026
-The factory will produce 40GWh of battery cells every year. That is equivalent to supplying 500,000 vehicles
Given all of the above, it is no surprise the announcement has been welcomed by local leaders. Bill Revans, leader of Somerset Council, said:
“This is momentous for the county, its economy and for future generations. It's about seizing an incredible opportunity to be at the heart of the UK's green energy industry that will create thousands of highly-skilled, well-paid, green jobs."
The investment comes at a time when electric car sales are stalling in the UK amid concerns about their price and a lack of charging points.
It emerged overnight that Apple is cancelling plans to build its own electric car after spending years and billions of dollars on developing it. The news was first reported by Bloomberg. Nearly 2,000 people have been working on the project and they will be moved to Apple’s artificial intelligence initiatives. The story said:
Apple’s most senior executives finalised the decision in recent weeks, according to the people. It comes just a month after Bloomberg News reported that the project reached a make-or-break point. The most recent approach discussed internally was delaying a car release until 2028 and reducing self-driving specifications from Level 4 to Level 2+ technology. Apple had employees from across the car industry working on the project, including designers from Aston Martin, Lamborghini, BMW and Porsche.
You can read the Bloomberg story here
Apple is not the first company to scrap plans to build an electric car. Dyson, which has a manufacturing base in Malmesbury, Wiltshire, not far from the new gigafactory, did the same. Sir James Dyson gave a great interview to The Sunday Times in 2020 in which he explained the decision to stop work on the vehicle despite spending £500 million on it. He said:
“There’s huge sadness and disappointment. Ours is a life of risk and of failure.”
You can read that interview with Sir James in full here
The new Business Leader…
The new Business Leader website and magazine have now launched. We are building a new inspirational, aspirational and agenda-setting business publication for the UK. You can read our analysis, interviews and expert columnists on our website by clicking the image below. Our new magazine is on its way to shops and you can subscribe to your own print or digital version by clicking here
Other stories that matter…
1. Shares in some well-known UK consumer companies have fallen sharply today after they warned that sales were falling. Firstly, shares in Halfords have fallen by 30 per cent after the retailer warned of a significant drop in sales for its cycling, motoring and tyres businesses. Halfords said: “Both the cycling and retail motoring markets have been impacted by a combination of continued weak customer confidence and unusually mild and very wet weather, which affected footfall into stores and sales of categories such as winter and car cleaning products.” You can find the company’s statement here.
2. Meanwhile, shares in Reckitt Benckiser, the maker of Nurofen, Dettol, and Cillit Bang, have fallen more than 10 per cent. The FTSE 100 company, which was valued at around £60 billion before today, said like-for-like sales had fallen by 1.2 per cent in the final quarter as demand for cold and flu medication and infant formula dropped. Reckitt also said that revenue was £55 million lower than expected due to an “understatement of trade spend in two Middle Eastern markets”. The company added: “Following investigation, we concluded a small group of employees had acted inappropriately and we are taking necessary disciplinary action.” You can read Reckitt’s statement here
3. 141,620 bank accounts held by small and medium-sized businesses were closed by lenders last year, according to information gathered by the treasury select committee. These accounts were among the 5.3 million held by businesses at eight big banks in the UK. The findings raise concerns about businesses being unfairly debanked by lenders. Harriett Baldwin, chairman of the treasury committee, said: “I hope publishing this data can aid scrutiny of the decisions taken by banks and help to ensure legitimate businesses are not being unfairly treated.” More from Sky News here
4. The Financial Times has launched a venture capital arm to invest in fast-growing media, tech and information businesses in the UK and abroad. Story by Axios here and statement by the Financial Times Group here
5. An artificial intelligence tool that could really matter for businesses in the UK? Sage, the FTSE 100 company that develops software for businesses, has launched Sage Copilot. This tool will handle administrative tasks and also recommend savings that businesses can make. Steve Hare, the chief executive of Sage, said the tool “revolutionises small and mid-sized businesses and accountant productivity by bringing trusted AI into the heart of their operations". You can find more details from Sage here and a story by Reuters here. On a similar note, Klarna says it is using an AI tool developed with OpenAI that does the work of 700 people. More here
Podcast…
The latest episode of our Business Leader podcast is the second part of our look at how B&M became one of the biggest retailers in the UK. In this episode we look at B&M’s transition from a promising medium-sized business to a FTSE 100 giant. This is a transition that many businesses fail to make. For B&M, it was about keeping your focus despite constant distractions. But it was also about learning and evolving - in terms of strategy and people. We also speak to Simon Arora about why he stood down as B&M’s chief executive and what may come next for him and the business.
You can listen to the episode on Substack here, Spotify here and Apple here
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