Tata Motors, Jaguar Land Rover’s owner, is asking for more than PS500mn in government aid to build a battery factory in Britain. This decision is “pivotal for the future” of the UK’s car industry.
According to people familiar with the discussions, the Indian group is considering Spain or south-west England as its preferred location for its plant. It has also offered financial support to UK ministers “weeks,” according to sources.
The total UK aid requested by Tata has been increased to PS500mn. This includes grants and support packages like assistance for energy costs or research funding.
This move by the UK’s largest employer of car manufacturers presents the government with an important choice about how much support it should provide to the sector as Britain struggles to transition from petrol and diesel cars into mass-market electric vehicles.
An official from the UK government stated that “We. . . they are engaged with them. Whether or not the talks move forward depends on whether or not a final amount is agreed upon.
According to industry leaders, a decision by to not source batteries in the UK could be devastating for the British automotive sector and would also affect the country’s appeal internationally to investors.
“This is crucial. . . It would send a seismic message internationally” if Tata Motors decides to build its factory in the UK, according to a person who was familiar with Tata Motors’ request of British government support.
According to people familiar with the negotiations, the group has sought significantly more state support since the beginning of talks with the government.
One stated, “This is very difficult to the government.”
Tata is looking into a partnership with Envision, a Chinese battery manufacturer. This would see the Asian group build and run a Somerset factory to supply JLR with its new range of electric vehicles.
PJ Balaji (Tata Motors’ finance chief) said last month that Tata Motors was looking into a location for battery manufacturing “in Europe”.
Spain is Tata’s European option to the UK and has already pledged to build battery factories with German carmaker Volkswagen, as well as start-up Inobat.
JLR and Tata Motors (part of Tata Group) declined to comment. Envision and the UK’s business department declined to comment.
Despite recent investments by Ford, Stellantis, and Nissan in electric vehicle technology the UK has not been able to attract large battery companies to establish factories.
The closure of Honda’s Swindon plant resulted in a decline in UK car production to its lowest level since 1950s.
To attract battery manufacturers to the UK, the government has allocated PS850mn and has several financial support programs it could use to attract investors.
Nissan received more than PS100mn from ministers to fund electric investment at Sunderland’s factory. Stellantis was awarded approximately PS30mn by the government for making electric vans at Ellesmere Port.
Britishvolt, a start-up that wanted Northumberland to have a battery plant, was offered PS100mn in state funding. It collapsed this year.
JLR is behind its rivals in launching a range electric vehicles. Only one electric vehicle is currently available in the group, the Jaguar I-Pace. It’s made in Austria by Magna Steyr, a contract manufacturer.
JLR announced that it will launch its flagship model, the electric Range Rover, next year.
JLR and Envision, which make batteries for Nissan in Sunderland were close to an announcement last year about a partnership to construct the battery factory in Somerset.
Tata’s announcement was delayed by political turmoil, as Boris Johnson was reappointed as prime minister by Liz Truss then Rishi Sunak.
Tata Group was simultaneously seeking British government support to its UK steel business. This caused the decision to be delayed.
To keep Tata’s Port Talbot steelworks open, ministers offered approximately PS300mn.