Next week, the chair of Tata Group will meet with Prime Minister Rishi Sunderak for discussions that should lead to an announcement that the Indian company plans to build a flagship battery factory for electric cars in the UK.
Ministers are confident that Tata will choose Somerset as the location to supply Jaguar Land Rover in the UK over an alternative site in Spain.
According to a minister, the Tata chief is scheduled to meet Sunak to discuss the size of an state support package. Downing Street declined to comment. Tata also declined to comment. But a government insider stated: “The mood in the country is very positive.”
A senior Conservative stated that a deal would “imminently” be announced. Another minister stated that, while the deal has not yet been finalised the “hope” is that the announcement of the Bridgwater gigafactory near the M5 motorway will come very soon.
Ministers’ promises of hundreds of millions pounds in support packages, including taxpayer subsidies for the plant’s electricity costs, have swung the decision, which was months in the making.
The weekend reported that Ministers are increasingly confident Tata will select the UK, after the late offer of energy subsidies.
The decision will be a huge boost to the UK auto industry, which has been struggling to attract investment in battery technology and has seen its car production nearly halved over a period of just three years. The Bridgwater factory would be the only large battery plant in Britain, after the gigafactory which supplies Nissan’s Sunderland plant.
Somerset’s selection would also be a boost to Sunak’s Government which has prioritized the development of green industry.
It would also show how Sunak was reluctantly drawn into a global race for green subsidies triggered by US’s 369bn Act to Reduce Inflation.
Tata will receive funding to build the site, as well as for new roads, but its biggest cost is subsidising energy consumption at the factory. This was the deciding factor in Tata’s choice.
The Indian group initially asked the UK for around £500mn of total financial assistance, but it is difficult to estimate the final amount given that the energy component of the deal will last for many years.
Tata also tries to get more money from the UK Government for its Port Talbot steel works. Tata’s steel operation has already received £300mn from the UK government to help it move towards greener steel production.
The executives have dismissed this sum as being too low, given that the estimated capital expenditure of £2bn – £2.5bn is needed to convert the Port Talbot Steelworks in Wales to electric arc furnaces which emit less carbon.
The executives have informed officials that they want the same level of support as their European competitors, including half the investment in capex.
The EU also wants a carbon tax on steel imports, similar to that agreed last year by the EU. The high energy prices in Britain, when compared with continental Europe, has been a sticking-point in negotiations.
Tata had planned to build the factory in partnership with Envision, a Chinese battery supplier that also operates Nissan’s factory.
JLR will release an all-electric Range Rover in 2019. It is one of seven battery-powered vehicles as part of the £15bn electrification program. The company wants to catch up to premium rivals like Mercedes-Benz or BMW.
BBC reported the first on Chandrasekaran’s UK visit on Wednesday.