Tata Group is expected to receive subsidies in the amount of £500mn from Britain to help support its £4bn UK battery factory, which will be used to power a new line of Jaguar Land Rover Electric Vehicles.
Prime Minister Rishi Sunak told the UK’s MPs that this was “a massive vote of confidence”.
BMW is also expected to provide some good news soon, as it plans to build an electric Mini in its Oxford factory.
According to those briefed about the deal, Tata and Envision could jointly build the gigafactory in Bridgwater, south-west England.
Sunak was thrilled with the news. It will create 4,000 jobs in the factory, and thousands more throughout the supply chain. From 2026, it will supply Jaguar Land Rover and Tata Motors.
He stated that Britain is “well on its way to building the capacity for electric vehicles we need in the future”. The new facility, with an initial output 40GWh, will provide approximately 40% of the battery production Britain estimates needs by 2030.
Downing Street refused to reveal how much money was spent to woo Tata. The company had looked at alternative sites in Spain.
Officials close to the deal have said that the total amount could be around £500mn. This includes direct grants from the “Automotive Transformation Fund” and improvements in transport connections.
Tata, on the other hand, will receive support from “British Industry Supercharger”, an energy subsidy package that provides long-term support to 300 energy intensive companies.
Lord Nick Macpherson was not impressed. I’m full admiration for Tata’s ability to extract higher rents from an desperate government, he tweet.
Kemi Badenoch is Britain’s Business Secretary. In a article for the FT, he said that Britain had a “new approach” to support advanced manufacturing, while other countries, notably, the US, were on massive spending sprees in order to grab a piece of the market.
Badenoch stated that Britain would “targeted” support, boost R&D and remove bureaucratic obstacles, accelerate the deployment of charging points for electrical vehicles, and address any potential trade issues.
She wrote: “For those who still believe in a semblance or free market, this is a battle between wits with countries willing to pay eye-watering amounts to lure business away from us.”
The Ministers hope that BMW will confirm the new electric Minis that it will produce at its Cowley factory near Oxford, following the Tata Investment. By 2030, all Minis will be electrical.
Sunak replied: “That is a question that Tata should answer, not me.” Envision, the Chinese company which built Britain’s first battery factory in Sunderland, also supplies Nissan’s auto factory.
He said that Britain has laws that protect against foreign investments that are not conducive to national interests. Tata has not yet made a decision on Envision’s participation, according to a British official.
Tata stated in a press release: “Agratas will design, develop, and manufacture batteries within the new gigafactory.”
Envision was asked to comment on Tata’s possible involvement.
Badenoch stated last month that Envision is welcome to invest in Britain, but that Britain must “make sure that we are not overly dependent on one country” when it comes to battery technology.
Tata didn’t specify where exactly in the UK it would build the gigafactory, as a courtesy to the electoral rules that restrict sensitive government announcements prior to elections.
On Thursday, voters in Somerton, Frome and the surrounding area of Somerset, where the potential site for the gigafactory is located, will vote in a by-election.
Officials from Labour said Tata sought assurances from the party, that JLR will retain government support, if the party wins the next elections, which are expected to be held in 2024. This is a sign the business community anticipates a change in government.
Grant Shapps said that Tata’s investment was the “biggest ever” for the UK automotive sector and it had been the biggest boost since Japanese automakers moved to Britain in 1980.
Shapps stated that the Bridgwater plant, located near the Hinkley Point C Nuclear Plant, could produce batteries for not only JLR, but also “half of the EVs needed by 2030”.