Tata Motors, owner of Jaguar Land Rover, is demanding more than £500m in government aid for a new battery factory in Britain, in a decision expected to be “fundamental” for the future of the UK car industry. .
People briefed on the discussions say the Indian group is close to choosing between Spain and southwest England for its factory and has given UK ministers “weeks” to pledge financial support.
They added that the total amount of British aid requested by Tata exceeds £500m, including grants and support packages such as assistance with energy costs and research funding.
The move, from the UK’s biggest car manufacturing sector employer, presents the government with a key choice over how much support to give the industry as Britain struggles to make the transition from petrol and diesel cars to high-end electric vehicles. pasta.
A UK government official said: “We . . . are engaging with them – whether the negotiations go anywhere or not depends on whether a final figure can be agreed.”
JLR’s decision not to supply batteries in the UK would deal a heavy blow to the UK car sector, undermining the country’s international appeal for investors, according to industry leaders.
“This is fundamental. . . would send a seismic signal internationally” if the Indian company chooses to build its plant outside the UK, said a person familiar with Tata Motors’ request for British government support.
The group has significantly increased the amount of state support it has been seeking since negotiations with the government began, people close to the talks said.
“This is very difficult for the government,” said one.
Tata is examining a partnership with Chinese battery maker Envision that would involve the Asian group building and running a plant in Somerset to supply JLR’s new range of electric cars.
PJ Balaji, chief financial officer of Tata Motors, said last month that the Indian company was considering a location to manufacture batteries “in Europe”.
Spain, Tata’s European alternative to the UK site, already has pledges to build battery factories for German automaker Volkswagen and start-up Inobat.
JLR and Tata Motors, part of the Tata Group, declined to comment. Envision and the UK business department also declined to comment.
Despite new investments by Nissan, Stellantis and Ford in electric vehicle technology, the UK has struggled to attract major battery companies to set up factories.
UK car production fell last year to its lowest level since the 1950s after Honda’s factory in Swindon closed.
The government has set aside £850m to attract battery makers to the UK and has a number of other financial backing schemes it could turn to to attract investors.
Ministers have provided Nissan with more than £100m for electrical investment at its Sunderland factory. Stellantis has received around £30m from the government to manufacture electric vans at Ellesmere Port.
Britishvolt, the start-up that wanted to build a battery factory in Northumberland, was offered £100m in state funding before its collapse this year.
Compared to rivals, JLR is late to launch a range of electric vehicles. The group currently has just one electric car – the Jaguar I-Pace, made in Austria by contract manufacturer Magna Steyr.
JLR has said it will launch an electric Range Rover, its flagship model, next year.
JLR and Envision, which makes batteries for Nissan in Sunderland, came close last year to announcing a partnership to build the battery plant in Somerset.
But Tata delayed an announcement amid political turmoil when Boris Johnson was replaced as prime minister by Liz Truss and then Rishi Sunak.
The decision has also been delayed as the Tata Group has simultaneously sought British government support for its UK steel business.
Ministers have offered around £300m to try to keep Tata’s steelworks in Port Talbot open.