Report says Tata Motors approached the UK government as the group considers sites in Somerset or Spain
Jaguar Land Rover’s owner, Tata Motors, has reportedly asked the UK government for over £500m in state subsidies to set up a battery factory in Somerset, in a move seen as essential to the future of the British car industry.
Tata, the Indian conglomerate that owns Jaguar Land Rover (JLR), has asked for the funds in the form of grants and support packages such as research funding and assistance for energy costs, the Guardian understands.
The automaker is deciding between a potential site in Somerset and another in Spain, according to the Financial Times, which initially reported the £500m figure. Spain has been giving huge grants to firms considering battery production, with the aim to attract the new industry with the potential for cheap solar power.
The decision on where JLR, Britain’s largest carmaker, procures its batteries is seen as a major test of the strength of the government’s desire to sustain a big car industry.
One person familiar with JLR’s strategy said it was likely that a final decision would be made within the next two months.
“We may be already past added-on time in extra time,” the person said. “If JLR, as the UK’s biggest motor manufacturer, can’t make a business case to build electric batteries in this country, who else is going to build batteries in this country?”
The UK government had offered JLR a funding package that was bigger than those from competitors in the EU, the person said. However, higher energy costs for the industry compared to other European countries were a major issue, given the needs of a gigafactory.
Other industry sources have hinted that the Tata gigafactory talks are connected to those on support for the conglomerate’s steelworks at Port Talbot. The government has offered £300m to help the works upgrade to lower-emission technology.
The Tata Motors chief financial officer, PB Balaji, said in February that the company was preparing for a plant in India and another in Europe to make battery cells. JLR was not able to say whether the reference to Europe included the UK.
A senior car industry source said there was “no financial logic” to JLR providing its UK factories with batteries from Spain as the cost of transportation for the batteries by sea and road would probably cancel out any savings from cheaper labour. “There is zero arbitrage,” the source said. “I think they are just positioning to get money.”
Buy Bitcoin NowA £500m subsidy would amount to a very huge investment for the UK government in a single project. Its “automotive transformation fund”, the key vehicle for supporting the UK industry’s switch from internal combustion engines to electric vehicles, is only worth £1bn in total.
However, the government is facing pressure to show it is devoted to a future for the UK car industry, especially after the collapse of Britishvolt, a startup that was praised by the former Prime Minister Boris Johnson before its collapse in 2023.
Some experts indicate the industry, a source of well-paid and secure jobs, specifically in the Midlands, will dwindle without gigafactories to supply car factories. Others oppose that, stating that manufacturers including Toyota and Stellantis plan to supply batteries from their British factories from outside the UK.
