Jaguar Land Rover-owner to spend £4bn on UK battery factory

Jaguar Land Rover-owner Tata has confirmed plans to build its flagship electric car battery factory in the UK.

The new plant in Somerset is expected to create 4,000 UK jobs and thousands more in the wider supply chain.

Tata said it would invest £4bn in the site, but it is understood that the government is also providing subsidies worth hundreds of millions of pounds.

The plant is described as the most important investment in UK automotive since Nissan arrived in the 1980s.

The new gigafactory near Bridgwater will be one of the largest in Europe and will initially make batteries for Jaguar Land Rover vehicles like Range Rover, the Defender and the Jaguar brands.

But the plan is to also supply other car manufacturers as well, with production at the new factory due to start in 2026.

Tata has been in negotiations for months to secure state aid for the project and the government confirmed on Wednesday that Tata had been offered a "large" incentive to site the plant in the UK. The subsidies are likely to be in the form of cash grants, discounts on the cost of energy, and training and research funding.

But Prime Minister Rishi Sunak told the BBC that Tata's decision was based on a wider range of factors.

"Tata is an international business and will consider a number of factors when deciding where to invest. Last autumn the chancellor cut taxes specifically so that we could encourage investments like this," he said.

"We're making lots of changes and it's this whole package that's attractive, like investment in skills and apprenticeships, infrastructure in road, rail and broadband.

"It's also the approach we're taking to regulation after leaving the EU," he added.

Liberal Democrat Treasury spokesperson Sarah Olney MP welcomed the decision, saying it came "after years of the south west being neglected by government investment".

The Society of Motor Manufacturers and Traders said that the investment had come at a critical time for the UK.

"With the global industry transitioning at pace to electrification, producing batteries in the UK is essential if we are to anchor wider vehicle production here for the long term," said SMMT chief executive Mike Hawes.

Industrial strategy

Batteries typically account for a large proportion of the value of an electric vehicle, so a reliable supply is expected to be vital for the future of the UK car industry.

But the government has been criticised for lacking a clear industrial strategy and falling behind the US and EU in attracting investment in low-carbon technologies such as battery manufacturing.

Sharon Graham, general secretary at the Unite union, said: "The US and Europe have clear, proactive plans for jobs and investment. We cannot continually lag behind."

She said the government should use the opportunity to set out a "strategic long-term industrial plan", and require that the new factory be constructed with UK-made steel.

Some industry insiders hope that the Tata battery investment will open the door to further battery investments in the UK.

The UK currently only has one plant in operation next to Nissan's Sunderland factory, and one barely on the drawing board in Northumberland.

Another proposed battery manufacturer, in the north east of England, Britishvolt, went into administration earlier this year.

By contrast the EU has 35 plants open, under construction or planned.

Shadow Business Secretary Jonathan Reynolds welcomed Tata's new plant, adding that Labour would ensure "announcements like this aren't a one-off, but the basis for a growing economy, with good jobs in our industrial heartlands".

Help for steel

As well as owning Jaguar Land Rover, Tata has extensive steel interests in the UK including the Port Talbot plant in South Wales and the government is also expected to offer around £300m to subsidise, upgrade, and decarbonise those operations.

Parliament's cross-party Business and Trade Committee is holding an inquiry into the UK's electric vehicle battery manufacturing sector.

Its chairman Darren Jones, said Tata's decision to site the new plant in the UK was "very welcome" but he raised questions over the scale of the subsidies provided.

"We will want to reflect... on the subsidy package that was required to secure this decision and if this approach is scalable to meet the need for further battery manufacturing sites for other car companies across the UK."

Those concerns were echoed by the FairCharge group, which represents other companies in the electric vehicle sector.

FairCharge's founder, Quentin Willson, said there was a fear in the industry that Tata's investment could "sweep up" all available government support.

"I truly hope that other companies in the battery, critical minerals, charging and EV supply chains won't be neglected," he said.

Andy Palmer, former executive at Nissan and Aston Martin - who is now at EV charging firm Pod Point - said the UK needed a strategic industrial strategy to "lift all boats".

"Support must come in all shapes and sizes for businesses of all shapes and sizes," he said. "One gigafactory doesn't equal success, it equals part of the puzzle."