JLR calls for UK government financial support

1 min read

Following the news that Britishvolt has been acquired and a proposed gigafactory in the North of England is back on track Tata Motors, the owner of Jaguar Land Rover, is reported to have asked the UK government for state subsidies to build a battery factory in Somerset.

Tata has asked for upwards of £500m in the form of grants and subsidies to assist it with energy costs and research funding, concerning the proposed plant.

According to reports Tata is currently looking at Somerset and Spain as potential sites in Europe, and the Spanish authorities have been offering enormous grants to companies considering battery production. Spain has the added advantage of potential cheap solar power.

For many the decision on where JLR sources its batteries is now being seen as a key test of the strength of the government’s desire to sustain a large automotive industry here in the UK.

According to one person with knowledge of the company’s strategy a decision is likely within the next few weeks.

“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 source said.

The UK government does appear to have offered a sizeable funding package to the company but it appears that the issue that is holding up the decision is the higher energy costs being faced by manufacturers here in the UK, when compared to the EU.

Running a gigafactory is a costly process.

Industry sources suggest that there is no financial logic in supplying batteries built in Spain to UK car factories – transport costs would have significant impact on any financial benefit of taking this route.

Could it be that Tata is simply using the Spanish option to leverage more cash from the government?

While a big investment for the UK government, compared to the support industry is getting in the EU and from the US authorities, it is relatively small beer. It would, however, demonstrate the UK government’s commitment to the car industry.

So, is the building of a gigafactory here in the UK critical to the survival of a domestic automotive industry? Some say it’s a no brainer and that the government needs to step up to the plate – otherwise a source of well-paid and secure jobs will simply wither and disappear.

Others argue that it’s quite possible to supply batteries from outside the UK.

It’ll be interesting to see which way the UK government jumps in the next few weeks.