The owner of carmaker Jaguar Land Rover (JLR) is expected to announce that it will build an electric car battery gigafactory in the UK, backed with £500m in government funding, in what would be a major boost for the British car industry.
Indian conglomerate Tata Group, which owns Jaguar Land Rover, has been locked in negotiations for months to secure state aid for the project, which would aim to produce 40 gigawatt hours (GWh) of batteries a year, enough to power hundreds of thousands of electric cars.
An announcement on plans for a plant, which will be located in Somerset, is expected as soon as Wednesday, although some details of the agreement have yet to be finalised, said one person briefed on the plans.
The failure of Britishvolt, a gigafactory startup which collapsed after securing pledges of £100m in government support, has cast a shadow over the future of carmaking in Britain.
The Tata project is expected to create thousands of jobs, and would guarantee a second major battery factory for the UK. The only other plan for a plant at “gigafactory” scale is Envisionplant in Sunderland, which is owned by a Chinese corporation and supplies Nissan. Envision plans to expand its site to produce 38GWh.
Tata had also considered a rival site in Spain for the plant, which would probably also supply separate brands, as well as JLR.
The deal, if confirmed on Wednesday, would come a day before three parliamentary byelections, with the Conservative party braced for defeat in all three. One of the byelections is to be held in Somerset and Frome, a constituency near Tata’s proposed site.
The prospect of two large gigafactories would help the UK attract investment and new jobs in other parts of the battery supply chain, replacing tens of thousands of posts likely to disappear as production of petrol and diesel vehicles is wound down before the ban on new fossil fuel cars in 2035.
The Tata subsidy deal is expected to include direct grants to support the construction of the factory, as well as investments in the local infrastructure. The total support is expected to be as high as £500m, said a person involved in the lengthy negotiation process.
Jonathan Reynolds, Labour’s shadow business secretary, welcomed the deal, saying it “shows the strength of the UK automotive industry”, but said it had come “in spite of the government’s cack-handed approach to industry and our economy”.
Darren Jones, the chair of parliament’s business and trade committee, said its MPs would examine the subsidies on offer to Tata.
A Somerset location would ensure relatively good transport links to Jaguar Land Rover’s car factories, which are concentrated in the Midlands.
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Talks on a gigafactory had made progress in recent weeks, but there is still no agreement on parallel negotiations over Tata’s steel plant in Port Talbot, according to two people with knowledge of the talks. The steelworks require investments worth £2bn or more to upgrade to new technology capable of producing steel without carbon emissions.
One source close to Tata said that Natarajan Chandrasekaran, chair of Tata Group, had arrived in the UK. The leader of the conglomerate had been due to visit the country earlier in the summer in order to finalise the deal, but that was delayed.
Tata had shown some signs that it was preparing for a gigafactory. Last week it published a job advertisement for a “cell developer” to work for its new battery division.
A No 10 spokesperson said they were unable to comment on a commercially sensitive matter.
Jaguar Land Rover declined to comment.
