Tata Motors set to announce plans to build UK battery factory

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Tata Motors is poised to announce plans to build a flagship battery factory in the UK to supply Jaguar Land Rover’s electric cars, according to people briefed on the Indian group’s plans.

Tata, owner of JLR, has chosen a site in Somerset in south-west England for the gigafactory over a rival location in Spain, and is expected to unveil its decision on Wednesday.

UK Prime Minister Rishi Sunak held secret talks in May with Natarajan Chandrasekaran, chair of parent company Tata Sons, in an attempt to kick-start Britain’s efforts to join the global race for electric car production.

Tata has asked for £500mn of state assistance from the UK, including subsidies for the Somerset factory’s high-energy use, a one-off grant from the government’s £1bn automotive transformation fund, and road improvements to the site near the M5 motorway.

A Tata Group spokesperson said: “We don’t have any further information right now.” Downing Street declined to comment, but government insiders said they expected Sunak to travel to JLR’s vehicle assembly centre in the Midlands on Wednesday.

Securing the proposed JLR battery factory at Bridgwater in Somerset is seen as a must-win by the government as it seeks to support the UK car industry, which has struggled with the transition to electric vehicle production.

A big vote of confidence in British industry would also raise the morale of Conservative MPs as they contemplate the expected loss of three by-elections on Thursday: Uxbridge in Greater London, Selby and Ainsty in North Yorkshire, and Somerton and Frome in Somerset.

The proposed factory at Bridgwater is close to the Somerton and Frome constituency and would be a big boost to the south-west economy.

Bosses at the Gravity industrial park near Bridgwater — which would host the battery plant — reckon the factory could employ more than 5,000 staff.

However, bookmakers reckon the Liberal Democrats are almost certain to win the Somerton and Frome by-election, while Labour is poised to secure Uxbridge and Selby. MPs break for their summer recess on Thursday.

Britain has run into difficulties with the shift from diesel and petrol vehicles to electric cars, epitomised by the slow rollout of battery factories needed to power them.

The one big breakthrough came in 2021 when Japanese carmaker Nissan unveiled plans for the UK’s first large-scale battery factory, at its Sunderland plant in north-east England. The gigafactory was built with Chinese battery supplier Envision.

Start-up Britishvolt had ambitious plans to build a gigafactory in north-east England, but it collapsed into administration in January. Parts of the company were subsequently bought by an Australian group, with the promise of reviving the plans.

A Policy Exchange think-tank paper by Sir Geoffrey Owen, a former Financial Times editor, last month highlighted how in the EU there were 25 gigafactories in operation, under construction or planned.

Meanwhile, the US is offering huge subsidies to companies for battery plants, so Tata’s decision to build Britain’s second gigafactory will be hailed by Sunak as evidence the UK is competitive in the industry. Tata has been planning to build the factory in Somerset with Envision.

Jonathan Reynolds, shadow business secretary, welcomed the news but said a Labour government would go further by investing in eight gigafactories to ensure that “announcements like this aren’t a one-off”.

The government has been conducting parallel negotiations with Tata over its UK steel operations and the JLR gigafactory but the two discussions have now been “decoupled”, according to people briefed on the talks.

Ministers have offered state support worth over £300mn for Tata Steel to keep open its Port Talbot steelworks in south Wales.

JLR is due to release an all-electric Range Rover next year, one of a family of seven battery-powered cars as part of a £15bn electrification programme, as it aims to catch up with rivals including Mercedes-Benz and BMW.

Tata had originally been planning to announce the Somerset factory last autumn but it delayed the decision amid political turmoil in the UK as Boris Johnson was replaced as prime minister by Liz Truss and then Sunak.