Yahoo Finance Jaguar Land Rover owner stokes gigafactory bidding war between Spain and UK
The owner of Jaguar Land Rover is pressing Madrid to increase a €350m (£300m) subsidy offer as it prepares to announce whether its new battery gigafactory will be built in Spain or Britain.
Tata has urged the Spanish to sweeten a proposed support package after Jeremy Hunt, the British Chancellor, reportedly offered the business £500m to come to the UK.
The business – which owns JLR as well as the Port Talbot steel plant and Tetley Tea in the UK – is choosing between the Gravity business park in Somerset and a site in Spain for the facility. It will churn out batteries for a new generation of electric cars and provide a significant boost to the manufacturing base of whichever country is successful.
Spain has €2bn of European Union funds available to award to electric vehicle-building and battery-making projects. However, it has set a limit of €350m for battery plant financing.
Chancellor Jeremy Hunt has reportedly promised £500m of help if Tata picks Britain, as well as taxpayer support for Port Talbot to net zero by installing electric arc furnaces to replace its ageing blast furnaces.
JLR denied it had been offered subsidies, saying: “Reports that JLR has been offered government funding to influence a decision around future global gigafactory locations are untrue.
“JLR will become an anchor customer of the Tata Group's future global gigafactory venture.”
Spain relaunched its funding efforts this year after a slow start in attracting interest with its terms criticised as too strict by car firms.
Discussions are understood to be ongoing, with no target date set for an agreement to be reached. However, UK negotiators are hoping to close the deal off soon.
Mr Hunt hinted earlier this week that the UK car industry might receive welcome news soon after much disappointment in the race to build up an electric supply chain.
Britishvolt, the country's hope for an independent battery plant, collapsed into administration earlier this year. It left only Nissan, JLR’s biggest competitor in the UK, Nissan, with a domestic battery supply.
A looming 2035 ban on the sale of new petrol and diesel cars means it is increasingly important to have gigafactories in Britain.
The Brexit deal also means that cars built using imported batteries from outside Europe will attract a 10pc tariff if exported to the Continent.
Mr Hunt told the British Chambers of Commerce’s annual conference on Wednesday that “we need to have battery making capacity in the UK”.
Mr Hunt said: “All I would say is, watch this space, because we are very focused on making sure the UK gets that EV manufacturing capacity.”
Adrian Mardell, the chief executive of JLR, said last week that situating the plant in Spain would not hinder his company’s plans to build more electric vehicles.
He said: “I don't believe it will impact where we build models. We've already announced where those models are actually going to be built.”
The firm's Solihull factory will build electric versions of both Jaguar and Land Rover models.
Tata was approached for comment. The Department for Business and Trade declined to comment.
Negotiations over the gigafactory coincide with Tata’s demand for state help to decarbonise its huge Port Talbot steel mill, switching it from a carbon-belching blast furnace to an electric arc site using green electricity.
Last year Natarajan Chandrasekaran, chairman of Tata Group, told the Financial Times that the plant could close without £1.5bn of taxpayer support.