The Indian owner of Jaguar Land Rover is threatening to shift electric car production to Slovakia if ministers refuse to offer taxpayer support for a UK gigafactory.
Tata Motors has held talks with the foreign battery makers Northvolt and SVolt Energy Technology amid a deadlock over state backing for a plant in the UK, which is key to its plans to go all-electric by 2025.
The company has previously announced that new electric models will be built at existing factories in the Midlands, and is understood to be in advanced negotiations about building a gigafactory in either near Bristol or Redcar.
Many of JLR’s 30,000 UK jobs could be at risk if it opts for Slovakia instead.
Government sources suggested that the proposals were a negotiating tactic. An insider said: “They are using this as a way to extract more money from the Government.”
Tata has been in talks with ministers for several months as it finalizes its decision for a new plant to supply JLR’s electric vehicle fleet, whittling site locations to a shortlist of two.
The Daily Telegraph can disclose that Gravity business park near Bristol – the location that the UK hoped to convince Jeff Bezos-backed electric truckmaker Rivian to base a £1bn factory – will compete against the Teesworks site in Redcar.
A final decision is due by the end of June, industry sources said.
A spokesman for JLR said: “With our strategy for every single Jaguar Land Rover model available as a full [battery electric vehicle] by the end of the decade, we continue to explore all options around the supply of batteries. No decisions have been made yet.”
The threats by Tata will draw parallels with Nissan’s tough bargaining with the Government at the end of 2016. The Japanese carmaker managed to secure £80m in taxpayer aid in return for committing to Britain’s biggest car plant in Sunderland, four months after the Brexit vote.
Boris Johnson promised to build a new motorway junction and revive old rail links to woo Rivian to the 635-acre Gravity business park.
At the time, the Prime Minister said: “The UK’s innovation scene is thriving due to the steps my Government has taken to invest in the electrification of the automotive sector underpinned by my personal commitment to the industry.”
It emerged in March that Jaguar Land Rover had started talks with the battery maker that supplies Nissan about producing power sources for its Land Rover and Range Rover models.
Envision AESC, which has its roots as a joint venture between Nissan and Japanese conglomerates NEC and Tokin, is already planning a new battery plant for the Japanese car maker in Sunderland.
However, the size of a potential deal with Jaguar Land Rover, Britain’s biggest car maker, would require a second battery factory, according to insiders.
If the JLR/Envision battery factory goes ahead, it is expected to be on the site of a former steelworks in Redcar on Teesside, which has access to renewable energy sources as well as the necessary space.
JLR, which together with Nissan accounts for the majority of cars made in the UK, is lagging its main rivals in choosing a battery supplier.
The company is also suffering more than its competitors from the enduring computer chip crisis.
Earlier this month, JLR said supply disruption stemming from coronavirus lockdowns in China could extend its money losing streak for another three months as it reported a loss for last year.
A shortage of computer chips and higher costs pushed it to a pretax loss of £412m for the year until the end of March, compared to a £662 profit for the previous 12 months, after its operations were “significantly impacted by the constraint on production and sales resulting from the global chip shortage”.
Chinese lockdowns have closed factories producing computer chips and disrupted ports shipping those and many other parts.
But while other European car manufacturers have had record profitability, ploughing what computer chips they can find away from mass-market models to more profitable vehicles often at the luxury end of the market, JLR was unable to do that to the same degree.
In spite of these setbacks, customers are still making orders. The car maker has a record order book of 168,000 cars, which it will take about five months to fulfill at last year’s manufacturing rates.
The company said two out of every three cars it sells are now either battery-powered or a hybrid, up from 51pc a year ago.
It took a £43m charge on its business in Russia where it has a sales operation. JLR, which sold 6,900 cars to the country last year, suspended exports to Russia in March.