UK Officials Warned Jaguar Land Rover Might Shift Production Without £380m Battery Subsidy

Government officials at the Department for Business and Trade stated in December that Jaguar Land Rover, Britain's largest automotive employer, would have considered moving car production out of the UK and cutting jobs without a £380m subsidy for its sister battery company.

According to state aid documents prepared by the competition regulator, this could have triggered an exodus from the UK car industry. Jaguar Land Rover is owned by Tata Sons, an Indian conglomerate that also controls Britain's largest steelmaker. Tata Steel received £500m to upgrade its Port Talbot steelworks.

Earlier this month, the government extended a £380m grant to Agratas, Tata's new business building a battery gigafactory in Somerset to supply Jaguar Land Rover and other carmakers. The documents indicate the planned total investment for the factory increased to £5.2bn from £4bn when announced in 2023.

The documents reveal government warnings that without the subsidy, Agratas could locate its European factory in Spain, potentially leading Jaguar Land Rover to move production from Britain to reduce costs for electric cars by being nearer the battery plant.

Jaguar Land Rover employs 33,000 people in the UK and produces models such as the Range Rover and forthcoming Jaguar models in Solihull, West Midlands, and the Discovery Sport in Halewood, Merseyside. A Jaguar Land Rover spokesperson said the company is committed to manufacturing in the UK.

Under UK law, government authorities must consult the Competition and Markets Authority’s subsidy advice unit for sums greater than £25m, though the unit expressed doubts on whether the government's assessment of risks to the British car industry was sufficiently justified.

A government source described the assessment as considering a counterfactual scenario that did not occur. The Land Rover and Jaguar brands are positioned as luxury vehicles emphasizing British heritage. Andy Palmer, a former chief operating officer at Nissan and chief executive at Aston Martin who now runs Palmer Energy Technology, said car companies seek the lowest total cost of delivery.

He added that the UK approach to subsidies needs root and branch renovation. Jaguar Land Rover has delayed its electric Range Rover launch and the transition of Jaguar to an all-electric brand, with Range Rover sales expected to start this year and orders for the first new Jaguar in 2027.

A government spokesperson said the government values Jaguar Land Rover’s commitment to manufacturing in the UK. Agratas declined to comment.