Tata Demands $600 Million Ransom From UK Government To Keep Jaguar Land Rover British

Jaguar Land Rover's parent company, Tata, has issued the UK government a stern ultimatum: Either pay over half a billion pounds (around $600 million) in state aid to help build a new battery factory in the southwest part of the country, or it will build it in Spain.

According to the Financial Times, Tata's executives have given the UK government only weeks to confirm its financial support. The aid package Tata demands reportedly includes "grants and support packages such as assistance for energy costs and research funding."

The government might have no choice but to cut a deal for one key reason: JLR is the largest employer in the country's auto manufacturing industry and only recently returned to profit. Losing the new EV factory would mean the loss of thousands of new and existing jobs. Tata is also keenly aware of the UK's difficulties transitioning from combustion-engined vehicles to EVs.

Not getting the new battery factory (a site in Somerset has been marked for it) would result in significant long-term damage for not only the UK's auto industry but also its international investor appeal. "We are engaging with them - whether or not the talks go anywhere depends on whether a final amount can be agreed," said one unnamed UK government official. "This is a very difficult time for the government."

Tata is reportedly considering a partnership with Chinese battery manufacturer Envision, which would see the latter building and running the new factory to supply JLR's upcoming new EVs. An all-electric Land Rover Defender will arrive in 2025, and a complete lineup of fully electrified Jaguars will follow later the same year.

Both JLR and Tata declined to comment on the negotiations, but Tata clearly has the upper hand.