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

Electric Vehicles / 21 Comments

Tata demands the UK government pay $600 million or else.

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.

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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.

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Compared to other countries in Europe and North America, the UK has struggled to attract significant investments from automakers as they pursue EV battery technologies. Auto production in the country dropped to its lowest level since the 1950s last year following the closure of the Honda factory in Swindon, which previously built the Civic hatchback and Type R.

The UK government has already set aside a reported £850 million to attract battery manufacturers. It has already given £100 million to Nissan for EV-related investment at its facility in Sunderland, while Stellantis received £30 million to build EV vans in Ellesmere Port. Chances are, the UK government will succumb to Tata's demands because it can't afford not to.

Losing Tata would send a strong signal to other deep-pocketed corporations that the UK isn't a good place to do business.

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