Government officials warned in December that Jaguar Land Rover (JLR) could have moved car production out of the UK and cut jobs without a £380 million subsidy for its sister battery company, according to state aid documents prepared by the competition regulator. The Department for Business and Trade (DBT) cautioned that Britain’s largest automotive employer might have triggered an exodus from the UK car industry if the subsidy for Agratas, Tata’s new battery business, had not been approved.
Background on the Subsidy and Investment
JLR is owned by Tata Sons, an Indian conglomerate that also controls Britain’s largest steelmaker, Tata Steel, which received £500 million to upgrade its Port Talbot steelworks. Earlier this month, the government extended a £380 million grant to Agratas, which is building a battery gigafactory in Somerset to supply JLR and other carmakers. The planned total investment for the factory has increased to £5.2 billion, up from £4 billion when initially announced in 2023.
Potential Relocation to Spain
The documents reveal that without the subsidy, Agratas could have located its European factory in Spain, eventually leading JLR to move production from Britain due to lower costs of making electric cars near the battery plant. The DBT stated: “Over time, this systemic disadvantage could lead JLR to relocate its vehicle production closer to the counterfactual battery plant in Spain, resulting in significant job losses at JLR’s UK vehicle production and its wider supply chain.”
JLR employs 33,000 people in the UK, manufacturing the flagship Range Rover and forthcoming Jaguar models in Solihull, West Midlands, as well as models like the Discovery Sport in Halewood, Merseyside. A JLR spokesperson said: “JLR is committed to manufacturing in the UK. We did not suggest moving our vehicle production to Spain during discussions with government about the location of the gigafactory.”
Competition and Markets Authority Scrutiny
Under UK law, any government authority must consult the Competition and Markets Authority’s (CMA) subsidy advice unit for sums over £25 million. The CMA expressed doubts over whether the government’s dire assessment of the British car industry’s future was sufficiently justified, writing: “The assessment should provide more reasoning and evidence to support its conclusion that JLR potentially relocating its production could contribute to a scenario where the majority of current UK automotive production leaves the UK.”
It is unclear if a threat of JLR leaving would be realistic. A government source said the assessment considered a “counterfactual” that did not happen. The Land Rover and Jaguar brands are luxury vehicles that rely heavily on their British heritage. Des Quinn, a national officer for the Unite union representing JLR workers, said: “It’s good to see that the government were on the right side to support the UK car industry.”
Industry Reactions and Context
Senior JLR executives have previously stressed Tata’s commitment to the UK, though the company manufactures some models exclusively abroad, such as the Land Rover Defender built in Slovakia. Andy Palmer, former chief operating officer at Nissan and CEO at Aston Martin, commented: “It is the nature of car companies to seek the lowest total cost of delivery. This naturally includes access to grants, and inevitably their shareholders demand that alternatives are sought and competitiveness is proven.” Palmer, now running Palmer Energy Technology, said the UK approach to subsidies “needs root and branch renovation” and called for a system that backs the whole ecosystem.
JLR has been slower than rivals to produce electric cars, delaying its electric Range Rover and the launch of Jaguar as an all-electric brand. Sales of the electric Range Rover are expected to start this year, while orders for the first new Jaguar will begin in 2027. A government spokesperson said: “We value JLR’s commitment to manufacturing in the UK. Our £380m subsidy to Agratas will increase UK domestic battery production and keep us at the forefront of the transition to zero-emission vehicles.” Agratas declined to comment.
