The Tata Group chairman is due to meet Prime Minister Rishi Sunak next week for talks that are expected to culminate in the announcement that the Indian group will build a flagship electric car battery factory in the UK.
Ministers believe Natarajan Chandrasekaran’s visit will lead Tata to choose a site in Somerset rather than a rival site in Spain to supply Jaguar Land Rover, its UK-based automaker.
THE Tata The boss is set to meet Sunak for talks which will focus on the size of a state support package, according to a minister. Downing Street and Tata declined to comment, but a government insider said: ‘The mood is very positive.
A senior Tory said a deal was ‘imminent’ and another minister said that although a deal had not been finalised, ‘the hope’ was that the gigafactory near the M5 motorway in Bridgwater would be announced very soon.
The choice, which lasted for months, was swayed by promises from ministers of a support package worth hundreds of millions of pounds which will include taxpayers subsidizing the plant’s energy costs for years to come .
The Financial Times reported at week-end that ministers increasingly hoped that Tata would choose the UK after making the offer of energy subsidies at the end of negotiations.
The decision would be a big boost to Britain’s beleaguered car sector, which has struggled to attract investment in batteries and has seen car production nearly halve in just three years. The Bridgwater plant would be only the second major battery plant in Britain after the gigafactory that supplies Nissan’s Sunderland plant.
Somerset selection would also represent a boost for Sunak governmentwhich has made the development of green industries a priority.
But it would also signal how Sunak was reluctantly drawn into a global green subsidy race sparked by the US$369 billion. Inflation Reduction Act.
Tata is expected to receive grants for building the site and funding new road links, but the biggest cost will be subsidizing the plant’s energy consumption, which had been the critical factor behind Tata’s decision. .
The Indian group originally requested around £500million in total financial support from the UK, although a final figure is difficult to calculate given that the energy support element of the deal will last for many years.
Tata is also trying to get more money from the UK government for its steelworks in Port Talbot. Ministers have already offered £300m to Tata’s steel operations to help them switch to greener forms of steel production.
Executives, however, dismissed the sum as too small given the estimated capital outlay of between £2-2.5bn needed to move the Port Talbot steelworks in Wales from blast furnaces to arc furnaces less carbon-intensive electricity.
The leaders told officials they were looking for similar levels of support offered to their European rivals, including half the capital investment.
They also want a level playing field on energy costs, as well as a carbon border tax on steel imports, similar to the carbon border adjustment mechanism agreed by the EU last year. Britain’s high energy costs, compared to mainland Europe, were a sticking point in the negotiations.
Tata planned to build the plant with Chinese battery supplier Envision, the same group that operates the Nissan plant.
JLR is set to launch an all-electric Range Rover, one of a family of seven battery-powered cars, as part of a £15bn electrification program next year as it aims to catch up to top rivals range such as Mercedes-Benz and BMW.
Chandrasekaran’s visit to the UK was first reported by the BBC on Wednesday.