JAKARTA - Jaguar Land Rover or JLR is said to be considering moving car production from the UK if the government does not provide a subsidy of 380 million pounds sterling for the Agratas battery company.
According to a report by The Guardian, which was quoted on Tuesday, May 5, the warning appeared in a state aid document prepared by the UK competition regulator.
British Business and Trade Department officials in December assessed JLR, the largest automotive employer in the UK, as potentially triggering an exodus of the car industry from the country. The risks mentioned in the document include relocation of production, job losses, and impacts on supply chains.
JLR is owned by Tata Sons, an Indian conglomerate that also controls Tata Steel. Earlier this month, the British government extended a 380 million pound grant to Agratas, Tata's new business building a giant battery factory in Somerset.
The plant will supply batteries to JLR and other carmakers. The investment value has now risen to 5.2 billion pounds, from the initial plan of 4 billion pounds when it was announced in 2023.
In the document, the government warned that Agratas could choose to build a European factory in Spain without British subsidies. If that happens, JLR is considered to be able to move vehicle production closer to battery factories because the cost of producing electric cars will be cheaper.
"DBT explains that, over time, this systemic loss could lead JLR to move its vehicle production closer to its competitor battery plant in Spain," the document said.
JLR employs around 33,000 people in the UK. The company produces the Range Rover and upcoming Jaguar models at Solihull, West Midlands. Other models, including the Discovery Sport, are made at Halewood, Merseyside.
However, JLR denied ever threatening to move production to Spain.
"JLR is committed to manufacturing in the UK. We have never suggested moving the production of our vehicles to Spain in discussions with the government regarding the location of the gigafactory," a JLR spokesperson said, quoted by The Guardian.
The Competition and Markets Authority (CMA) has also asked the government to provide stronger reasons and evidence for the conclusion that the possible relocation of JLR could make most of the UK's automotive production out of the country.
It is not clear whether the threat of leaving is realistic. A government source said the assessment only describes a comparative scenario that does not happen.
The Unite union welcomed the government's support. Des Quinn, Unite's national officer, said the government was on the right side to support the British car industry.
However, the debate on subsidies is not over. To The Guardian, Andy Palmer, a former executive at Nissan and Aston Martin, said car companies would indeed seek the lowest production costs, including through government grants.
According to Palmer, the UK subsidy system needs to be completely revised. "We need a system that supports the entire ecosystem, not just the biggest names," he said.
JLR itself is relatively slow to enter the electric car market. The long-awaited electric Range Rover is delayed, as is the launch of Jaguar as an all-electric brand. Sales of the electric Range Rover are expected to begin this year, while the first new Jaguar reservations will begin in 2027.
The British government said the 380 million pound subsidy for Agratas would strengthen domestic battery production and keep the UK ahead of the transition to zero-emission vehicles.
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