Jaguar gets the UK onto the starting grid in the EV race

British government officials describe Tata Group’s decision to build an electric-car battery factory in the UK as a “major vote of confidence” and a huge boost for the country’s auto industry, saying it will create thousands of jobs and help drive economic growth. For once, the hype may be partly justified.
The significance of the £4 billion ($5.2 billion) project shouldn’t be underestimated, though it is more of a lifeline for domestic carmakers rather than their crowning glory. This was the deal the UK couldn’t afford to lose. Much local media coverage focused on the financial incentives that the government must have offered to win the Indian conglomerate’s favor, which some reports put at £500 million — a figure that may turn out to be conservative once the full extent of support is known. Is it worth it? That’s a question of values and priorities. If Britain wants to have a car industry, the answer is yes.

The country plans to move fully to electric vehicles in 2030, when sales of new petrol and diesel cars will end. The battery pack is the single most expensive part of an EV, accounting for 30% or more of the cost. If you can’t manufacture batteries, you won’t have much of a domestic industry. As of last year, the UK was projected to have the ninth-largest battery output in Europe by 2030, with a mere 7% of the planned capacity in Germany, the continent’s biggest auto producer. In other words, it was heading for the status of an also-ran.

Even the 40 gigawatt-hours to be added by the Tata plant would raise Britain only to sixth position, just ahead of Norway, based on 2022 figures from the Faraday Institution, a battery research group. So to say that the project puts the UK in the “fast lane” for EV production, as Energy Security Secretary Grant Shapps told the BBC, looks a little hyperbolic. Still, it gets the country into the race. Car production is a highly integrated multinational business and, like most manufacturing, it thrives on clusters; proximity to suppliers is key. Getting one project of reasonable scale on board raises the likelihood that other companies — including vehicle and parts makers — will follow.

So the importance of the Tata gigafactory extends well beyond the immediate jobs and investment it will generate. Failure to secure this project would have put a real question mark over the long-term viability of the British car industry, which has already shrunk by half in output terms since the 2016 vote to leave the European Union. If the government couldn’t land this deal, what hope could it have elsewhere? Elon Musk’s Tesla Inc. already turned down the UK, saying in 2019 that Brexit had made it too risky to site a gigafactory in the country.