A plant under construction by Jaguar Land Rover in Somerset has been given a £380 million grant as part of a £700 million package designed to position Britain in the global race to produce electric cars, and, especially for smaller firms, to pump money into the supply chain that will supply it.
Announcing the funding for the Bridgwater area on Wednesday, business secretary Peter Kyle framed the intervention as a clear sign, however, that Whitehall intends to remain on the ground where previous administrations, in his view, stood aside. “In an unstable world,” he said, the government’s industrial strategy was about giving investors “the stability and confidence they need” to plan for the next decade.
For a community of SMEs peering nervously at the fringes of the automotive ecosystem, some interesting numbers reside under the eye-catching title of JLR. Of the remaining £320 million, £100 million has been earmarked for firms in the West Midlands and North East to re-use factories and retrain EV supply chain workers, while another £47 million will flow to small battery innovation projects. Additional sections will support the adoption of AI, robotics and digital manufacturing techniques among small engineering businesses, as well as skills funding for sixth forms and further education colleges.
The headline beneficiary remains Agratas, the Tata-owned battery company and sister company to JLR, whose Bridgwater plant will eventually supply cells for Range Rover and Jaguar models rolling off West Midlands production lines from 2028. The first battery-powered Jaguars are expected on the road next year, using cells produced at the existing Agratas plant in Gujarat. JLR has promised to end production of the internal combustion engine by 2036.
Bridgwater will be Britain’s second largest plant of the scale, joining Nissan’s operation in Sunderland, which already supplies cells for the Leaf and is preparing to produce electrified versions of the Juke and Qashqai. JLR and Nissan, which are among the country’s biggest car hire companies, will share a £90 million fund earmarked for research and development aimed at reducing costs in EV networks.
The announcements are under the umbrella of Drive35, the government’s decarbonisation plan launched last year, which commits £4 billion to the sector until 2035. Ministers say the plan will ultimately generate 50,000 jobs and unlock £7.5 billion in private investment, figures which, while ambitious, will be heavily dependent on the UK’s microfinance provision.
Among the small firms to benefit are Birmingham-based HyProMag, which recycles rare earth magnets used in EV motors, features on the winning list, as does Maeving, a Coventry-based electric motorcycle manufacturer, and Banbury-based Elm Mobility, a specialist in last-mile delivery vehicles. Also named is McMurtry Automotive, the Cotswold-based carmaker founded by the late Renishaw founder Sir David McMurtry, which produces electric cars worth around £1 million each.
However, not all recipients are healthy. Surface Transforms, the Liverpool carbon-ceramic brake disc specialist, has been named the winner of the major funding despite calling in administrators last month, leading to the cancellation of its Aim listing. An official from the Department of Business and Trade confirmed that the company had “passed through the application process” but had to clear the due diligence required to release any money, which is likely to raise eyebrows in the investor community.
Moving away from the usual grant-making, the government has also taken a 10 per cent stake in listed hydrogen specialist ITM Power, which includes a £40 million cash injection and a £46.5 million grant for the company’s electrolyser development programme. The move marks one of the clearest examples yet of direct state involvement in a listed green technology company and may set the template for future interventions.
Package time is not a risk. Figures from the Society of Motor Manufacturers and Traders this week showed new car purchases in March rose 6.6 per cent year-on-year, the strongest monthly performance since 2019 and evidence, ministers argue, that consumer confidence in the UK car market is returning. Against the background of the country’s instability, faltering supply chains and a growing global dispute over battery production, the government’s message to industry – and to international investors – is that Britain is open for long-term business.
For SMEs operating in the slipstream of JLR and Nissan, the question now is execution. Grants and gigafactories make compelling picture calls; building a strong, globally competitive domestic supply chain in less than a decade is a very difficult proposition. The Bridgwater site alone is expected to generate 4,000 jobs when fully operational. Whether the thousands more promised across the wider environmental system will be realized will depend on whether the small firms now backed by Whitehall can deliver on the pace of change.
