Jaguar Land Rover proprietor Tata Motors is demanding greater than £500mn of presidency help for a brand new battery manufacturing unit in Britain, in a choice set to be “pivotal” for the way forward for the UK automobile business.

Individuals briefed on discussions say the Indian group is shut to selecting between Spain and south-west England for its plant and has given UK ministers “weeks” to pledge monetary assist.

They added the whole worth of UK help sought by Tata exceeds £500mn, together with grants and assist packages corresponding to help for vitality prices and analysis funding.

The transfer, by the most important employer within the UK automobile manufacturing sector, presents the federal government with a elementary alternative over how a lot assist to present the business as Britain struggles to make the transition from petrol and diesel automobiles to mass-market electrical automobiles.

A UK authorities official stated: “We . . . are participating with them — whether or not or not the talks go wherever will depend on whether or not a closing quantity may be agreed.”

A call by JLR to not supply batteries within the UK could be a physique blow to the British vehicle sector, damaging the nation’s worldwide enchantment to traders, in keeping with business leaders. 

“That is pivotal . . . it will ship a seismic sign internationally” if the Indian firm opts to construct its manufacturing unit exterior the UK, stated one individual acquainted with Tata Motors’ request for British authorities assist. 

The group has considerably elevated the quantity of state assist it’s searching for since talks with the federal government started, stated individuals near the negotiations.

“That is very tough for the federal government,” stated one. 

Tata is analyzing a partnership with Chinese language battery maker Envision that may contain the Asian group constructing and working a manufacturing unit in Somerset to produce JLR’s new vary of electrical automobiles.

PJ Balaji, Tata Motors’ finance chief, stated final month the Indian firm was contemplating a website for battery making “in Europe”.

Spain, Tata’s European different to the UK website, already has pledges to construct battery factories from German carmaker Volkswagen and start-up Inobat.

JLR and Tata Motors, a part of Tata Group, declined to remark. Envision and the UK enterprise division additionally declined to remark.

Regardless of new investments by Nissan, Stellantis and Ford in electrical car know-how, the UK has struggled to draw massive battery firms to arrange factories.

UK automobile manufacturing dwindled final 12 months to its lowest stage for the reason that Fifties, following the closure of Honda’s plant in Swindon. 

The federal government has put aside £850mn to draw battery makers to the UK, and has a number of different monetary assist schemes it might draw on to entice traders.

Ministers supplied greater than £100mn to Nissan for electrical funding at its manufacturing unit in Sunderland. Stellantis obtained about £30mn from the federal government to make electrical vans in Ellesmere Port.

Britishvolt, the start-up that needed to construct a battery manufacturing unit in Northumberland, had been provided £100mn of state funding earlier than its collapse this 12 months. 

In contrast with rivals, JLR is late to launch a variety of electrical automobiles. The group at present has just one electrical automobile — the Jaguar I-Tempo, which is made in Austria by contract producer Magna Steyr. 

JLR has stated it can launch an electrical Vary Rover, its flagship mannequin, subsequent 12 months. 

JLR and Envision, which makes batteries for Nissan in Sunderland, got here shut final 12 months to saying a partnership to construct the battery manufacturing unit in Somerset. 

However Tata delayed an announcement amid political turmoil as Boris Johnson was changed as prime minister by Liz Truss after which Rishi Sunak.

The choice was additionally held again as a result of Tata Group has been concurrently searching for British authorities assist for its UK metal enterprise. 

Ministers have provided about £300mn to attempt to hold Tata’s Port Talbot metal works open.