Taxpayer must help fund £2.5bn British gigafactory, warns Street

CHANCELLOR Jeremy Hunt must be prepared to put up “hundreds of millions of pounds” to ensure plans for the UK’S biggest battery factory go ahead, West Midlands Mayor Andy Street has warned.

The local Tory leader said talks are taking place with unnamed multinational companies about investing in a £2.5bn scheme next to Coventry airport, which could produce enough batteries to power 600,000 vehicles per year. But Mr Street said state subsidies will be essential to getting it over the line if Britain hopes to compete with the likes of China, the US and the EU in the electric car industry.

Jaguar Land Rover is expected to be the biggest customer of the so-called gigafactory if the scheme goes ahead, but earlier this year the carmaker warned it was “exploring all options” as the proposals continued to remain uncertain. Mr Street told The Telegraph: “We have a number of companies interested. But the point is every battery factory in the world has a public subsidy and we will need to agree with the Government on how they subsidise this. It depends on the scale of the factory but it is a very big sum of money, it’s hundreds of millions of pounds. And if you look at what’s happened around the world, that’s standard.”

Mr Street claimed that ministers “have said they will put money on the table” but that potential investors in the Coventry gigafactory had yet to ask for state support. But he added: “It will be key to getting the project over the line.”

Ensuring battery gigafactories are built in Britain is “mission critical” to preventing the demise of the domestic car industry, Mr Street added, because future electric vehicle supply chains will be clustered around them. The Faraday Institution, a publicly-funded body set up to monitor progress of the transition to electric cars, says most of the investment decisions for gigafactories are likely to be made in the next two to three years.

Earlier this year The Telegraph revealed that Tata, the owner of Jaguar Land Rover, had threatened to shift production to Slovakia if ministers refused to offer taxpayer support for a UK gigafactory.

But a decision on whether to back the West Midlands gigafactory project and others will be a key test of the Government’s determination to secure a foothold in the global industry for Britain.

Only two other UK gigafactories are currently in the pipeline, including the endangered Britishvolt scheme.

Britishvolt narrowly avoided collapse last month thanks to a cash injection from Glencore, but the deal is thought to have secured its future only for a period of months. The Government promised grant funding and were asked to release cash early. But these approaches were rebuffed as the Government argued that the company had not met agreed milestones.