Jaguar Land Rover’s under-construction gigafactory in Somerset has been handed a £380 million taxpayer grant as part of a £700 million package designed to cement Britain’s place in the global race for electric vehicle manufacturing, and, crucially for smaller firms, to pump money into the supply chain that will feed it.
Announcing the funding at the Bridgwater site on Wednesday, business secretary Peter Kyle framed the intervention as the clearest signal yet that Whitehall intends to stay on the pitch where previous administrations, in his view, hovered on the sidelines. “In an unstable world,” he said, the government’s industrial strategy was about giving investors “the stability and confidence they need” to plan a decade ahead.
For the SME community watching nervously from the edges of the automotive ecosystem, the more interesting numbers sit beneath the eye-catching JLR headline. Of the remaining £320 million, £100 million has been earmarked for firms in the West Midlands and the North East to retool factories and retrain workers for the EV supply chain, while a further £47 million will flow to smaller battery innovation projects. Additional tranches will support the adoption of AI, robotics and digital manufacturing techniques among smaller engineering businesses, alongside skills funding for sixth forms and further-education colleges.
The headline beneficiary remains Agratas, the Tata-owned battery business 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 Agratas’s existing facility in Gujarat. JLR has pledged to end internal combustion engine production by 2036.
Bridgwater will become Britain’s second gigafactory of meaningful scale, joining Nissan’s operation in Sunderland, which is already supplying cells for the Leaf and is gearing up to produce electrified versions of the Juke and Qashqai. JLR and Nissan, between them the country’s two largest automotive employers, will share a further £90 million ring-fenced for research and development aimed at lowering costs in next-generation EV platforms.
The announcements sit under the umbrella of Drive35, the government’s decarbonisation blueprint launched last year, which commits £4 billion to the sector through to 2035. Ministers claim the programme will ultimately generate 50,000 jobs and unlock £7.5 billion in private investment, figures which, while ambitious, will depend heavily on whether smaller UK suppliers can scale quickly enough to capitalise.
Among the smaller firms to benefit are Birmingham-based HyProMag, which recycles rare-earth magnets used in EV motors, features on the winners list, as does Maeving, the Coventry electric motorcycle manufacturer, and Elm Mobility of Banbury, a specialist in last-mile delivery vehicles. Also named is McMurtry Automotive, the Cotswold-based hypercar maker founded by the late Renishaw co-founder Sir David McMurtry, which is producing electric track cars priced at around £1 million apiece.
Not every recipient, however, is in robust health. Surface Transforms, the Liverpool carbon-ceramic brake disc specialist, was named as a scale-up funding winner despite having called in administrators last month, triggering the cancellation of its Aim listing. A Department for Business and Trade official confirmed the company had been “successful in the application process” but was yet to clear the financial due diligence required to release any money, a detail likely to raise eyebrows in the investment community.
In a departure from standard grant-making, the government has also moved to take a 10 per cent equity stake in listed hydrogen specialist ITM Power, comprising 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 participation in a listed green technology company and may set a template for future interventions.
The timing of the package is no accident. Figures from the Society of Motor Manufacturers and Traders this week showed March new car sales up 6.6 per cent year on year, the strongest monthly performance since 2019 and evidence, ministers argue, that consumer confidence in the UK automotive market is returning. Set against geopolitical volatility, fragile supply chains and an intensifying global scramble for battery manufacturing capacity, the government’s message to industry — and to the international investors it is courting — is that Britain is open for long-term business.
For the SMEs operating in the slipstream of JLR and Nissan, the question now is execution. Grants and gigafactories make for compelling photo calls; building a resilient, globally competitive domestic supply chain in under a decade is a rather harder proposition. The Bridgwater site alone is expected to generate 4,000 jobs when fully operational. Whether the thousands more promised across the wider ecosystem materialise will depend on whether the smaller firms now being backed by Whitehall can deliver at the pace the transition demands.
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JLR battery plant lands £380m as government unveils £700m EV package