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

Folks 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 entire worth of UK help sought by Tata exceeds £500mn, together with grants and assist packages akin to help for vitality prices and analysis funding.

The transfer, by the biggest employer within the UK automobile manufacturing sector, presents the federal government with a basic selection over how a lot assist to provide the trade as Britain struggles to make the transition from petrol and diesel vehicles to mass-market electrical automobiles.

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

A choice by JLR to not supply batteries within the UK could be a physique blow to the British car sector, damaging the nation’s worldwide attraction to buyers, in line with trade leaders. 

“That is pivotal . . . it might ship a seismic sign internationally” if the Indian firm opts to construct its manufacturing facility exterior the UK, mentioned one particular person aware of Tata Motors’ request for British authorities assist. 

The group has considerably elevated the quantity of state assist it’s in search of since talks with the federal government started, mentioned folks near the negotiations.

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

Tata is inspecting a partnership with Chinese language battery maker Envision that may contain the Asian group constructing and operating a manufacturing facility in Somerset to provide JLR’s new vary of electrical vehicles.

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

Spain, Tata’s European various to the UK web site, 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 automobile know-how, the UK has struggled to draw large battery firms to arrange factories.

UK automobile manufacturing dwindled final yr to its lowest degree because the 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 buyers.

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

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

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

JLR has mentioned it should launch an electrical Vary Rover, its flagship mannequin, subsequent yr. 

JLR and Envision, which makes batteries for Nissan in Sunderland, got here shut final yr to asserting a partnership to construct the battery manufacturing facility 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 in search of British authorities assist for its UK metal enterprise. 

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