The UK government has announced £700 million in grants and support to boost electric vehicle manufacturing, with Jaguar Land Rover’s Somerset gigafactory receiving the largest share at £380 million.
Business Secretary Peter Kyle revealed the funding package during a visit to the Bridgwater construction site. He positioned the investment as central to the government’s industrial strategy.
“In an unstable world, our modern industrial strategy is providing investors with the stability and confidence they need to plan not just for the next year but for the next ten years and beyond,” Kyle said at the site.
He added that the commitment would help keep advanced manufacturing “a thriving sector in the UK for decades to come.”
Agratas Leading Battery Production
The Bridgwater gigafactory is being built by Agratas, the battery division of India’s Tata Group, which owns JLR. The plant will supply batteries for electric Range Rovers and Jaguars manufactured at JLR’s West Midlands facilities.
The first British-made batteries are expected in 2028.
JLR’s first electric Jaguars, launching next year, will use batteries from Agratas’s current facility in Gujarat. The company plans to stop making petrol and diesel vehicles by 2036 – making the Somerset plant essential for its electric future.
Bridgwater will become Britain’s second large-scale gigafactory, joining Nissan’s Sunderland operation. Nissan already produces batteries for the Leaf and is preparing to supply the electrified Juke and Qashqai models.
Funding Distribution
The remaining £320 million will be distributed across multiple initiatives:
- £90 million shared between JLR and Nissan for joint research and development to reduce EV production costs
- £100 million for West Midlands and North East companies to retool factories and train workers
- £47 million for smaller battery innovation projects
Additional funding will help smaller companies adopt digital technologies, AI, and robotics. Skills training programs in schools and universities will also receive support.
All announcements fall under the government’s Drive35 strategy, launched last year to decarbonize the automotive industry within a decade. Ministers expect the program to create 50,000 jobs and unlock £7.5 billion in private investment.
Smaller Companies Get Support
Several smaller innovators received funding. Winners include HyProMag of Birmingham, which makes rare-earth magnets for EV motors, and Coventry-based Maeving, an electric motorbike manufacturer.
Elm Mobility of Oxfordshire, which builds delivery vehicles, also made the list. So did McMurtry Automotive from the Cotswolds, maker of the £1 million Spéirling electric hypercar.
Surface Transforms, the Liverpool-based carbon-ceramic brake disc specialist, was selected despite recently entering administration. A Whitehall source noted the company “has been successful in the application process but has not yet undergone the financial checks and due diligence required to receive the funding.”
In a departure from typical grants, the government will take a 10% stake in hydrogen company ITM Power. This includes a £40 million equity injection and £46.5 million grant for electrolyser technology.
Market Context
The announcement comes as the Society of Motor Manufacturers and Traders reported new car sales hitting a seven-year high. March registrations rose 6.6% – the strongest performance since 2019.
That growing demand supports the case for domestic battery production as global competitors invest heavily in their own supply chains.
Kyle argued that policy certainty has become “a competitive advantage” amid geopolitical instability and supply chain challenges. Through Drive35, the government has pledged £4 billion to the automotive sector through 2035.
This represents the industry’s largest long-term commitment since the post-war era.
The Somerset gigafactory alone will create 4,000 jobs and include a “smart campus” for workers. Built using British steel, it’s designed to anchor a domestic battery supply chain and reduce reliance on imported cells.
The facility will complement existing investments in Sunderland, Coventry, and Bolton. For an industry watching competitors in Europe, North America, and Asia chase the same EV investment opportunities, the government’s message is clear: Britain is serious about securing its share of the electric vehicle market.
