Britain’s car industry has been on the decline for some time. Last year, production fell to a 66-year low due to the closing of two plants, a global shortage of semiconductors and supply chain bottlenecks.
It has also faced an existential challenge as rival governments pledge vast amounts of public funds to the development of electric vehicles.
“The reality is that the global battery market is not a free market,” said Andy Palmer, the former CEO of Aston Martin who now chairs Slovak battery maker InoBat.
“It is distorted by huge state subsidies and we either recognize that and respond or see our auto industry slowly deplete.”
On Wednesday, however, the outlook brightened. Prime Minister Rishi Sunak flew by helicopter to Warwickshire, in the west Midlands, to hail a new range of electric JLR vehicles that will be backed by a 4-billion-pound ($5.2 billion) battery factory to be built further south in Somerset.
The U.K. came close to missing out on the new battery plant, with executives at parent company Tata Group considering Spain as an alternative location.
Nine months ago, in the wake of Liz Truss’s resignation, financial markets were still reeling from her disastrous mini-Budget and the country had just welcomed its third prime minister in two months.
Grant Shapps, who was Business Secretary at the time, received a call from Tata executives to say they would not be choosing Britain for the plant.
That phone call triggered a series of conversations between U.K. ministers, officials and senior representatives from Tata including its Chairman Natarajan Chandrasekaran, according to people familiar with the discussions.
In March, Shapps flew to Mumbai, India for a crunch meeting with Chandrasekaran.
At that point, U.K. officials were still concerned Spain would win out and the authorities in Madrid were confident they had clinched the investment, Bloomberg reported at the time. Shapps described Tata’s decision as being on “a knife edge.”
After Shapps’s return, his successor — Kemi Badenoch — sent Chandrasekaran a text message which began months of correspondence between the two over the shape of a possible deal.
By May, the wheels were in motion. Investment Minister Dominic Johnson met Tata executives while on an unrelated trip to India and returned with something close to a final settlement. The deal was finalized after Tata’s Chief Procurement Officer Tom Flack visited Number 10 Downing Street to meet Badenoch and Shapps.