Jaguar Land Rover owner Tata Group is investing £4 billion to build an electric car battery gigafactory in the UK.

It is understood that the project is backed with £500 million from the UK government.

The Indian company has earmarked a site in Somerset to serve the JLR plant in the Midlands in what would be a huge boost to the UK car manufacturing sector.

It plans to create 4,000 jobs producing 40 gigawatt hours (GWh) of batteries a year which will help secure a vital battery source. It follows the failure of the Britishvolt project in northeast England which put the future of the car industry in doubt.

There are currently two plans for large-scale battery plants in the UK – a 38GWh plant at the Envisionplant in Sunderland, which is owned by a Chinese corporation and supplies Nissan, and the other in Dundee where AMTE Power is looking at a facility capable of producing over eight million battery cells a year.

Thurso-based AMTE Power, however, is running out of cash and at the end of last month announced that it has appointed FRP Corporate Finance to consider “all credible options”, including a sale of the company’s business.

Tata confirmed it has chosen the UK over a rival site in Spain and that the plant will also supply other manufacturers.

The site near Bridgwater, known as the Gravity Smart Campus, is owned by Salamanca Group, a privately held, London-based merchant bank specialising in property and infrastructure investment. 

Some in the car industry have described the investment the most important in the UK automotive sector since Nissan came to Britain in the 1980s.

In a statement this morning, N Chandrasekaran, chairman of Tata Sons, said: “The Tata Group is deeply committed to a sustainable future across all of our business. 

“Today, I am delighted to announce the Tata Group will be setting up one of Europe’s largest battery cell manufacturing facilities in the UK. Our multi-billion-pound investment will bring state-of-the-art technology to the country, helping to power the automotive sector’s transition to electric mobility, anchored by our own business, Jaguar Land Rover. 

“With this strategic investment, the Tata Group further strengthens its commitment to the UK, alongside our many companies operating here across technology, consumer, hospitality, steel, chemicals, and automotive. 

“I also want to thank His Majesty’s Government, which has worked so closely with us to enable this investment.

Prime Minister, Rishi Sunak said:  “Tata Group’s decision to build their new gigafactory here in the UK – their first outside of India – is a huge vote of confidence in Britain. This will be one of the largest ever investments in the UK automotive sector.

“It will not only create thousands of skilled jobs for Britons around the country, but it will also strengthen our lead in the global transition to electric vehicles, helping to grow our economy in clean industries of the future.”

The battery gigafactory will produce high-quality, high-performance, sustainable battery cells and packs for a variety of applications within the mobility and energy sectors.

The company’s strategic growth plans for its flexible manufacturing capacity will begin with a rapid ramp-up phase and the start of production in 2026. The gigafactory intends to maximise its renewable energy mix, with an ambition for 100% clean power.

The plant will employ innovative technologies and resource efficient processes like battery recycling to recover and reuse all the original raw materials to deliver a truly circular economy ecosystem.”

he announcement came ahead of three difficult by-elections for the Conservative Party on Thursday, including one in Somerset.