Jaguar Land Rover-owner Tata has confirmed plans to build its flagship electric car battery factory in the UK.
The new plant in Somerset is expected to create 4,000 UK jobs and thousands more in the wider supply chain.
Tata said it will invest £4bn in the site but it is understood that the government is providing subsidies worth hundreds of millions of pounds.
The plant is described as the most important investment in UK automotive since Nissan arrived in the 1980s.
The new gigafactory will be one of the largest in Europe and will make batteries for Jaguar Land Rover vehicles like Range Rover, the Defender and the Jaguar brands.
The plan is to supply other car manufacturers as well, with production at the new factory is due to start in 2026.
Tata have been in negotiations for months to secure state aid for the project. The company did consider a rival site in Spain for the battery plant.
Sources said a significant level of subsidy has been provided, which are likely to be in the form of cash grants, discounts on the cost of energy, and training and research funding. The size of the incentive package has not been disclosed.
Prime Minister Rishi Sunak said: “With the global transition to zero emission vehicles well underway, this will help grow our economy by driving forward our lead in battery technology whilst creating as many as 4,000 jobs, and thousands more in the supply chain.”
Liberal Democrat Treasury spokesperson Sarah Olney MP said: “This is a welcome move by Jaguar Land Rover after years of the south west being neglected by Government investment.”
The plant is Tata’s first outside India and, it is hoped, will help the car manufacturing sector transition from petrol and diesel to making electric vehicles.
The Society of Motor Manufacturers and Traders said that the investment comes at a critical time for the UK.
“With the global industry transitioning at pace to electrification, producing batteries in the UK is essential if we are to anchor wider vehicle production here for the long term,” said SMMT chief executive Mike Hawes.