The plant could prove to be significant for UK electric vehicle manufacturing. Credit: Valdis Skudre via Shutterstock.

Jaguar Land Rover owner Tata has finalised plans to build its flagship European electric vehicle (EV) battery plant in Somerset, UK, after months of talks with the country’s government.

According to the BBC, Tata said it will invest £4bn ($5.1bn) into the project, but the UK Government is expected to pour hundreds of millions of pounds in subsidy support into the site, a necessary measure to secure the deal against rival bids. Before the UK was officially selected, Tata was strongly considering Spain as the host of the new battery factory.

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Sources say that a significant sum in incentives has been provided, although an exact figure has not yet been disclosed. These are likely to come in the form of cash grants, discounts on energy costs, and training and research funding, the BBC reports.

The plant is expected to create 4,000 jobs in the UK and thousands more in the wider supply chain.

Production at the site is currently scheduled to begin in 2026, with plans to supply EV batteries to other car manufacturers. The gigafactory will be one of the largest in Europe and has been touted by some in the industry as the most important investment into the UK’s automotive industry since Nissan moved operations to the UK four decades ago.

The deal comes at a critical time for EV manufacturing in the UK as the country’s competitiveness regarding energy transition subsidies falls behind US and the EU offerings. Several automakers and battery producers have already announced moves from the UK to the US this year citing more competitive subsidies.

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In April, AMTE Power, the UK’s last homegrown battery producer, said it was considering moving the site of its proposed battery gigafactory from Dundee in Scotland to the US to take advantage of green incentives offered by the Inflation Reduction Act. Just one month later, Stellantis, one of the world’s biggest carmakers, said that its operations in the UK could also be under threat due to Brexit trade tariffs.

The UK Parliament is holding an inquiry into the UK’s failing EV manufacturing sector. Darren Jones, chairman of the Business and Trade Committee, said that Tata’s decision to choose the UK for its new site is welcome, but questioned the scale of government subsidies.

“We will want to reflect, however, on the subsidy package that was required to secure this decision and if this approach is scalable to meet the need for further battery manufacturing sites for other car companies across the UK,” he told the BBC.