JLR at risk of battery supply delays after Somerset factory turmoil | Jaguar Land Rover
Jaguar Land Rover risks delays in the first delivery of electric car batteries from its £5.2bn state-backed factory in Somerset following construction problems.
The British carmaker plans to rely on its Agratas factory in Bridgwater, Somerset, to supply batteries for its new electric models. Agratas and JLR are owned by Indian industrial conglomerate Tata.
The battery factory, only the second in the UK, is seen as an important step in the domestic car industry’s move away from fossil fuel-powered vehicles. The UK government promised £380 million in subsidies for the facility in April.
However, Agratas terminated its main construction contractor, Sir Robert McAlpine (SRM), and replaced it with another firm, Tonroe Group Ltd (TSL). Agratas informed SRM that its services would not be required after the end of the month and would only give three weeks’ notice by letter.
When Tata first announced the gigafactory in 2023, it targeted the start date as 2026 and then pushed it back to 2027. But it looks like the latest internal start date of January 2028 could also be missed.
Agratas has set a budget of around £800 million for construction, but the actual cost is expected to exceed this by at least £500 million, according to a person with knowledge of the project. Agratas is also building a gigafactory in Sanand in western India. Agratas’ Indian management is thought to have increased costs in the UK to match its other project.
The person said the budget mismatch led to tensions as contractors, including SRM, tried to achieve targets they deemed impossible to achieve. SRM was never subject to the contract but had been operating under a temporary arrangement known as a letter of limited authority for more than two years. SRM billed approximately £400 million during this period, with no contractual agreement reached.
It is the second departure of a leading contractor, following TClarke’s departure in March amid reports of “strained relations”. These departures are likely to be noticed by other companies in the supply chain and could raise concerns in the government about the progress of a project it heavily supports.
Newbuild contractor TSL, a private company based in Buckinghamshire, will need to quickly adapt to the demanding requirements of the massive factory. These include building one of Europe’s largest clean rooms with strict humidity controls, as well as building facilities to process hazardous electrolyte – the liquid through which lithium ions move inside car batteries to produce electricity. While TSL’s primary focus is building data centers, it has also been involved in building a battery factory for Sweden’s now-bankrupt Northvolt.
However, it appears that some parts of the project are behind schedule. Agratas did not purchase the necessary parts to build a substation to connect electricity — equipment that could take two years or more to arrive. Work on a key ring road has yet to start and the building itself is well behind schedule; Many milestones have been delayed due to slow purchasing decisions.
There has also been relatively high senior staff turnover at Agratas in the UK, with some senior staff leaving, including the head of process engineering and vice president of global manufacturing engineering; The vice president of manufacturing operations will retire early in August.
Delays in Agratas starting production could prove challenging for JLR, which depends on sister company to power electric Land Rover models, including the new electric Jaguar and the already delayed electric Range Rover.
JLR managing director PB Balaji said in November: “We are racing against time on this. It is a stressful situation but we will do our best to get there.”
The delays could cause significant problems in JLR’s efforts to meet the UK’s electric car sales targets, known as the ZEV mandate. JLR executives have doubts about whether they can achieve much higher targets over the next few years, which could potentially expose them to penalties. Their warnings are thought to be the main motivation for the UK government’s decision to water down the mandate.
A lower ZEV mandate target could take some of the time pressure off Agratas. However, JLR has also decided to sell more hybrids instead of battery-powered models; This could raise questions about Somerset’s future battery demand.
A spokesperson for Agratas said it had been “identified that a different construction delivery model was needed to support the next phase of our development”.
He added: “After reviewing the requirements of the project, we have decided to move to a new construction partner. We thank our current construction partner for their support to date.
“This change reflects the evolving needs of the project and positions us to complete the next phase with the talent and focus needed to achieve our goals safely, efficiently and on time.”
A spokesman for SRM said: “Following the successful completion of the first phase of Agratas’ battery manufacturing facility in Somerset, we have mutually agreed to part ways following extensive discussions. We are now working closely with Agratas to support a smooth and orderly transition to a new construction partner.”
JLR declined to comment.
