U.K. Is Said to Plan Car-Battery Factory to Halt Autos Decline

(Bloomberg) -- Britain aims to build an industry-leading car-battery factory to accelerate a push into electric vehicles, people with knowledge of the plan said, as Brexit and an over-exposure to diesel models hurts demand and jobs.

The plant would add to 246 million pounds ($325 million) of battery-related investment announced in July 2017, according to the people, who asked not to be named discussing unpublished plans. While one person said progress is being made, both cautioned against the suggestion that a decision is imminent.

A new plant would provide a much-needed boost for the British automotive industry as Brexit causes companies to review investment plans, a Chinese slowdown weighs on demand, and U.K. measures to cut pollution discourage sales of diesel models.

U.K. Is Said to Plan Car-Battery Factory to Halt Autos Decline

In the past two months alone, Jaguar Land Rover Automotive Plc announced it would cut 4,500 jobs, mostly in the U.K., Nissan Motor Co. scrapped plans to build the X-Trail sport utility vehicle in Sunderland, northeast England, and Honda Motor Co. said it will close its only British factory in 2021. Ford Motor Company has also warned of dire consequences for its U.K. sites in the event of a hard Brexit, and PSA is reviewing the future of its Vauxhall brand plants.

Honda’s move highlighted the importance of electric cars in determining how automakers allocate funds, with the group opting to focus all such production on Japan. That suggests it views the U.K. as unattractive for investment, said David Bailey, professor of industrial strategy at Aston Business School.

Britain identified the development and manufacturing of electric vehicles as a central element of its so-called automotive sector deal announced last year and intended to form a key plank of U.K. industrial strategy.

The people declined to identify any companies that might be involved in the battery project, after the Sunday Times reported that ministers were in talks with BMW AG, Geely Automobile Holdings, JLR and Nissan. JLR told Bloomberg the report was “speculation.” while Nissan declined to comment and BMW and Geely couldn’t immediately be reached.

One of the officials said Britain wants not only to develop the next generation of batteries, but also to build up the relevant manufacturing skills.

©2019 Bloomberg L.P.