Gigafactories building batteries for electric cars are needed more than ever in the UK and government funding could help make this a reality in Coventry - Labour's Shadow Business Secretary has said.

Jonathan Reynolds MP toured a research facility at the University of Warwick today (March 9) along with MPs Ed Miliband and Louise Haigh to see state of the art developments on electric transport there.

The trio's visit was timed to coincide with a pledge by Labour to commit £2 billion of public money to help companies build eight battery factories across the UK.

Mr Reynolds spoke to the Local Democracy Reporting Service (LDRS) before a presentation to him and other MPs by senior councillors at Coventry City Council.

He explained why the pledge to help fund gigafactories is so important and could make the difference in areas of the UK such as Coventry where plans appear to have stalled.

Planning permission for a gigafactory in Coventry was granted in January 2022 and the project got another £500,000 from the council to help market it to investors.

The project has been billed as vital for Coventry and the wider region, as it could bring in billions of investment and create thousands of jobs.

But negotiations for an investor are still underway and last week it was reported that Jaguar Land Rover's owners are considering building a battery factory in Somerset or Spain.

'We have to be making the batteries in the UK'

Mr Reynolds told the LDRS today: "Automotive is particularly close to my heart, I grew up in Sunderland so you'll be familiar with the big Nissan Factory there – it's a really good example of the tremendous impact a world-class manufacturing facility can have on a local economy.

"I am really worried about the automotive sector as a whole in the UK. I think it's well known that the transition to electric vehicles is a huge issue.

"We have to be making the batteries in the UK if our existing automotive strength is being preserved.

Planning permission for the West Midlands Gigafactory was approved at the start of 2022 (image via Coventry City Council)

"The battery is so much of the value of an electric vehicle. First of all, unless you are building the batteries in the UK over time it's very unlikely the rest of the production will be here as well.

"Specifically, around the Brexit deal and trading corporation agreement the government signed, the value of the battery is such a significant percentage of the vehicle overall that unless the battery is made in the UK they wouldn't qualify under the rules of origin agreement to be UK produced vehicles.

"And of course under what the government has agreed, the percentage UK content has to ramp up over time."

Funding

Asked how they would be funding the £2 billion cash injection, he said: "This comes under our green prosperity plan.

"This is public investment that is designed to leverage in much greater private investment.

"So if you look at gigafactories around Europe you have some degree of public-private partnerships in every single one of those.

"Unless you have a range of incentives available, you are just not on the pitch.

"And what we've seen particularly in the US is a huge package of measures from the Biden administration to attract green investment. You've seen the EU responding to that."

He added: "It's not just about public money but you do need to have a package of incentives or you're not going to attract investment, because the private capital required is so vast."

Labour says it will spend £8 billion on eight new gigafactories (image via SWNS)

Lessons from Britishvolt

The LDRS asked how Coventry's gigafactory plans can avoid the fate of Britishvolt.

The company was set up in 2019 to build a battery factory in Northumberland but after failing to get enough investment it went into administration in January 2023. It has since been bought by an Australian firm.

Mr Reynolds said: "With Britishvolt, it was a start-up company that didn't have a customer.

"Now the government wanted the credit for Britishvolt when it was announced and so they have to accept the accountability for it not going ahead.

"But what will be essential in Coventry is to have a customer for the product if the gigafactory goes ahead.

"And so at the minute what I think is missing is a clear offer from government to be a partner for this site.

"So any gigafactory would be a negotiation between a private provider which would need a customer.

"But there's this incredible sense that the reason we're not getting the follow-through on the early interest is that if you look for interest, and Spain's a good example of a particular rival for us, they have a clear commitment from government that they will get the negotiations, they are putting together a competitive pitch to industry to do that.

"And that is not available in the UK. And of course even if Britishvolt had gone ahead, even if this site was going ahead right now, we would still be very far behind the capacity the UK needs for gigafactories for the existing automotive industry."