This Department for Business and Trade, subsidy to Agratas Limited is a proposed capital grant of up to £380m for Agratas, funded through the DRIVE35 Automotive Transformation Fund, to enable the investment in the construction of an EV battery factory (gigafactory) by 2035. Specifically, it will help cover capital expenditure in relation to building, equipment, groundworks, internal fit out costs, equipment costs, installation of equipment costs and quality testing costs.
The subsidy secures an estimated £5.2b total capital investment from Agratas, with additional proposals of support from another public authority and the government which does not form part of this referral.
Our key takeaways from the Subsidy Advice Unit (SAU) report are:
- Assessments should clearly describe the underlying policy aim of the Subsidy, explaining which of the impacts it expects to achieve directly through the subsidy as opposed to being ancillary benefits of the wider policy programmes.
- Reasoning and evidence should be included to support any conclusion that relocating production could contribute to a scenario where the majority of current UK automotive production leaves the UK.
- Assessments should set out the specific benefits of the subsidy compared with those of other known or anticipated funding sources. This should include information on why the subsidy is proportionate given those other measures.
- Detail should be included on the selection and assessment process used, including how this ensured the subsidy was limited to the minimum amount necessary.
- Explanations should be included for Principle F on how global competition will limit the potential distortive impacts of the subsidy, including any mitigations which are anticipated.
- Assessments should consider how the recipient may have incentives to supply other UK EV manufacturers on less favourable terms than it supplies JLR, in order to enhance JLR’s competitive position.
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