Jaguar Land Rover is discovering that building the future isn't as simple as plugging it in. The British carmaker faces potential delays to the first deliveries of electric car batteries from a £5.2bn government-backed factory in Somerset after construction problems.
The company planned to rely on the Agratas factory in Bridgwater, Somerset, to supply batteries for its new electric models. Agratas and JLR are both owned by Indian industrial conglomerate Tata, making this a family affair - albeit one that's currently arguing about the budget.
The battery factory, only the second in the UK, is widely seen as a key step in the domestic car industry's transition away from fossil fuels. The UK government, clearly hoping to electrify more than just vehicles, promised £380m in subsidies for the plant back in April.
But Agratas has terminated its main construction contractor, Sir Robert McAlpine (SRM), replacing it with Tonroe Group Ltd (TSL). SRM received a letter giving just three weeks' notice that its services won't be needed beyond the end of the month - a firing that's decidedly less graceful than a Jaguar.
When Tata initially announced the gigafactory in 2023, it targeted a 2026 start date, then pushed it to 2027. Now the latest internal start date of January 2028 is also likely to be missed, proving that predicting the future of electric vehicles is almost as hard as building them.
Agratas set a construction budget of about £800m, but the actual cost is likely to exceed that by at least £500m, according to a person with knowledge of the project. Meanwhile, Agratas is also building a gigafactory in Sanand, western India, and its Indian management apparently pushed for UK costs to match - a classic case of comparing apples to, well, different apples in a different orchard.
The budget mismatch caused tensions as contractors including SRM tried to hit targets they saw as impossible. SRM was never under contract, working under a temporary arrangement known as a letter of limited authority for more than two years, billing about £400m without ever reaching a contractual agreement. That's a lot of trust for a handshake deal.
This is the second departure of a leading contractor after TClarke left in March amid reports of a "strained relationship." The departures are likely to be noted by other companies in the supply chain, and may cause concern in government over a project it has backed heavily.
The new contractor, TSL, a privately owned Buckinghamshire business, will have to get up to speed quickly with demanding requirements: building facilities to handle dangerous electrolyte (the liquid through which lithium ions move inside batteries to generate electricity) and constructing one of Europe's largest clean rooms with stringent humidity controls. TSL's main focus is datacentres, though it was involved in building a battery factory for Sweden's now bankrupt Northvolt - a résumé item that might not inspire confidence.
Several parts of the project are behind schedule. Agratas hasn't bought crucial parts for a substation that can take two years or more to arrive. Work hasn't started on an important ring road, and the building itself is well behind schedule due to slowed purchasing decisions.
There's also been relatively high turnover of senior staff at Agratas UK, including the departures of its head of process engineering and vice-president of global manufacturing engineering, while its vice-president of manufacturing operations will take early retirement in August. The revolving door is spinning faster than a EV motor.
Delays could prove challenging for JLR, which depends on its sister company for cells to power its new electric Jaguar and electric Land Rover models, including the already delayed electric Range Rover. JLR chief executive PB Balaji said in November: "We are running against the clock on this one. It is stressed, but we'll do our best to reach there." Translation: We're behind, but we're trying.
Delays could cause significant problems for JLR's efforts to comply with the UK's electric car sales targets (the ZEV mandate). JLR executives doubt they can hit much higher targets in the next few years, potentially leaving them exposed to fines. Their warnings are thought to be a leading motivation for the UK government's decision to water down the mandate.
A lower ZEV mandate target could remove some time pressure for Agratas. However, JLR has also decided to sell more hybrids rather than battery models, which might raise questions over future demand for batteries from Somerset. So the factory might be late, and when it arrives, it might not be needed as much.
An Agratas spokesperson said it had "determined that a different construction delivery model is needed" and thanked their existing partner for support. An SRM spokesperson said they had "mutually agreed to part ways" after successfully completing the first phase. Everyone is being very diplomatic about what appears to be a £500m budget overrun and a delayed timeline.
In other words, the UK's electric vehicle future remains slightly more uncertain than your car's battery charge on a cold morning.