Jaguar Land Rover is in advanced talks with battery supplier Envision AESC to supply its Range Rover and Land Rover electric models, in a move likely to pave the way for a new UK gigafactory.

Envision AESC makes batteries for Nissan and is investing £450mn in a dedicated gigafactory at Sunderland to supply the Japanese carmaker.

But the size of the deal with JLR, which is Britain’s largest carmaker and is aiming to sell only zero-emission models in the next decade, will require another factory, according to three people familiar with matter.

Sites are being considered in the UK as well as Hungary and Spain, though JLR’s strong preference is to source the batteries from Britain if possible, according to two of the people.

The company has already said its flagship Solihull plant will be its main centre for electric vehicles, including a battery-driven Range Rover from 2024.

JLR is Britain’s last main auto plant operator yet to decide on its battery sourcing, and the UK’s final chance for securing new large-scale gigafactories on home soil.

While the UK has secured new battery sites from Envision AESC and the start-up Britishvolt, the industry has warned it needs more investment to support the network of plants, which employ more than 100,000 people in car or van production.

A new UK battery plant would provide a further safeguard for Britain’s car industry as it prepares to pivot from engines to zero-emission vehicles in the coming decades.

On Friday, InoBat, another battery start-up, also said it was considering sites in the UK and western Europe for a new battery plant to follow its debut facility in Slovakia. It is considering two UK sites, one in Teesside and one in Humberside, according to people familiar with the discussions.

One possible UK site for a new JLR Envision plant is the former steelworks at Redcar in Teesside, which has large amounts of space and access to renewable energy, one person said. The businesses are in talks with government ministers about securing funding to help secure a UK plant.

If selected, the Redcar site would be the third battery plant in the North East, after Envision’s Sunderland facility and Britishvolt’s site at Blyth.

JLR said: “We are exploring all options at this time. No decisions have been made.” It declined to comment further.

Envision AESC said: “We are in regular contact with several OEMs [carmakers] and wouldn’t comment on private discussions.”

Under the leadership of former Renault boss Thierry Bolloré, JLR has pledged to phase out engines during the 2030s, and the company signed the COP26 pledge to sell only zero emission vehicles worldwide by 2040 if possible.

Earlier this week, former Nissan executive Andy Palmer, who chairs battery start-up InoBat, said the UK needed to attract more battery investment to safeguard its carmaking plants.

“If the United Kingdom does not establish at least four gigafactories in the next five years, we risk losing our entire auto industry” he told the SMMT’s Electrified conference in London on Wednesday.

On Friday, InoBat confirmed it is looking at the UK, as well as sites in western Europe, for an additional factory to follow its debut site in Slovakia. A decision will be made this year, the company said.

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