Finally hope for British car manufacturers as Jaguar’s new electric XJ will be built in Birmingham

Jaguar Land Rover

Jaguar Land Rover is set to pump hundreds of millions of pounds into British car making — a rare dose of good news for an industry battered by Brexit uncertainty and the shift away from diesel.

Britain’s biggest automotive manufacturer is this week expected to reveal that it will build an all-electric version of its XJ luxury saloon at its Castle Bromwich factory in Birmingham. It will be the first of three electric cars to be built from a new common skeleton, offering a reprieve to the 2,500 workers at the former Spitfire aircraft plant, who recently agreed to work a four-day week.

The factory will shut for six weeks so that the production line at Castle Bromwich can be retooled, with work due to begin within days. The new XJ will be capable of travelling almost 300 miles on a single charge and is expected to arrive on forecourts next year.

It will be followed by a large electric sports utility vehicle (SUV), with a third electric model also in the works.

Jaguar’s decision comes at a pivotal time for the industry, which has been hit hard by Brexit uncertainty, the collapsing Chinese market and plunging sales of diesel cars. Bosses have warned that a no-deal Brexit would crush its competitiveness by piling on 10% tariffs and causing gridlock for supply chains that rely on just-in-time delivery.

The industry is on a collision course with Boris Johnson, the frontrunner to be prime minister, who has repeatedly said he will take Britain out of the EU by October 31 — with or without a deal. Jaguar’s boss, Ralf Speth, has been trying to secure assurances over the future trade relationship with the EU.

Nissan secured a secret promise of state aid from the government in 2016 to insulate it from a hard Brexit. Sources close to Jaguar said the Castle Bromwich investment was going ahead without government cash.

Ministers are expected to help with the cost of upgrading infrastructure such as power cables, though, and have provided funds for research and development.

Jaguar has already made an impact in the fast-growing electric car market with its I-Pace, which was named European Car of the Year in March. However, that is built at Magna Steyr in Austria. The new XJ will pit Jaguar squarely against Tesla, and it is hoped the model will appeal to chauffeur-driven Chinese executives.

Jaguar is in the middle of a deep cost- cutting drive designed to save £2.5bn, which includes axing 4,500 jobs. It lost £3.6bn last year after taking a £3.1bn impairment charge due to plummeting demand for its saloons and the lower value of its diesel technology. It sold 579,000 cars in the year to March, a 5.8% fall. Sales in China plunged by 34.1%.

The batteries for Jaguar’s models will come from a new assembly plant at nearby Hams Hall in Birmingham; the electric motors will be built at its huge engine complex near Wolverhampton.

The XJ is expected to feature hybrid and petrol engines at a later date. It will be built on Jaguar’s new “modular longitudinal architecture” — a base structure that will form the common skeleton of several models.

Castle Bromwich will continue making XE and XF saloons alongside the new electric models. It hopes to sell about 15,000 of the luxury saloons each year.

The investment comes amid a wave of change for Britain’s car industry. Ford has said it will close its Bridgend engine factory in South Wales in 2020 with the loss of 1,700 jobs, after unions failed to convince the Detroit-based giant to make electric car technology there.

BMW is due to begin making electric Minis at its Oxford factory from November, but has warned that it could quit the UK if Britain leaves the EU without a deal.

Nissan has been making its electric Leaf at its Sunderland factory since 2013.