Done deal. Tata is a tough cookie and sure knows how to haggle. First takes Britain... what's next?

http://www.guardian.co.uk/business/2009/sep/18/tata-electric-car-uk-state-aid

The government has finally dipped into its eight-month-old £2.3bn aid package for the car industry, lending Tata Motors £10m to assemble an electric car in the UK.

Tata Motors, which owns Jaguar Land Rover, will invest £25m into the project, which could create hundreds of jobs.

It will also see Tata Motors-badged cars on the UK's roads for the first time.

The Indian company will announce shortly where the car will be assembled. Tata claimed the "Indica Vista EV [electric vehicle]" will be the world's first mass-produced family-sized electric car and will be available in Europe by the end of the year.

It developed the four seater at its R&D centre in Warwick. Tata Motors is partnered with Norwegian company Miljø Grenland/Innovasjon which will make the electric batteries. Tata will use its Indica Vista's chassis, which it will ship to the UK for assembly with the battery.

Initially assembly will take place in Norway until the UK site is ready, where the number of cars being produced will ramp up depending on sales.

Tata came close to scrapping its plans to build the car in the UK because of frustration over how long it had to wait to find out if the government would provide financial support. The company had to wait over eight months for a decision.

A spokewoman for Lord Mandelson's business department said that it was difficult to find banks to underwrite the loan, even though many are in state control.

The Government unveiled the £2.3bn automotive assistance package in January in order to kickstart the ailing car industry and help companies develop low carbon technologies.

http://www.telegraph.co.uk/finance/newsbysector/industry/6207514/Mandelsons-car-scheme-offers-first-loan-to-Tata.html

Lord Mandelson, the Business Secretary, unveiled the scheme in January, pledging to support the investment programmes of British-based manufacturers with loans and loan guarantees.

However, negotiations with companies have proved controversial, with Jaguar Land Rover, which is owned by Tata, pulling out of talks and securing its own financing after the Government demanded a say in the business's strategy.

Tata has now become the first company to secure a loan under the scheme, eight months after its launch. The £10m from the Government will support £25m of the Indian company's own investment in plans to develop and manufacture Tata-branded electric cars in the UK.

The company is now "considering locations" in Britain to set up a factory, according to sources close to the talks. An announcement is expected soon. Along with the Tata Motors European Technical Centre at the University of Warwick, which already employs 180 people, the project could support hundreds of jobs.

Lord Mandelson said: "The Government is determined to help the car industry to exploit fully the opportunities offered by green manufacturing. Today we are backing Tata as Tata backs Britain.

"This loan will strengthen our electric vehicle manufacturing expertise, securing and creating high value engineering jobs in the West Midlands."

A spokeswoman for the Business Secretary said the Government was in talks with 17 other companies about projects worth £2bn.

Tata said it "appreciates" the state support. The car maker, led by Ratan Tata, has developed a four-seater electric vehicle in partnership with Norwegian group Miljø Grenland/Innovasjon. Production of the vehicle should begin in Norway later this year.

The AAP is part of the Government's support for the beleaguered car industry alongside the scrappage scheme, which offers consumers a £2,000 incentive to scrap an old car for a new model and has reinvigorated sales in the UK.

The Society of Motor Manufacturers and Traders yesterday wrote to Lord Mandelson to ask for the scheme to be extended to the original end-date of February 2010.

The scheme, which has been so successful that a 24.8pc annual decline in May new car sales was reversed into a 6pc rise in August, means that the £300m of Government funding, enough for 300,000 cars, could run out by October.

There are fears that the end of the scheme, combined with a return to the higher rate of VAT, will cause the market to slump again. Paul Everitt, SMMT chief executive, said: "Avoiding a relapse in demand is critical to the UK economy."