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China’s Chery would use a British plant owned by Jaguar Land Rover to manufacture cars, under proposals backed by the UK government and set to be discussed during Prime Minister Keir Starmer’s visit to Beijing next week.
Under the proposal, the Chinese company would use an existing manufacturing facility owned by JLR to build cars in Britain, according to two people familiar with the discussions. The UK has been actively courting Chery to make its vehicles in the country for the last few years, three people close to the talks added.
While deal negotiations are at an early stage and details are yet to be finalised, Chery and JLR will hold exploratory talks during Starmer’s visit to China, the first by a British premier in eight years. The delegation, which includes key business leaders, will arrive a week after the UK approved a Chinese “super embassy” in London, a scheme that had previously attracted criticism in Washington amid heightened geopolitical tensions.
Peter Kyle, the business secretary, acknowledged that the government wanted Chery to manufacture in the UK and that using an existing JLR plant would be an option.
“If there is a manufacturing facility where there is sort of undercapacity, then [ . . . ] there is a logic to forming partnerships and that could well form one of them,” he told the FT.
A new JLR deal with Chery will be crucial for the government to achieve its target for the UK to produce 1.3mn vehicles annually by 2035, almost double the 738,000 units forecast by the Society of Motor Manufacturers and Traders for 2025.
Chery’s Omoda and Jaecoo models are the fastest-growing Chinese brands in the UK, which has attracted an influx of affordable vehicles from BYD and other Chinese carmakers put off by higher tariffs imposed by the EU on China-built electric vehicles.
But while Omoda executives have not ruled out a new plant in the UK and are looking to build extra capacity, people close to the company have previously cited high energy and labour costs as the main hurdle to producing locally.
A manufacturing venture between a western carmaker and a Chinese rival outside China is relatively in the global automotive industry. But analysts say there is likely to be a rise in the number of such deals in coming years, as plants in Europe struggle with sluggish demand and high production costs.
Chery already owns a plant in Barcelona, which it acquired from Nissan, while it reached another agreement on Friday to buy the Japanese carmaker’s plant in South Africa. Nissan has also not ruled out its Chinese partner Dongfeng using its plant in Sunderland to fill extra capacity.
Chinese rival Leapmotor also has a partnership with Stellantis and will start producing new models at a Spanish plant this year.
JLR, which is owned by Tata Motors of India, already has a joint venture with Chery. In 2024, JLR agreed to license its Freelander brand to Chery to develop electric vehicles using the Chinese group’s platform.
JLR is meanwhile recovering from a devastating cyber attack last summer that prompted at least £196mn of losses. Its car plants in Halewood and Solihull have resumed production after being shut down for more than a month last year.
The company plans to launch an electric version of the Range Rover and relaunch Jaguar as an all-electric ultra premium brand this year.
Despite the planned new EV launches, David Bailey, professor of business economics at the University of Birmingham, said there would probably be spare capacity for one or two new models at JLR’s plants. For both JLR and Chery, producing vehicles in a factory at or near capacity will help bring down the average cost.
“At a time when European plants are under capacity, it’s a way of filling that space and also getting Chinese brands to produce in Europe,” Bailey said. “It’s a potential win-win.”
JLR declined to comment and Chery was not immediately available for comment.
