JLR's parent company Tata Motors is currently weighing up whether to build the factory somewhere in the south west of England or in Spain.
It is said to want an aid package including grants, help with energy costs and cash for research and develop[ment.
Talks are currently taking place between the motors group and the Government.
Tata Motors chief financial officer PB Balaji confirmed plans for a European battery plant at Auto Expo 2023 in Delhi, India.
He said it would primarily supply JLR, which has its engine manufacturing centre at the i54 to the north of Wolverhampton, and India-based Tata Motors but will also sell batteries to the wider market.
The plan is to produce cells using two chemistries – lithium iron phosphate and nickel manganese cobalt – with the latter earmarked for JLR vehicles.
It could be a significant step towards ensuring JLR complies with European ‘Rule of Origin’ regulations for electric vehicles, which become stricter from 2024. The rules currently require at least 40 per cent of the content in an electrified vehicle sold in the UK or EU to be sourced from the region, but become five percentage points tougher from next year.
For battery packs, this change will be more severe, with the minimum threshold for locally sourced content doubling from 30 to 60 per cent.
JLR ise in the early stages of ramping up EV production across its range of cars. Currently, the Jaguar I-Pace is the only fully electric vehicle in its range.
It plans to launch an electric Range Rover in 2024.
JLR and Tata Motors have declined to comment on the battery factory plans.