(Bloomberg) --

Group Lotus Plc and Britishvolt Ltd. have signed a preliminary agreement to explore teaming up on battery manufacturing, research and development, according to people familiar with the matter.

The companies plan to share details of their memorandum of understanding next week, said the people, who asked not to be identified ahead of the announcement. Representatives for Lotus and Britshvolt declined to comment.

The deal is the first official tie-up with a carmaker for Britishvolt and an important step for the company looking to cement its credibility with prospective investors. The startup has done two rounds of fundraising and said last year it’s considering a listing on the London Stock Exchange.

Britishvolt has started work on a 2.6 billion-pound ($3.5 billion) factory site in Blyth, England, that the company has said will eventually create about 3,000 jobs. At full capacity, the plant will produce enough battery cells for more than 300,000 electric vehicle battery packs a year.

The U.K.’s auto industry trade group has warned the country’s carmakers have little time to scale up its battery-making sector before the Brexit deal reached in late 2020 subjects vehicle trade to stricter content requirements for tariff-free trade. Britishvolt has said its factory will be operational by the end of 2023.

The U.K. is banning sales of new cars powered only by gasoline and diesel engines by 2030. Prime Minister Boris Johnson’s government is trying to avoid falling behind in a transcontinental competition to chip away at the dominance of Asian battery manufacturers. Johnson has committed 1 billion pounds to help build factories that can produce at scale.

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