India’s Tata Group revs up Britain’s idling EV drive with US$5 billion battery plant: ‘by 2035, it will all be electric’
- Tata plans to build a 40-gigawatt battery factory that analysts say will be able to meet nearly half of Britain’s battery production needs by 2030
- It represents the single largest investment into Britain’s EV sector and is expected to create 4,000 jobs, helping PM Rishi Sunak fulfil his promises
“The United Kingdom was facing the dire possibility that it would miss out on the EV market altogether as it is way behind the rest of Europe in positioning itself for the transfer away from vehicles propelled by internal combustion engines,” said V. (Paddy) Padmanabhan, a marketing professor at international business school INSEAD.
“Having a domestic battery plant is extremely important to enable domestic EV manufacturing as they are hard to transport across distances.”
“The only remaining player is a Chinese company [Envision group] that makes batteries for the Nissan plant in Sunderland. If all goes well, the Tata plant will be bigger than the Chinese supplier and could easily support the manufacture of hundreds of thousands of EVs in Britain,” Padmanabhan said.
Boost for Sunak
Tata’s new factory represents the biggest single investment Britain has made in EV battery production. It’s not known how much financial support the UK government offered Tata Group, as Whitehall has declined to disclose the figures, but the BBC reported last week that it would amount to hundreds of millions of pounds.
“This will allow the prime minister to claim that his government is committed to creating good jobs and putting in place all the things needed to ensure the UK can support a thriving domestic automobile industry,” Padmanabhan said.
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The new plant is expected to create 4,000 jobs, according to the British government.
Earlier in January, Sunak had outlined five priorities for his tenure including growing the economy and creating better jobs, as well as halving inflation this year.
The Tata investment into EV batteries coupled with an unexpected drop in inflation to 7.9 per cent in June is likely to solidify Sunak’s political pitch around economic competence ahead of next year’s general elections.
Although the Tatas have not disclosed the location of the battery plant, it is expected to be in Somerset in southwest England, while the Jaguar Land Rover factories are based near Birmingham in central England.
According to the new UK-EU trade rules, carmakers can benefit from zero tariffs only if 45 per cent of EV parts – by value – and 60 per cent of the battery components originate from either the EU or Britain.
“Given that Jaguar Land Rover represents close to 25 per cent of UK-manufactured cars, it will obviously be a major beneficiary of this plant,” said Ashish Bagadia, a partner for corporate finance and investment banking at BDO India.
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The move will also help Jaguar Land Rover cars, which are known for fuel-driven premium vehicles, align with future markets, analysts say.
“It is not a matter of choice any more. In five to seven years, electric cars will probably comprise 50 to 60 per cent of the EU’s car market,” said Puneet Gupta, S&P Global – director mobility. “By 2035, it will all be electric.”
“The first thing that anyone is doing today is to retain your share in the local market,” said Gupta, adding that “de-risking” has become a cornerstone for manufacturers.