Indian conglomerate Tata Sons has announced that it will construct a massive $5.2 billion gigafactory in the United Kingdom to build electric vehicle batteries. The new factory will significantly boost the local supply of EV batteries in the UK and aid its efforts to replace internal combustion engine vehicles with zero-emission battery electric cars.
Tata Sons’ UK gigafactory will create an estimated 4,000 jobs on site and many more up and down the supply chain, injecting much-needed cash into the country amid poor economic conditions. The UK government has lauded the announcement, noting that it would bolster the country’s economy and accelerate its electrification efforts.
The new EV battery factory will have a production capacity of around 40 gigawatt hours of EV battery cells per year. UK Energy Security Secretary Grant Shapps estimates this will be enough output to supply the country with one-half of its EV battery needs as Tata will also supply EV batteries to other vehicle brands.
During the announcement, Tata Sons Chairman Natarajan Chandrasekaran said that the EV battery project would “introduce state-of-the-art technology” to the UK and support the transportation and auto industry’s transition to zero-emission vehicles. He stated that the investment would also be crucial to supporting Jaguar Land Rover’s shift to EVs. Tata Motors, which is under Tata Sons’ umbrella, bought Jaguar Cars and Land Rover in 2008.
The UK government is reported to have offered significant financial incentives to Tata Sons to bring the $5 billion project to the country. However, officials stated that the information behind the project was commercially sensitive and declined to provide further details.
The project comes to the UK amid economic uncertainty in the country due to Brexit, the after effects of the coronavirus pandemic and an energy crisis exacerbated by the ongoing Russia-Ukraine war. Multinational corporation Stellantis, which owns car brands Jeep, Maserati, Citroën, Vauxhall and Alfa Romeo has also claimed that trade relations changes caused by Brexit will impact the fledgling electric vehicle industry and slow down electrification.
Under the Brexit deal, companies such as Stellantis will have to pay a 10% tariff when they export EVs to the rest of Europe, increasing EV production costs within the UK and discouraging other EV firms from setting camp in the country. In a written statement to the UK government, Stellantis said that establishing electric vehicle production in the country would boost the UK’s competitiveness on a regional and global scale.
Tata Sons’ investment will be crucial to the growth of the local EV market and the economy in general by ensuring a constant supply of EV batteries and creating new employment opportunities for thousands of Brits.
As Tata Sons joins the likes of QuantumScape Corp. (NYSE: QS) in manufacturing EV batteries, economies of scale and competition could kick in and result in lower prices for batteries, hence reducing the cost of electric vehicles further.
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