Tata Group Set to Build Flagship Electric Car Battery Factory in the UK

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Tata Group

The Chair of Tata Group, Natarajan Chandrasekaran, is scheduled to meet with Prime Minister Rishi Sunak next week to discuss plans for the establishment of a flagship electric car battery factory in the UK. The talks are expected to lead to an announcement confirming Tata’s selection of a site in Somerset over a competing location in Spain, with the intention to supply Jaguar Land Rover, the UK-based carmaker owned by Tata Group.

While Downing Street and Tata declined to comment on the specifics, government insiders express optimism, indicating a positive outcome for the discussions. Several senior Conservatives believe a deal is imminent, and it is hoped that the gigafactory, situated near the M5 motorway in Bridgwater, will be officially announced in the near future.

The decision to choose Somerset as the location for the factory comes after months of deliberation, during which ministers offered Tata a substantial support package worth hundreds of millions of pounds. This package includes energy cost subsidies for the plant, which will be subsidized by taxpayers for an extended period.

If Tata selects Somerset, it will provide a significant boost to the struggling UK auto sector, which has faced challenges in attracting battery investments and experienced a nearly 50 percent decline in car production over the past three years. The Bridgwater plant would be the second large battery factory in the UK, following the gigafactory that supplies batteries to Nissan’s plant in Sunderland.

Choosing Somerset would also align with the priorities of Prime Minister Rishi Sunak’s government, which has emphasized the development of green industries. The move would also highlight the UK’s participation in a global race for green subsidies triggered by the United States’ $369 billion Inflation Reduction Act.

Tata is expected to receive grants for the construction of the site, as well as funding for new road connections. However, the primary cost lies in subsidizing the factory’s energy consumption, which played a critical role in Tata’s decision-making process.

Additionally, Tata is seeking increased financial support from the UK government for its Port Talbot steelworks. While ministers have offered £300 million to assist Tata’s steel operations in transitioning to greener forms of steel production, executives argue that this amount is insufficient given the estimated capital expenditure of £2 billion to £2.5 billion required for the conversion to less carbon-intensive electric arc furnaces. Tata executives have requested comparable levels of support offered to their European counterparts, including assistance with approximately half of the capital expenditure and a level playing field regarding energy costs.

Tata’s plan involves collaborating with Chinese battery supplier Envision, the same group that operates Nissan’s plant. Jaguar Land Rover is set to introduce an all-electric Range Rover next year, as part of a £15 billion electrification program aimed at catching up with premium rivals such as Mercedes-Benz and BMW.

The visit of Natarajan Chandrasekaran to the UK was initially reported by the BBC, highlighting the significance of the upcoming discussions between Tata Group and the UK government. As the electric vehicle industry continues to expand, the establishment of a flagship electric car battery factory in the UK will contribute to the country’s efforts to transition to sustainable transportation and promote green industries.