What does Tata battery investment mean for EV UK?

  • Tata confirms new battery gigafactory will be based in the UK giving the EV sector a big boost
  • Largest ever automotive investment in the UK supports EV sector
  • What does this news mean for the future of EVs and EV manufacturing in the country?

Jaguar Land Rover owners Tata confirmed that its new EV battery gigafactory will be built on a site in the south west of the UK. This comes after earlier rumours that the company was deciding between building the facility in the UK or Spain.

The factory is set to become one of the largest battery factories in Europe. It will be able to produce 40GW worth of battery cells annually, to deliver “electric mobility and renewable energy storage solutions for customers in the UK and Europe”. This works out at around 500,000 EV batteries per year, considering the average 80kW battery capacity within an electric car.

- Advertisement -

Whilst Tata are reported to have invested £4bn in this new facility, the UK government has also provided subsidies. The exact figure has not been revealed, but the government previously offered £500m in subsidies to Tata in May.

What does this breakthrough mean for the UK electric car industry, however? Here are all the points that hint at further EV development within Britain.

Cheaper electric cars

This move by Tata to base its battery production within the UK could be great news for the UKs cheapest electric cars, especially if other manufacturers decide to follow suit. Not only is the closer supply chain cheaper in logistical terms, but it also sidesteps expensive import tariffs that can be passed onto the consumer.

We asked the commercial director of AutoTrader, Ian Plummer, for his thoughts on Tata’s announcement, who also echoed this theory:

“With electric batteries often accounting for as much as 40% of the cost base of EVs, a figure well in excess of the equivalent for a petrol or diesel car, the need for localised battery production near to car assembly plants is well documented. Without UK battery production, there’s simply likely to be less car production in future years, as well as less affordable electric cars sold to UK car buyers.”

Will more manufacturers choose the UK for their battery factories?

The EU and UK’s post-Brexit trade deal stipulates that for free trade of EVs, the vehicles will need to be made up of 45% EU/UK components, with this figure rising over the next couple of years. If these targets are not met, car manufacturers will have to face UK and EU import tariffs of 10%, pushing up the cost of EVs.

The EU and UK’s post-Brexit trade deal stipulates that for free trade of EVs, the vehicles will need to be made up of 45% EU/UK components, with this figure rising over the next couple of years. If these targets are not met, car manufacturers will have to face UK and EU import tariffs of 10%, pushing up the cost of EVs.

This incentivisation would unmistakably draw more manufacturers to the country, but those in the industry still have some concerns about this announcement:

“There is a genuine fear in the industry that it could sweep up all available government support, which would be hugely detrimental to the future health of U.K. plc in the race to zero. We have some world class battery and EV talent and we must support them as much as we can to prevent this valuable resource of innovators moving to other more receptive markets.”

Quentin Wilson, Founder of FairCharge

“As a long-time advocate for government support of the nascent UK battery industry, I, like any sensible onlooker, welcome the news. However, I also air caution and so should the industry. If the UK dishes out the bulk of its battery-related support to one brand, then we still face likely car industry Armageddon.”

Andy Palmer, Founder & CEO of Palmer Automotive

“Whilst definitely good news for Tata and JLR there is significant concern that a single and digital grant award to an individual company will satisfy U.K. Gov that the job is done on batteries. There needs to be better equity across the U.K. Battery sector to ensure that other companies who are emerging, and may not be tied directly to an automotive OEM, have the grant funding required to progress their ideas and products from R&D to scale production. Singling large companies or OEMs for all the money will not diversify the sector and will mean opportunities, particularly for export, will be missed and some really cool technology runs the chance of never seeing the light of day”

Isobel Sheldon, OBE

The 2030 internal combustion engine (ICE) ban

A combination of local manufacturing, possibly making EVs more affordable and more commonplace, is great news. It ensures there is a wide variety of options available for consumers, as the 2030 ban on new petrol and diesel-powered cars and vans gets closer.

“The road towards 2030’s ban on sales of new petrol and diesel cars is somewhat “pot-holed” at the moment so this announcement is a very welcome piece of good news that will add positive momentum to the UK’s EV transition.”

Ian Plummer, Commercial Director of AutoTrader

“Our multi-billion pound investment will bring state-of-the-art technology to the country, helping to power the automotive sector’s transition to electric mobility, anchored by our own business, Jaguar Land Rover.”

Natarajan Chandrasekaran, Chairman, Tata Sons

The USA’s inflation reduction act

The US has set aside a significant amount of money for tax credits towards consumer EVs under this act, with up to $7,500 credited after purchase of an EV. This arrangement stipulates that 40% of EV battery materials must be extracted/processed in the US, or with countries it has a free trade agreement with. This minimum threshold then rises to 50% in 2024, 60% in 2025, and so on.

Whilst the UK does not yet have the same free trade agreement, Joe Biden and Rishi Sunak last month tentatively agreed to UK electric car firms getting access to the USA’s green tax credits.

“Governments are in competition with each other to support indigenous manufacturers of EVs, with this competition being led by President Biden’s Inflation Reduction Act. What underpins this is the massive project to decarbonise mobility and to address the very pressing climate change challenge.”

Ade Thomas, Founder of Green.TV

The factory location?

The supply chain between battery production and final car assembly are now more closely linked, with this move to the UK.

However, the upcoming all-electric Range Rover is set to be built 4 hours north of this battery production facility in Halewood, Merseyside. There remains a question as to why the battery manufacturing facility was not located more centrally, especially considering the carbon footprint and logistics of hauling batteries up the 200-plus mile route to the Halewood plant.

Related Articles