Jaguar Land Rover (JLR) owner Tata will build a new £4bn (US$5.2bn) 40 GWh per year capacity gigafactory in the UK. The Somerset factory, announced on 19 July 2023, will create 4,000 jobs and provide batteries for all JLR electric vehicles (EVs) from 2026 onwards. Natarajan Chandrasekaran, Chairman of Tata Sons, says the investment “further strengthens Tata’s commitment to the UK, alongside our many companies operating here across technology, consumer, hospitality, steel, chemicals, and automotive.” Yet the project is only the first step as the UK looks to gain ground.
Much needed investment
The UK Energy Secretary Grant Shapps describes the Tata investment as “the biggest investment ever” in the UK automotive industry, and its announcement brings relief as well as celebration. Until now, there’s been little to cheer on the UK gigafactory front. Britishvolt’s proposed 30 GWh gigafactory—long planned to be the UK’s first—was dropped when the company went into administration earlier this year due to an investment shortfall.
Shapps claims the new gigafactory will produce enough batteries to supply “half the EVs the UK will need by 2030”. JLR is currently the only definite customer. Nissan produces its own supply, whereas significant players including Mini, Toyota, and Stellantis are unlikely candidates due to established supply relationships already in place. Under such circumstances, Shapps’ claims may prove optimistic. The Tata investment is also no simple business venture. According to The Financial Times, the £4bn in question is subject to £500m in as yet undisclosed subsidies.
Nonetheless, the factory, Tata’s first to be built outside India, is a boost to the UK EV industry. The UK is currently host to just one EV battery production facility—Nissan’s Envision plant in Sunderland—as it builds towards expected demand and emissions targets. Under the Paris agreement, the UK is committed to cutting emissions by 68% by 2030, compared with 1990 levels. The UK Government also expects up to 11 million hybrid or fully electric vehicles on UK roads by 2030. By then, the Faraday Institution expects UK battery demand at more than 100 GWh a year.
Supply chain boost
The Advanced Propulsion Centre’s Chief Executive, Ian Constance, believes the Somerset gigafactory is of huge wider significance. “The Tata batteries will not only work towards fulfilling UK demand for EV production but will also boost businesses involved in the UK EV supply chain, meaning far-reaching impact.” Constance says the investment offers “reassurance” to companies involved in motors and drives, power electronics, and fuel cells.
Moody’s Investors Service Analyst Timo Fittig considers the factory to be “an important building block for JLR’s electrification strategy” and re-emphasises the boost to wider industry. “Having a domestic supply of batteries will create more robust supply chains and avoid future tariffs in relation to EU exports of BEVs made in the UK.”
One gigafactory doesn’t equal success, it equals part of the puzzle
Ben Nelmes, Chief Executive of NewAutomotive, is bullish about what the investment may initiate. “Gigafactories essentially futureproof the UK manufacturing industry—batteries are heavy and costly to transport, so manufacturers are likely to produce vehicles close to where the batteries are made.” Nelmes feels that the announcement is the catalyst the UK transport industry needs. “The Government must make the most of it by continuing to electrify transport at a rapid pace.”
Guarded optimism
There are other good reasons to build gigafactories in the UK. As Fittig suggests, tariffs for EV exports from the UK to the EU (and vice versa) if batteries are imported from outside the EU or the UK seriously threaten UK car production. “Although the UK is the most important export destination for the EU, accounting for 1.1 million, or 20%, of all passenger cars exported by the bloc, tariffs on EU exports would hit the UK harder,” he states. According to the Society of Motor Manufacturers and Traders, 78% (607,000) of passenger cars produced in the UK in 2022 were exported. More than half (58%) were sold to EU countries, which makes the EU the UK’s largest export destination.
Currently, there are 300 gigafactories planned internationally, including 40 in Europe. In the UK, the Tata gigafactory is the whole story. According to The Faraday Institution, the UK needs five gigafactories by 2030 and ten by 2040 to cover the battery power needed to meet emissions targets and expected demand. As industry veteran Andy Palmer, former Chief Operating Officer of Nissan and former President and Group Chief Executive of Aston Martin, suggests, “One gigafactory doesn’t equal success, it equals part of the puzzle.” So much depends on further investment, including the sustainability of a vast supply chain network. Further gigafactory plans need to be given the green light before the guarded optimism accompanying the Tata announcement can be replaced by confidence.
