UK reportedly offered colossal subsidy to woo Tata's GBP4 billion EV battery plant

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

As governments around the world are trying to outbid one another to woo EV and battery manufacturing to their home turf, Tata's decision to set up a GBP4 billion EV battery gigafactory in the UK is seen as a shot in the arm for the country that saw its competitiveness erode post-Brexit.

According to a press release, the UK government announced that Tata will invest GBP4 billion (US$5.18 billion) to set up an EV battery plant in Somerset, southwest England, to supply Jaguar Land Rover's BEV models. The plant is expected to enter operation in 2026, creating 4,000 jobs and producing an initial production output of 40GWh.

Starting in 2030, the UK will enforce a ban on the sale of new cars with combustion engines and impose EV sales targets for manufacturers. Besides, beginning as early as 2024, the UK will impose tariffs of 10% for imported EVs with EU or UK content less than 45%.

Tata had been considering Spain and the UK for the location of its battery plant outside of India before it chose Somerset. Financial Times quoted sources saying that the UK government agreed to subsidize GBP500 million to woo Tata's plant to land in the UK. Furthermore, Tata will also benefit from a separate incentive package, British Industry Super Charger.

Dominic Johnson, the investment minister of the UK, told Reuters that this moves the needle and acts as a massive beacon for the global car industry to say that the UK is back in business. Grant Shapps, the secretary of state for energy security and net zero, told BBC that the news represented the biggest UK car investment for 40 years and a big vote of confidence in the British economy.

According to data from the Society of Motor Manufacturers and Traders, due to a global chip shortage and COVID lockdowns in China, only 775,014 passenger cars were made in Britain in 2022, a 66-year low for the UK automaking industry. The development followed Ford's decision to shut its engine factory in Bridgend in 2020 and Honda's closure of its plant at Swindon in 2021.

Britain's business secretary wrote in an article to Financial Times, saying that the UK has chosen a new path to support advanced manufacturing when other countries, notably the US, are engaged in massive spending sprees.