Tata Group to set up a 40 GW gigafactory in UK, only the second so far

The hub of globally popular ICE brands like Bentley, Mini, Aston Martin, and Vauxhall, the UK is also home to 100,000 jobs associated with this sector of automobiles. A rapid transition to EVs has meant that the UK has struggled to find replacements for these jobs, especially after snapping ties with the European Union.

Countries in its neighborhood, like Germany and France, have a queue of manufacturers setting up gigafactories but the UK had to be content with just one, which was owned by a Chinese company.

Address UK's needs and beyond

The gigafactory is being set up by Land Rover, another globally renowned brand of UK origin, yet owned by the Indian conglomerate Tata Group. While Land Rover's main market is China, analysts told the South China Morning Post (SCMP) that Tata's approach to setting up a factory in the UK is in line with today's car manufacturers.

In a strategy of "de-risking," car makers are ensuring that they retain the market shares in their home markets during this transition before seeking to compete in foreign markets.

Tata Group's move to set up a high-capacity plant in the UK will help it evade high tariffs by sourcing a larger share of components locally and strengthening its presence in the local market, where it enjoys a 25 percent market share.

The UK has also set a 2030 deadline for the sale of ICE vehicles, and the 40 GW production capacity could cater to nearly half of the country's estimated battery needs then.

Attract more suppliers

During the unveiling of plans last week, the Tata Group did not reveal where the plant would be set up. The Guardian reported that the government has committed to providing 500 million pounds (US$ 641 million) worth of subsidies to support a move that will create 4,000 jobs.

More importantly, though, the announcement puts the UK back on the map of future investments and potentially will add more suppliers to enable the EV shift. For now, the region has managed to steer the Tata Group away from Spain, where it could have set up a gigafactory.

Another positive to come from this move is that the existing supplier, China-owned AESC, has decided to increase the capacity of its gigafactory to 38 GW from its current 1.8 GW.

The UK will be hopeful that more battery makers will try to replicate the move since analysts believe that at least three more gigafactories will be needed to match the production rate of ICE vehicles.