BARCELONA -- Tata Motors is considering setting up a battery cell plant for electric vehicles in Spain or Britain, a source with knowledge of the matter told Reuters, as the automaker seeks to boost supply chains in Europe.
Tata Motors Chief Financial Officer, P.B. Balaji said last month that the company is considering setting up plants in India and Europe to produce battery cells for EVs.
In Europe the factory would provide batteries for Tata's Jaguar Land Rover unit, which has car plants in the UK and Slovakia.
Tata told the Spanish government that it was considering Spain and Britain as the two top locations for a European battery plant, said the source who declined to be identified due to the sensitivity of the issue.
Tata was attracted by Spain's allocation of European Union pandemic relief funds to promote EV and battery manufacturing, and its status as a member of the EU unlike Britain following its departure from the bloc, the source said.
The location being considered by Tata in Spain is an industrial lot in the town of Zuera, outside the city of Zaragoza in northeastern Spain, the same site Volkswagen considered for a battery plant it is now building in Valencia, the source said.
Tata representatives from India and Britain participated in the joint meetings with officials from the Spanish and the Aragon regional governments, the source said, adding that there were also visits to the potential location.
As Europe's second largest car-producing country behind Germany, Spain launched in 2021 an ambitious program to attract EV-related investments mostly using EU funds.
It was seen as a key factor in convincing VW to locate a battery plant in Spain and to build EVs in the country. Starting in 2026, the VW battery factory will supply cells to plants in Martorell and Pamplona that will build electric small cars for VW, Audi, Curpra and Skoda.
The program, however, only allocated 877 million euros ($958.47 million) last year out of the 2.9 billion euros' overall budget due to technical and administrative issues, the government said.
The remaining funds will be disbursed in new phases and could benefit new contenders, such as Tata.
Tata and JLR declined to comment. The Spanish government did not respond to a request for comment.