LONDON -- Tata Group will build an electric vehicle battery plant in the U.K., the company and the British government said, in a boost for a car industry in need of domestic battery production to help secure its long-term future.
The factory will supply Jaguar Land Rover's future battery-electric models including the Range Rover, Defender, Discovery and Jaguar brands, with the potential to also supply other car manufacturers, the government said in a statement on Wednesday. Production is due to start in 2026.
The factory will have a capacity of 40 gigawatt hours, enough to supply roughly half a million vehicles a year depending on the size of the batteries.
There had been months of speculation around where Tata, the conglomerate that owns JLR, would build the factory. Tata previously considered building its battery site in Spain. The decision in favor of the U.K. will help to secure the future of JLR's plants in its home market.
The plant is a win for Britain, which is trying to catch up in the global race to build electric vehicle battery capacity locally -- vital for automakers which rely on heavy batteries being built near their car factories.
Britain has expressed concerns at the U.S.'s Inflation Reduction Act, which promises hundreds of billions of dollars of subsidies to green industries, with finance minister Jeremy Hunt saying the government did not have large sums of money for similar measures.
Homegrown battery production will also help British automakers comply with post-Brexit trade rules that will require them to source more electric vehicle components locally to avoid tariffs on UK-EU trade from 2024.
The government has previously said it was in talks with the EU over easing those rules, after a warning from Stellantis, which owns the U.K. Vauxhall brand, that it would be forced to shut factories with the loss of thousands of jobs were it to face tariffs.
Tata said the factory includes an investment of 4 billion pounds ($5.2 billion).
The BBC said the government would provide subsidies worth hundreds of millions of pounds to Tata. The government declined to immediately detail what support it had provided as part of the deal.
Tata's choice of Britain will also provide a boost for Prime Minister Rishi Sunak's government, which has outlined a series of net zero goals including a ban on the sale of new gasoline and diesel cars from 2030.
The government said the factory would create up to 4,000 jobs, with further jobs expected to be created in the supply chain.
The plant is expected to be built in Somerset, southwest England, while Jaguar Land Rover's U.K. factories are based near Birmingham, central England.
The battery factory will help JLR accelerate its shift to cleaner vehicles. JLR is planning to invest 15 billion pounds over the next five years in developing electric cars as well as autonomous-driving features.
With an output of 40 gigawatt hours, Britain said the factory would provide almost half of the battery production needed by 2030. The Faraday Institution has projected U.K. battery demand to reach over 100 GWh a year by that time.
The U.K.'s car manufacturing sector, once a core part of the economy, has been struggling to cope with Brexit and the shift to electric vehicles. The company at the center of a proposed battery factory in the northeast of England, Britishvolt, fell into administration earlier this year.
Bloomberg contributed to this report