Tata, the Indian-based conglomerate, announced on Wednesday that it would build a 4 billion-pound ($5.2 billion) battery plant in western England, a commitment sought by the auto industry and lawmakers hoping to stem fears of an exodus of car manufacturers from Britain.
Tata owns Jaguar Land Rover, the British-based automaker, and the company’s factories in Britain would be important customers for the batteries. The government said the plant, which would create 4,000 jobs, could eventually produce almost half of the electric-car batteries needed by Britain by 2030.
The announcement was made possible by a large package of subsidies offered by the government of Prime Minister Rishi Sunak. It came as worries have grown in recent weeks that Britain’s car industry could be decimated by the shift to electric vehicles, coupled with the country’s exit from the European Union, the main export market for British-made cars.
Having a large domestic maker of batteries means carmakers won’t have to import them and face hefty EU tariffs or the high costs of transporting the equipment. Until now, Britain’s only other battery facility was one linked to the country’s largest car plant, operated by Nissan in northeast England.
Tata was recently reported to be considering building its battery plant in Spain, but such a move would have put Jaguar Land Rover’s cars made in Britain at a disadvantage. The site ultimately selected is likely to be in Somerset.
Mr. Sunak came up with an offer that would allay fears of losing one of the country’s largest auto manufacturers. Grant Shapps, the British energy security secretary, told the BBC that the deal was “hard won.” He declined to say how much in aid and subsidies Tata had been offered; the government said it would publish those details “in due course.”
In a news release issued by the British government, Natarajan Chandrasekaran, Tata’s chairman, said he wanted “to thank His Majesty’s government, which has worked so closely with us to enable this investment.”
Jaguar Land Rover produced nearly 203,000 vehicles in Britain last year, according to figures from the Society of Motor Manufacturers and Traders, making it the country’s second-largest automaker after Nissan. Overall, the number of cars produced in Britain has fallen sharply, to 775,000 last year from a peak of more than 1.7 million in 2016.
In the race for battery manufacturers to support carmakers, Britain is competing against the United States, which offers substantial subsidies to battery makersand the European Union.
While car manufacturing in Britain has been in decline since 2016, coinciding with the vote to leave the European Union, it remains important to the economy, employing 182,000 people, according to the Society of Motor Manufacturers and Traders. Eight out of 10 cars made in Britain are exported, with nearly 60 percent of those going to the European Union.
Tata is already heavily invested in various businesses in Britain. Along with Jaguar Land Rover, the company has substantial steel operations, including a large mill in Wales. The company has been talking with the government about financial aid to convert the plant’s operations to produce steel with fewer carbon emissions.
In his statement, Mr. Chandrasekaran said Tata’s decision to invest in the battery plant “strengthens its commitment to the UK”.