Tata Group to build $6-billion gigafactory in the UK

India’s Tata Group will build an electric vehicle (EV) battery plant in the U.K. to supply its Jaguar Land Rover factories, marking the country’s biggest move to date in the car gigafactory space aimed at boosting domestic battery production.

Under the plan, announced by the British government and Tata on Wednesday, the company will invest £4 billion ($6.7 billion) to build its first massive gigafactory outside of India.

The plant is expected to create up to 4,000 jobs and produce an initial output of 40 gigawatt hours (GWh), starting in 2026.

Prime Minister Rishi Sunak hailed the development, saying it would speed up the slow-moving transition of Britain’s auto industry from gas and diesel cars to electric vehicles (EVs).

His office, however, has declined to say how much financial support it promised in order to secure the investment and fend off Spain, which had also lobbied to win the project.

Muthu Krishna, Fastmarkets’ battery manufacturing cost modeller, estimated the alleged state assistance and grants to total $1.5 billion.

He said the announcement represented a “crucial victory” for the U.K. automotive industry at a time when Chinese EV brands are entering western markets and companies abandon European plans to invest in the U.S.

Tata’s EV battery plant would be the U.K.’s second. By contrast, the European Union is said to have more than 30 already operational or in the pipeline.

Energy secretary Grant Shapps said the Indian firm’s decision was the “biggest investment ever” in the U.K. auto industry, as well as the most significant boost for the sector since Japanese makers moved to Britain in the 1980s.

U.K. Business and Trade Secretary Kemi Badenoch said the multibillion-pound investment demonstrated that the government has “the right plan when it comes to the automotive sector.”

The gigafactory could be built in Somerset, south-west England, but the location has not yet been confirmed. Jaguar Land Rover’s U.K. factories are located in Birmingham, in central England.

Britain’s goal of phasing out new diesel and gas cars is part of its goal to achieve net zero carbon emissions by 2050 in order to help tackle climate change.