Tata's Agratas targets FY2027 to begin cell production in UK, clarifies timeline
Tata Group's battery business Agratas expects to begin production of lithium-ion batteries needed to power electric vehicles in the UK by the 2027 financial year. The Mumbai-based conglomerate is looking to reduce dependence on China for the critical component.
In 2024, Agratas announced that it would commence the production of batteries in 2026 in the UK.
Despite two analyst notes suggesting that the production at the plants will begin by 2027, a Tata spokesperson clarified that the project remains on track to meet its deadlines.
Also read: China's shadow looms large as Tata Motors, JLR flag EV supply chain risk
'The project to set up giga factories in India and UK is on track and will commence operations from FY27 in a phased manner," a Tata Motors spokesperson said.
Analysts at Nuvama Institutional Equities and Motilal Oswal Financial Services wrote in their respective notes on 16 June, after meeting the management of Jaguar Land Rover during its investor day, that the production of EV batteries at the UK plant will begin by 2027.
'In the battery space, JLR has partnered with group company Agratas, which is constructing the UK's largest EV battery plant—to be operational by CY27E," Nuvama analysts wrote.
In 2024, Agratas announced that it would build a 40 GwH electric battery manufacturing plant in Somerset, UK. The firm is also building a 20GWh plant in Sanand, Gujarat, through Agratas, which is expected to begin production by December 2026.
'Construction will be completed in phases, with battery production set to begin in 2026," an Agratas statement on 28 February 2024.
The company has not specified the month in which it will begin production at the UK plant so far.
With both Tata Motors and its wholly-owned subsidiary JLR flagging the threat of disruption to their electric vehicle supply chain in their annual reports, the construction of the battery plant by Agratas is listed as one of the mitigation measures to deal with the risks of China currently holding a large share of the lithium-ion battery supply chain.
Also read: Tata Motors plans a premium push as competition intensifies in EV space
In FY2024, Tata Group's holding company, Tata Sons, invested ₹950 crore in Agratas, which was founded in 2023.
In the battery company's 2024 annual report, the management acknowledged the 'strategic importance of obtaining a secure supply of battery cells to power electric vehicles sold in the future".
'The investment in the company is of critical importance to Tata Sons," the annual report said.
JLR is planning to make Jaguar an all-electric brand by 2026, while Tata Motors is the largest seller of electric cars in the country. Last fiscal year, it sold close to 65,000 EVs in the country, holding a 55% market share in the country's electric passenger vehicle market.
Both JLR and Tata Motors are facing headwinds in terms of uncertainty in the global trade markets and competition in the domestic market. Tata Motors' market share has come under intense pressure from domestic firms such as Mahindra and Mahindra, JSW MG Motor and Hyundai Motor India.
JLR cut its operating profit margin guidance to 5-7% from the earlier stated 10% due to the imposition of increased tariffs in the US and the slowdown in the Chinese market.
The risk of concentration of the supply chain also comes at a time when automobile companies in the country are facing restrictions on exports of rare earth magnets by China.
Also read: Tata Motors' headcount, senior pay hikes squeezed as sales dip in FY25
According to some industry estimates, China holds about 80% of the market for lithium-ion batteries and 90% of the supply of rare earth magnets to companies worldwide.
Several companies in the country are building gigafactories to produce lithium-ion batteries locally. In addition to the Tata Group, other companies include Reliance, Ola Electric and Rajesh Exports.
These three companies received approval to build gigafactories under the ₹18,100 crore production-linked incentive scheme but are facing delays.
Due to the delay in commencing production and setting up operations, all three face the prospect of fines. The government had set a two-year milestone to invest ₹225 crore per GwH, which the players committed to building.
Primarily, the players have cited the issues with sourcing raw material required to begin battery production.
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