The Tata group on Wednesday said it would invest £4 billion (Rs 42,500 crore) to set up a gigafactory in the UK.

The gigafactory will make EV batteries and will have capacity to produce 40GW of cells annually. It is expected to create more than 4,000 jobs and provide almost half of the car battery production needed in the UK by 2030.

A BBC report said the plant will be set up in Somerset in western England. The British government has provided subsidies worth hundreds of millions of pounds, it said.

Tata Motors and its British subsidiary Jaguar Land Rover (JLR) will be the principal customers of the batteries. It will be used by other car makers as well.

Production will commence from 2026 for use in JLR vehicles, including the Range Rover, Defender and the Jaguar brands.

“Today, I am delighted to announce the Tata Group will be setting up one of Europe’s largest battery cell manufacturing facilities in the UK. Our multi-billion pound investment will bring state-of-the-art technology to the country, helping to power the automotive sector’s transition to electric mobility, anchored by our own business, JLR,’’ N. Chandrasekaran, chairman, Tata Sons, said.

He said the Tatas would further strengthen its commitments to the UK, alongside the group firms which operate across technology, consumer, hospitality, steel, chemicals and automotive segments.

British Prime Minister Rishi Sunak said the investment is a testament to the strength of the UK car manufacturing industry and its skilled workers.

The stock markets reacted positively to the announcement with the shares of Tata Motors rising 1.35 per cent to settle at Rs 620.45 on the BSE.

Hard-won deal

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.

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, Chandrasekaran said he wanted “to thank His Majesty’s government, which has worked so closely with us to enable this investment.”

Tata is already heavily invested in various businesses in Britain. Along with Jaguar Land Rover, the company also 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 announcing its huge investment, the Tata group joins Mukesh Ambani and Gautam Adani who have pledged thousands of crores of rupees into such factories in India.