By Joan Faus
BARCELONA (Reuters) -India's Tata Group is considering setting up a battery cell plant for electric vehicles (EV) in Spain or Britain, a source with knowledge of the matter told Reuters, as its carmaking unit seeks to boost supply chains in Europe.
Tata Motors' chief financial officer told Reuters last month its parent, Tata, was considering setting up plants in India and Europe to produce battery cells for EVs. In Europe it would aim to provide batteries for its luxury Jaguar Land Rover unit, which has manufacturing facilities in Britain and Slovakia.
The company told Spain's government following talks late last year that it was considering the country and Britain as the two top locations for the plant, said the source, who declined to be identified due to the sensitivity of the issue.
Tata was attracted by Spain's allocation of European Union pandemic relief funds to promote EV and battery manufacturing, and its status as a member of the EU, unlike Britain following its departure from the bloc, added the source.
A Tata Motors spokesperson said the company does not comment on speculation. The Spanish government did not respond to a request for comment.
The location being considered by Tata in Spain is an industrial lot in the town of Zuera, outside the city of Zaragoza in northeastern Spain, the same site Volkswagen considered for a battery plant it is now building elsewhere in the country, the source said.
Tata representatives from India and Britain participated in the joint meetings with officials from the Spanish and the Aragon regional governments, the source said, adding there were also visits to the potential location.
Jaguar Land Rover and the regional government of Aragon, which includes Zuera, declined to comment.
Jaguar Land Rover is accelerating its shift to EVs with plans to make all Jaguar cars fully electric by 2025. Tata dominates the EV market in India, where it plans to launch 10 electric models by 2026.
As Europe's second largest car-producing country behind Germany, Spain launched in 2021 an ambitious programme to attract EV-related investments mostly using EU funds.
It was seen as a key factor in convincing Volkswagen to locate its Southern Europe battery plant in Spain and the company plans to start manufacturing EVs in the country.
The programme, however, only allocated 877 million euros ($958 million) last year out of the overall 2.9 billion euro budget due to technical and administrative issues, the government said.
The remaining funds will be disbursed in new phases and could benefit new contenders, such as Tata.
(Reporting by Joan Faus Additional reporting by Nick Carey in London and Aditi Shah in New Delhi Editing by Emelia Sithole-Matarise and Mark Potter)