In April of 2023, Jaguar Land Rover announced its plans to speed up its shift towards electric mobility. The company shared that its UK factory will exclusively produce all-electric vehicles and that its next medium-sized SUV architecture, EMA, will be completely electric. It’s worth noting that Jaguar Land Rover is a subsidiary of Tata Motors, with Tata Sons being the biggest shareholder.
Soon after (in Jul 2023), Tata Group made a notable announcement about constructing a 40 GWh electric vehicle battery plant in Britain. This plant will serve Jaguar Land Rover and Tata Motors factories and is significant for three reasons. Firstly, it is a major investment in the UK’s automotive industry. Secondly, it will significantly boost the UK’s auto industry, which requires local battery production. Thirdly, it will support the UK’s net-zero goals, as UK aims to ban the sale of new petrol and diesel cars from 2030. Additionally, it will help automakers comply with post-Brexit rules, which mandate sourcing more EV components locally to avoid tariffs on UK-EU trade, starting from 2024.
In addition, Tata has signed an MOU with the Gujarat Government to establish a 20GWh Battery plant in Sanand. This move demonstrates the strong commitment of the original equipment manufacturer (OEM) to ensure a reliable supply chain for electric vehicle (EV) batteries. It is worth mentioning that Tata Motors already has a plant in Sanand and has acquired the adjacent Ford Motors plant. Currently, they are working on integrating the two plants.
The automotive industry is well-acquainted with the idea of manufacturers aiming to integrate their supply chain vertically. A prime example of this is Henry Ford’s River Rouge complex, which, in the 1920s and 1930s, was the only place in the world where the entire process of producing automobiles could be witnessed in a single day. Although no automaker has been able to achieve the same level of extensive vertical integration as River Rouge, automakers have always preferred to develop their own engine manufacturing (ICEs) in-house as a major differentiator in performance. Auto OEMs have been designing, building and managing their own engine manufacturing factories producing cylinder heads, cylinder blocks, crankshafts, camshafts and connecting rods (“5C”).
How EV OEMs are trying to secure their battery supply chain
– Tesla has taken an early lead in securing the EV Battery Supply Chain with plants in North America, Asia and Europe and plans for future plants in Mexico.
– General Motors has planned for 4 EV Battery plants (~160 GWh) in North America, three under its partnership with LG (Ultium Cells LLC) and one with Samsung SDi. Additionally, General Motors is forging strong alliances in EV components, raw material recovery and processing. The company has also recently announced a USD 60M investment in Mitra Chem, which is developing a portfolio of Iron-Based Cathodes.
– Ford is planning 3 Battery plants (~129 GWh) in the US as part of its Joint venture with SK Innovation (Blue Oval SK).
– Moving focus to Europe – the Automotive Cells Company (ACC) involving joint venture members Total Energies/Saft, Stellantis and Mercedes Benz could see two gigafactories built in France and Germany.
– Luxury car maker Mercedes Benz has announced its intention to set up 8 battery factories with existing partner (CATL) across Europe, the US and China and one with a new partner.
– BMW has also planned for Giga factories with partners like CATL, Northvolt and Samsung SDi.
– Volkswagen has announced its intention to acquire a 26% stake in Gotion High-Tech Co. (China’s fourth largest battery producer) to become the battery maker’s largest shareholder, along with investment in a new battery plant in Germany in partnership with Northvolt AB of Sweden and in Solid State batteries through investment in QuantumScape Corporation.
– Along with Great Wall Motors example of backward integration into battery business (SVOLT), China also has an interesting reference of a Battery maker (BYD) forward integrating into car assembly to sell more batteries.
While securing the EV battery supply chain could be one of the primary considerations for investments in Battery makers by OEMs, another viewpoint could be to help provide them with a ringside view and closer integration with rapidly developing Battery Technology. While backward integration to secure the EV battery supply chain is definitely needed to help achieve cost parity for EVs, it remains to be seen how the automotive world will navigate complex cross-cultural business relationships while closely keeping pace with technology in the race to global EV leadership.
Gurusharan Dhillon is an automotive professional with 30+ years of expertise in strategy, operations, sales and marketing. He currently serves as a Director of eMobility at Customised Energy Solutions. With a focus on the electric mobility sector, Dhillon specializes in Powertrain, Battery Technology, Charging Infrastructure, and emerging technologies. He has worked with leading automotive OEMs like Toyota, Nissan, Honda and Hyundai.
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