BENGALURU, May 30 (Reuters) – Indian carmaker Tata Motors Ltd ( TAMO.NS ) has signed a deal to potentially buy a Ford Motor ( FN ) manufacturing plant in the western state of Gujarat as it looks to ramp up its production of electric vehicles .
The owner of Jaguar Land Rover already dominates India’s fledgling electric car market, which the government is trying to grow by offering companies billions of dollars in incentives.
The memorandum of understanding announced Monday covers the land, assets and all eligible employees working at the Sanand facility. The financial details of the agreement were not disclosed.
Tata said it would invest in new machinery and equipment at the plant through its electric mobility unit and expects the plant to have a production capacity of 300,000 units every year after work is complete. The capacity can be expanded to more than 400,000 units.
“Rising customer preference for passenger and electric vehicles from Tata Motors has led to manifold growth … this potential transaction will support capacity expansion,” said Shailesh Chandra, managing director of Tata Passenger Electric Mobility Ltd.
Tata last year raised $1 billion from private equity firm TPG for its electric car business and competes in the space with Mahindra and Mahindra ( MAHM.NS ).
Interest in the Sanand plant follows US carmaker Ford’s decision last year to halt production in India, where it had less than a 2% share of the passenger car market and had struggled to turn a profit for more than two decades.
Ford said earlier this month that it was looking at options for its two factories in the country while putting plans to make electric vehicles in India for export. Read more
Reporting by Chandini Monnappa in Bengaluru; editing by Uttaresh.V and Aditya Soni
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