Tata Passenger Electric Mobility Limited (TPEML) – Tata Motors’ newly formed electric vehicle subsidiary – and Ford India Private Limited (FIPL) have signed a Unit Transfer Agreement (UTA) allowing Tata Motors to acquire the latter’s manufacturing plant in Sanand, Gujarat. This comes almost a year after Ford announced its exit from India in September 2021; in May this year, a Memorandum of Understanding (MoU) was signed with the Government of Gujarat.
The acquisition of the plant will give Tata Motors possession of the land and buildings, manufacturing plant and machinery and equipment at the Ford India Sanand plant and, most importantly, all eligible employees at the Ford India Sanand plant – for a total consideration of ₹725.7 crore.
According to the agreement, Ford will continue to manufacture engines at the Sanand plant for its global operations. In return, Ford leases back from Tata the land and buildings of the powertrain manufacturing plant on mutually agreed terms. In the event that Ford ceases its operations in the future, TPEML has agreed to provide employment to eligible workers at that plant as well.
Tata Motors needs to make new investments to convert the plant to suit both the existing and future range of electric vehicles. The Sanand plant currently has a production capacity of 3,00,000 units per annum, which is scalable up to 4,20,000 units.
As Tata’s existing plants are approaching production saturation, this new acquisition is timely and will help the carmaker produce five million cars a year. The fact that this new plant is adjacent to Tata Motors’ existing manufacturing facility in Sanand should help in a smooth transition.
Having invested close to a billion dollars in the construction of this facility in 2012, the plant is a hot sell for Ford India, while there is still no talk of a manufacturing facility in Chennai.
Tata Motors is looking to utilize the additional capacity at the Sanand plant. Built to Ford’s global standards, the Sanand plant is a state-of-the-art manufacturing facility with a high level of robotization that requires a minimum of 1,00,000 units per annum to be operationally profitable. Tata is confident that with strong demand for its current lineup and a number of EVs planned in the coming years, it can meet both the plant’s requirements and its production targets.
The plant could be the production base for Tata’s future generation of electric vehicles, such as production versions of the Curvv mid-size SUV concept based on the first-generation Nexon EV platform, as well as the Avinya concept based on born electric. platform. Tata has also trademarked the names of four other electric vehicles slated for the coming years.