Tata Motors looks to buy Ford India plant in electric vehicle push - Reuters

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Tata Motors logos are pictured outside their flagship showroom in Mumbai May 28, 2013. Picture taken May 28, 2013. REUTERS/Vivek Prakash

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BENGALURU, May 30 (Reuters) - Indian automaker Tata Motors Ltd (TAMO.NS) has signed an agreement to potentially buy a Ford Motor (F.N) manufacturing facility 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 on Monday covers the land, assets and all eligible employees working at the Sanand facility. The financial details of the agreement were not disclosed.

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Tata said it would invest in new machinery and equipment at the plant through its electric mobility unit and expects the facility to have a production capacity of 300,000 units each year after the works complete. The capacity can be increased to more than 400,000 units.

"Rising customer preference for passenger and electric vehicles made by Tata Motors has led to a multi-fold growth ... this potential transaction will support expansion of capacity," said Shailesh Chandra, managing director of Tata Passenger Electric Mobility Ltd.

Tata last year raised $1 billion from private equity firm TPG for its EV business and competes in the space with Mahindra and Mahindra (MAHM.NS).

The interest in the Sanand plant follows U.S. automaker Ford's decision last year to stop production in India, where it had a less than 2% share of the passenger vehicle market and had struggled to turn a profit for more than two decades.

Ford said earlier this month it was seeking options for its two factories in the country while shelving plans to make electric vehicles in India for exports. read more

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Reporting by Chandini Monnappa in Bengaluru; editing by Uttaresh.V and Aditya Soni

Our Standards: The Thomson Reuters Trust Principles.

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