Ford which said it closed its operations in India last year will sell one of its factories to Tata Motors. Both parties reported Automotive News signed the memorandum of understanding which was announced on Monday (5/30).

The Ford plant to be purchased is in Sanand, Gujarat, a state in western India. This purchase includes land, assets and employees, but the investment value is not disclosed.

Tata explained that it will invest in new machinery and other equipment in the electric vehicle division. The Jaguar Land Rover owner said production capacity is estimated at 300,000 units per year if all construction is completed and can be increased to 400,000 units.

“Increasing consumer preference and electric vehicles manufactured by Tata Motors has led to a doubling of growth…the potential for this transaction will support additional capacity,” said Shailesh Chandra, Managing Director of Tata Passenger Electric Mobility.

Last year, Tata raised $1 billion from private equity firm TPG for its electric vehicle business and competition with Mahindra and Mahindra.

Before deciding to halt plant operations in 2021, Ford had been going through a tough time in India for two decades and had lost up to IDR 28 trillion. It was not only the Sanand plant that was shut down, but also the engine and vehicle assembly plant in Chennai.

Ford said this month it was considering options for the remaining two plants and ruled out plans to make electric cars in India for export.

(fea)