Tesla eyes UK sales with Milton Keynes warehouse deal

Tesla is close to signing a deal to rent a new warehouse in Milton Keynes to boost sales of its electric cars in Britain.

The electric-vehicle maker, headed by Elon Musk and founded in Silicon Valley’s Palo Alto in 2003, is in advanced talks to lease Trammell Crow’s 338,000 sq ft project, to establish what would be the company’s first major UK warehouse, according to React News, the property website.

The facility is expected to be created in conjunction with DB Schenker, the logistics group, which specialises in the storage and transportation of lithium batteries used to power electric vehicles.

Tesla is hoping to capitalise on the rising adoption trend in Britain that saw March achieve a record 46,626 electric cars registered – an 18.6 per cent year-on-year rise, according to the Society of Motor Manufacturers and Traders. Tesla’s Model Y was the top-seller in the category, with 8,123 units.

Tesla previously considered establishing a UK gigafactory in 2020. Despite the Britishvolt site in Tees Valley and Gravity Park in Somerset having been mooted as prospective locations, no plans have yet come to fruition.

Tesla is understood to have agreed a long-term lease at a rent of about £13 per sq ft – a figure that would substantially eclipse the current record rent for logistics in the Milton Keynes area. According to research by Savills, the real estate agent, the current high water mark for units of more than 100,000 sq ft is £9.75 per sq ft.

All parties were unavailable or declined to comment.

The move to increase sales in the UK follows the announcement on Monday that Tesla is increasing investment in China at a time of mounting tension between Washington and Beijing with a deal to build a battery factory in Shanghai.

The electric carmaker said it would make its Megapack large-scale energy storage unit at the plant. It already has a factory for electric vehicles in Shanghai.

Construction is scheduled to begin in the third quarter of this year, with the plant expected to start production in the second quarter of 2024.

It is aiming to produce 10,000 Megapacks a year, equal to about 40 gigawatt hours of energy storage. The company said each unit could store enough energy to power an average of 3,600 homes for one hour.