UK technology company Dyson Ltd, best known for its domestic vacuum cleaners, has announced it has chosen Singapore as its manufacturing location for electric cars.

The company said it is ready to break ground on the new plant before the end of the year, with the first car scheduled to roll off the production line in 2021.

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Dyson’s choice of Singapore surprised many in the industry because of the high production costs compared with neighbouring countries, including high land acquisition costs. 

But the company said this factor was offset by the island country’s abundance of engineering skills, the availability of strong hi-tech supply chains in the region and its proximity to target markets – particularly China. Singapore also has a free trade agreement with the EU,  giving its cars 0% tariff access.

The company had previously announced it would invest a total of GBP2bn (US$2.6bn) to enter the electric vehicle market, including GBP200m in a UK-based R&D centre and testing facilities including a 10-mile test track.

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Dyson employs around 9,000 people worldwide, with its UK workforce having recently expanded to 4,800 following the completion of a new R&D centre built on an old airforce base in Malmesbury, Wiltshire.  It also employs 1,300 in Malaysia, 1,100 people in Singapore, 1,000 in China and 800 in the Philippines.

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The company has written off GDP46m of the GBP58m investment it made in US solid state battery company Sakti3 in 2015, although it continues to develop both solid state and traditional lithium-ion batteries.

It is unclear whether it will outsource the batteries for its electric cars, or produce them in-house. Designs of the car have not yet been released, but company owner James Dyson has said in the past that it will not be like anything else on the market.

See also: Dyson ramps up EV development plan