TATA Motors' EV Dream |
| Credit: Exchange4media |
Tata Motors & the EV Industry
• Tata Motors has been among the first few to join the ride of the electric vehicle wave in India. The business holds a 71% market share and has been leading the relatively nascent EV cars category in India.
• Currently, it offers 2 vehicles in the personal segment The Tigor EV and The Nexon EV. For the fleet segment, it has the Xpres-T EV Sedan. Over 10,000 Nexon EVs have been sold since launch.
• The management is very bullish on electrification in India. During FY21, the company had clocked revenues of Rs 500-600 crores in the EV segment, Up Until now, it has invested Rs 150 billion into the EV business.
The Plan
• Tata Motors is looking to invest another $2 billion by 2026 to launch 10 different EVs across various price points. It is targeting 25% of total car sales from battery-powered cars.
• The business has set aside a whopping Rs 15,000 CR to fuel CAPEX over the next 4 years to work on new models and on features like autonomous driving and automotive software as well.
• Having obtained the shareholders' approval, the company will spin off its passenger vehicle business which will contain its own EV arm. This EV arm is expected to hold all the IP rights while manufacturing will be taken care of by the passenger vehicle division for a fee.
• The company said it is driving this shift of green mobility with the help of other group companies through an extensive ecosystem in the Tata UniEVerse.
• It has called Tata Power for EV charging infra, Tata Chemicals for Li-ion cell manufacturing and battery recycling, Tata Autocomp for the battery assembly plant, Tata Motors Finance for financing, and TCS/Tata Elxsi for ADAS and technology, all of them would work together to build a complete ecosystem for EVs.
• Analysts believe that Tata Motors' EV volumes will surge in the near term turn around the company's fortunes which is currently rolling from its JLR business. Some believe that EV business may show EBITDA break-even in FY 23.
Latest Development
• On 12th October 2021, as a boost to its electric vehicle push, Tata Motors closed a deal to raise Rs 7,500 crore (close to $1 billion) from TPG Rise Climate and Abu Dhabi's ADQ, valuing the business at $9.1 billion.
• This is the first major fundraising by an Indian carmaker to push clean mobility. The deal will give an 11-15% stake to the TPG-ADQ combine in the EV subsidiary.
• Consequent to the news, the Tata Motors stock was up by over 21 percent. The company also made its 52-week high at Rs 530 per share in the last four sessions.
• While a more than 20% move in one day is raising questions over sustainability but analysts believe that best is yet to come.
Govt. Support & Competition
• The Centre wants EVs to make up 30% of total car sales by 2030 in order to reduce oil dependence and pollution and has launched various incentive schemes for the same.
• In the FY22 Budget, the government announced the lowering of GST on EVs to 5% from 12% and offered income tax incentives to individuals purchasing EVs.
• Cashing in on these incentives is Elon Musk's Tesla, which is gearing up to enter India. However, before setting up a manufacturing unit in Idia, it is demanding a temporary tariff relief in import duties.
• Tata Motors' peers have diverse strategies towards cleaner mobility. While Maruti Suzuki is pinning its hopes on CNG vehicles, M&M has reorganized and set up a separate vertical for the EV business.
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