Buoyed by electric vehicle (EV) demand and a new partner on board, Tata Motors is planning to pump in about INR 16,000 crore to launch ten new EVs in the next five years, a top company official said.
The pegged investment in the new EV business of Tata Motors is the largest in the domain so far. Earlier, Mahindra & Mahindra has announced that it will invest a sum of INR 3,000 crore in the next three years.
Analysts and industry experts indicate that Tata Motors is leading with 70% market share, especially in the passenger vehicle segment, with three products - Nexon, Tigor EV, and Xpres-T.
Further investment in the EVs business will help the vehicle maker to dominate the segment. In addition, the company believes that government incentives, PLI schemes, improving TCO parity with ICE and the need for a stringent emission roadmap will further propel EV adoption.
P Balaji, CFO, Tata Motors, said, “We definitely see a surge in demand. In the last five years, the segment has grown by seven times, and in the current fiscal, the growth is estimated to be between 2.5-2.7x.
He also added that rising fuel prices, favourable policies, and the decreasing differential between ICE vehicle prices and EVs are the few factors driving growth in the segment. Apart from bringing ten new EVs by 2026 in different body styles and driving ranges, it will expand beyond existing micro-markets and offer subscriptions of EVs.
The company also said it will focus on the localisation of EV parts and expand Tata UniEVerse, such as charging and finance. From the current level of 65%, the vehicle maker aims to go beyond 85% localisation for products such as BMS, battery pack, e-drive inverter and integrated electronics. It is already working with leading suppliers such as Valeo, APTIV, Bosch, Hella and Motherson.
Tata Motors and TPG Rise Climate on Tuesday entered into a binding agreement whereby the latter, along with its co-investor ADQ, shall invest in a subsidiary of the vehicle maker that will be newly incorporated. The EV subsidiary is currently called TML EVCo.
Unlike Tata Motors PV company which is wholly owned by the vehicle maker itself, TML EVCo will allow external investors to hold up to 15% share. It will focus on EV products, build and own future IPs for EVs, besides catalysing charging infrastructure creation.
TPG Rise Climate, along with co-investors, shall invest INR 7,500 crore in compulsory convertible instruments to secure between 11% to 15% stake in this company, translating to an equity valuation of up to $ 9.1 billion.
The new company will leverage all existing investments and capabilities of Tata Motors and channel future investments into EVs, dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.