Tata Motors to invest Rs.15,000 Cr in EV segment in 5 years

It has been an eventful week for the Tata group. The week began with the redoubtable N Chandrasekaran appointed the CEO of Tata Air India with full executive responsibilities.

Then came the big news of Tata Motors announcing plans to invest Rs.15,000 crore in the electrical vehicles (EV) segment over the next five years. In fact, the company is planning to develop 10 more EV offerings over the next five years.

One of the big shifts that Chandra initiated during his first tenure of 5 years at the helm of Tata Sons was the shift in the focus of the automobiles business towards EV. Even as he aggressively cut debt in these companies, his theme was to always focus on sustainable business models.

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That applied to companies like Tata Power and Tata Motors. It is in this light that the investment of Rs.15,000 core and the 10 new launches must be viewed.

Tata Motors is already a leader in the EV segment in India with its Tata Nexon already a veritable market leader. In addition, the 10 new model launches, which are at various stages currently, will only enhance the sustainable offering of the Tata Motors product portfolio.

Tata Motors will launch these 10 new products with different kind of body styles, price, driving range options and durability to cater to different categories of customers.

It may be recollected that the EV division of Tata Motors had, last year, raised $1 billion from private equity firm, TPG Capital. This had assigned a valuation of $9.1 billion to Tata Motors, clearly indicating that it was the EV segment that was driving valuations at the Tata Motors group.

Speaking at Aurangabad, Chandra pointed to the need to accelerate the development of the EV ecosystem with charging facilities and other support infrastructure.

 

In fact, ecosystem is the key to the development of the EV market and, according to Chandra, the ecosystem of the EV business needs to expand at the same aggression as the existing fuel points available for traditional cars.

Currently, Tata Motors has a network of 400 charging stations in Maharashtra, of which nearly 20 such charging stations are located in the city of Aurangabad. However, Chandra feels this must be expanded substantially.

Interestingly, there are some shifts in the car buying market with the ownership profile undergoing a change. For instance, about a few years back, only 20-25% of the buyers were buying EVs as their first car.

According to Tata Motors, that number of first time buyers has risen to about 65%. Tata Motors has already sold over 22,000 EVs till date in India and it sees a big opportunity, especially to cater to the young / millennial and Gen-X crowd.