Tata Motors planning to invest Rs 18,000 cr in EV division till FY30

Tata Motors on Tuesday said it is planning to incur a capital expenditure between Rs 16,000 crore and Rs 18,000 crore into its electric vehicle (EV) division till 2029-30 (FY30). The company, which currently sells four electric car models, aims to launch six more by March 2026.

Moreover, the automaker targets to achieve a 20 percent share in the passenger vehicle (PV) market by FY30. In 2023-24 (FY24), Tata Motors’s share in the Indian PV market stood at 13.81 percent in volume terms, as per data from the Society of Indian Automobile Manufacturers (SIAM).

In a presentation to investors, Tata Motors announced its proactive strategy to drive the “mainstreaming” of EVs in India. This strategy includes expanding its EV product portfolio to offer a wider range of options with improved range (distance driven per charge) and achieving price parity with internal combustion engine (ICE) cars. 

Additionally, Tata Motors plans to increase the number of electric car dealerships to 50 cities within the next 24 months. In collaboration with private charging point operators (CPOs) such as Chargezone, Glida, and Statiq, Tata Motors aims to increase the number of public charging points across the country tenfold, reaching about 100,000 by FY30. The number of community charging points currently stands at about 4,300, and the company intends to expand this number to 100,000 by FY30. These efforts aim to reduce range anxiety and improve the overall ease of EV ownership.

Public charging points are accessible to any EV owner and are located in public areas, while community charging points are restricted facilities meant primarily for residents of a particular housing community or locality. Tata Motors stated that currently, only 10-15 per cent of its electric car customers are using rooftop solar for charging the vehicles. By FY30, the company aims to increase this share to about 50 per cent.

In FY24, India saw 90,996 electric car sales, marking a year-on-year (Y-o-Y) growth of 91.37 percent, according to data from the Federation of Automobile Dealers Associations (FADA). Tata Passenger Electric Mobility (TPEM), a subsidiary of Tata Motors, dominated the Indian electric car market, securing a 70.57 percent share in terms of volume in the last financial year.

In the presentation, Tata Motors said that its EV division — which is not a listed entity — would be “breakeven EBITDA” by 2025-26 (FY26). EBITDA breakeven refers to the point at which a company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) cover its operating costs, and it starts generating positive cash flow from operations.

The company also mentioned it would incur a capital expenditure of Rs 16,000 crore to Rs 18,000 crore in its EV division between the current fiscal year and FY30 “as necessary”. Tata Motors expects EV penetration in the Indian car industry to reach 20 percent by FY30, up from about two percent in the last financial year. Within its own portfolio, the company aims to achieve EV penetration of about 30 percent by FY30.

Tata Motors stated that its PV volume growth would exceed the overall PV market growth rate. Currently holding about a 14 percent share of the PV market, the company aims to achieve a 16 percent share by FY27 and then “18-20 percent in another 2-3 years”.

Tata Motors is not the only company that is investing heavily into its EV business. Mahindra & Mahindra’s (M&M) board had last month approved an investment of Rs 12,000 crore in its EV arm Mahindra Electric Automobile (MEAL) to fund the EV journey over the next three years. M&M would roll out its first set of “born EVs” from the first quarter of 2025 calendar year. A born EV is an electric vehicle designed and engineered from the outset as an EV, without being converted from an existing internal combustion engine vehicle platform. 

EVs will constitute around 20-30 percent of M&M’s overall sales by 2027 or so. Anish Shah, MD and CEO of M&M, had last month said that the EVs will have a similar margin profile (on a per unit basis) as the ICE vehicles. Just like ICE vehicles, EVs would have a lower margin profile when newly launched, and thereafter improve the margins through value engineering. Shah did not wish to give a timeline by when MEAL could break-even.

In March, Chinese automotive giant SAIC Motor, which owns MG Motor India, and diversified business conglomerate JSW Group joined forces to form an automotive joint venture — JSW MG Motor India Private Limited. In this partnership, JSW holds a 35 per cent stake. The JV plans to invest approximately Rs 5,000 crore to develop new energy vehicles (NEVs) and internal combustion engine (ICE) vehicles for both Indian market and exports. MG Motor is currently the number two player in the Indian electric car market.

Maruti Suzuki India had in 2023 announced the launch of its first electric vehicle (EV) in the sport utility vehicle (SUV) category in 2023-24. However, the launch date was subsequently pushed back to 2024-25. Overall, Maruti aims to introduce six EVs in India by 2029-30. South Korean carmaker Kia India in 2025 plans to launch a ground-up EV, specifically designed for the Indian mass market, marking the brand’s first foray into the mainstream electric segment.

First Published: Jun 11 2024 | 3:02 PM IST