Welcome to the new weekly series - Electric Car Watch, where we will talk about EV plans of major car brands, take a look at their EV vision, and go over their technology platforms. We will also discuss the EV models in production and look at what we can expect for India. In this week’s episode we will talk about our very own vehicle giant - Tata Motors and their plans for EV's in India and the world.
Tata Motor's EV Vision
In December 2019, Tata Motors unveiled their EV vision, where they showed how Tata Electric Cars will overcome the barriers that exist in the Indian market for electric cars. The barriers are affordability of EV’s, awareness of charging, performance of EV’s and battery worries. The Nexon EV was launched in Jan 2020 with an aim to knock down these barriers for electric cars in India. They also spoke about the Ziptron platform, the high voltage platform which will be used by multiple Tata EV’s. Nexon EV was launched at cost of ₹14 lakh (US $18,670) and gets a 30.2 kWh battery pack which helps it have a range of 250 kms. The car goes upto 100 kmph in 9.14 seconds with 245 Nm of torque at the start. Looking at the encouraging sales of the Nexon EV and after talking to many happy owners of Nexon EV, we can safely say that Tata Motors has succeeded in raising awareness and shown many people that these so-called EV barriers are not really major issues.
But the most promising aspect of Tata’s announcement was not the electric car itself but the Tata UniEVerse electric car ecosystem. In the Tata UniEVerse, many Tata groups of companies have planned to come together to create one large EV ecosystem. In this ecosystem, we will have
Tata has elevated EV awareness
Recently Tata launched another electric car based on the ZipTron platform - The Tata Tigor EV. Tata Motors now leads in the passenger EV segment in India with a market share of 71 percent. Tata has sold 10,000 EV's in India so far. The Nexon EV crossed 1,000 units sales landmark in August this year.
Looking back I would say that these 2 years have been fantastic for awareness building of EV’s in India. This is mainly due to Tata launching the Nexon EV and the Tigor EV. The Nexon EV has been a huge success for Tata Motors. We spoke to some people at Tata Motors and they say that the senior management are very positive about the demand for EVs, and this success of the Nexon EV will encourage Tata Motors to launch more EV’s in the coming years. I would say hats off to the Tata Motors EV team and to all the owners of these EV’s.
We recently have got some huge news regarding the future of EV’s from Tata Motors. TPG Rise Climate, a San Francisco based investment group, which invests in sustainable companies, announced that they will invest Rs 7500 CR or $1 Billion in a new subsidiary of Tata Motors for electric mobility business. This unnamed new company will use all the capabilities of Tata Motors and at the same time channel future investments into dedicated Battery Electric Vehicle platforms, charging infrastructure and battery technologies. Over the next 5 years, this company will create a portfolio of 10 EV's and in association with Tata Power Ltd, catalyse the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India.
N Chandrasekaran, Chairman Tata Motors Ltd commented, “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delights customers while meticulously creating a synergistic ecosystem. We are excited and committed to play a leading role in the Government’s vision to have a 30% electric vehicles penetration rate by 2030.”
Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG commented, “We are excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India. There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions. The investment aligns with TPG Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India.”
And yes TPG Rise Climate, have invested in sustainability focussed companies in India before. They have invested in Hyderabad-based Fourth Partner Energy who install solar power parks. But this scale of investing over a billion $ is huge for the electric car space in India.
No Manufacturing Facilities
We also learnt that the new company - “Tata Motors EVCo” will be created as an asset-light new subsidiary of Tata Motors. It will house all dedicated EV talent and design capabilities. This new company will invest in excess of $2 billion (Rs 14,802 crore) over the next 5 years. What they mean by asset light is that the new company will continue to use the production facilities of Tata Motors.
PB Balaji, chief financial officer, Tata Motors said, “The manufacturing capacities of passenger vehicle (PV) will be available on a tolling basis to the EV company. The EV company will not have any asset or any capacity for itself within the company but it will have the access to the PV capacities already created.”
We spoke to some EV owners from the EV community who are experienced in manufacturing and what this means is that “Tata Motors EVCo” will pay money to its parent company Tata Motors to use its tooling, assembly line and fabrication facilities. Some people we spoke to say this is a positive development as Tata Motors already has invested in creating assembly lines for Nexon ICE, Tigor ICE or the Altroz ICE so there is no need to have unnecessary capital expenditure. And this kind of tolling system has been used in the car business for a long time.
We spoke to others, who don’t like this dependency on the parent company. Paying an ICE car company at the cost of EV’s does not seem right. The new EV company must have its own manufacturing facility to have more control on processes dedicated to EVs. This seems to be a flaw, and won’t be sustainable in the long term.
So there are two points of views here on the new EV company being asset light with no manufacturing facility. I feel both views have valid points. On one hand using tooling and assembly lines of Tata Motors will help when it comes to conversions like Nexon, Tigor, Altroz. But what happens when the new “Tata Motors EVCo” wants to create its own designs? Will it continue using Tata Motor’s facilities?
Anyway I’m okay with whatever creates more EV options in the market. 10 electric cars by 2026 is pretty impressive. The Indian car market is starving for EV options and Tata Motors will be a huge player by 2025.
However, I still want to get more details on where the 1 Billion $ is going to be spent. Which areas will the new company focus on. Will they focus on vertical integration? Will they make cells in India? Will we have a gigafactory for cells? What about electronic components? Can the Ziptron platform support the 10 cars that will be launched in 2026? Will Tata work on a new platform?
The answers to these questions are the key for Tata. We hope we can interview someone from Tata Motors who can lay out the vision on where these investments will be made. Or Maybe Tata will launch their new electric car the Altroz EV and in that event, they may share more details.
Guys, we want an Indian car company to be a big player not only in India, but also the world. If any company is serious about being a global player in the coming decades, they need to focus on EV’s. So Tata Motors should grab this opportunity to be a world player.
Do write in the comments on this huge investment for Tata Motors. Do they have the aspiration to be a global EV player?