India’s Electric Vehicle Leader Tata Motors Adopting A Cheaper Path That Us Treaded Less

India’s Tata Motors Ltd refurbished an underused work floor at its flagship facility to produce its first electric vehicle for the consumer market. There is no sophisticated production line here; Nexon SUV bodywork built for gasoline versions are connected and battery packs are installed by hand.

Initially, the location, which could be mistaken for a prototype lab, produced only eight SUVs every day. However, in the two years after the Nexon EV’s debut, demand has skyrocketed. Tata now produces over 100 per day, however much of that is now handled at a nearby plant.

Tata dominates India’s young electric car market despite its humble beginnings, which depend on India’s history of ‘jugaad’ – a word referring to thrifty DIY creativity and workarounds.

This stands in stark contrast to other big automakers, which have invested billions of dollars on EV tooling and technology from the start, albeit Tata’s success is largely due to government subsidies and high tariffs that keep rivals like Tesla Inc out.

Tata realised it had to build a cheap automobile for a particularly cost-conscious populace in India’s untested EV industry. Rather than constructing an EV plant or line, which would be costly and time-consuming, it chose an existing successful model and worked on equipping it with a battery pack.

For a nascent industry, an EV factory would have been ideal “There’s a lot of money riding on the promise of emerging volumes. That was something we didn’t want to undertake “Tata Passenger Electric Mobility’s vice president of product line and operations, Anand Kulkarni, told Reuters.

Tata also cut costs by depending on Tata group companies for a variety of EV components and infrastructure, as well as opting for a less expensive battery chemistry type.

This allowed them to price the Nexon EV at roughly $19,000, which is not exactly cheap in India, but it is attainable for the upper middle class and not much more expensive than the Nexon gasoline model’s top variant.

Tata controls 90% of India’s electric car sales with just the Nexon EV and one additional model for fleet sales, giving it a crucial first-mover advantage despite EVs accounting for only 1 per cent of the broader auto industry.

Tata announced in June that it would launch ten electrified vehicles by March 2026. According to insiders, it plans to triple EV output to 80,000 cars this fiscal year.

TPG, a private equity group based in the United States, invested $1 billion in the company, valuing its electric vehicle business at $9 billion, which is less than some EV startups but equal to 40 per cent of Tata Motors’ market worth.

“This has definitely given us a significant head-start. It now gives us a force multiplier to aggressively move on EVs,” said Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and the EV subsidiary.

Tata has set aside $1 billion of its own money to fund its EV initiatives, and Chandra expects electric vehicles to account for a quarter of the company’s sales by 2025.

In the long run, Tata is developing an EV-specific automobile chassis and plans to debut its first vehicle based on it in 2025. According to Kulkarni, the corporation is also considering the necessity for a separate EV factory. find out more

Meanwhile, it intends to adapt combustion engine platforms in order to produce EVs with larger batteries and longer ranges. In around two years, those models are expected to join the market.

Tata’s electric vehicle sector, on the other hand, is expected to experience difficulties. While the government’s aim of having 30% of all automobiles sold in the country be electric by 2030 may appear ambitious, competition is on the way.

Hyundai Motor and Kia Motors of South Korea intend to begin selling electric vehicles in India this year, albeit their versions will be larger and more expensive. Some competitors are also expected to release gasoline-electric hybrids.

“The major threat will come when competitors like Hyundai launch EV models in a similar price band and as Toyota and Suzuki’s hybrid cars come into the market,” said Gaurav Vangaal, associate director at S&P Global Mobility.

Tata, like other automakers, is having difficulty obtaining semiconductors due to a global scarcity, which has become the company’s largest problem in ramping up production and resulted in a five-month backlog in EV orders.

Tata, on the other hand, plans to capitalise on its impressive lead in India’s electric vehicle market. It has amassed a wealth of data from its 25,000 electric vehicles on the road, which is particularly useful for developing electric vehicles in hot areas, according to Kulkarni.

“India has several hotspots which make it a challenge for electrification. Developing EVs in this market provides us with rich data, information which can flow back into our development process. I can’t tell you the kind of head start this gives us,” he said.

(Adapted from Reuters.com)

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