Tata Motors: Tesla’s Indian Mate
With the current hot topic of conversation being the entry of Tesla in India, and rumors of Tata-Tesla tie up sprouting, the EV industry has been in the limelight lately. India is all set to embark on a new journey and Tata Motors is taking the lead. The current phase can be regarded as a turning point in the automobile industry. What lies ahead? What does the EV industry have in store for Indians? What is the scope? What are the major hurdles standing in the path of this transformation?
The time has come for a change, a change big enough that has the potential to transform the automobile sector completely!
Just like Tesla commands the global EV Industry, Tata Motors too has created a niche for itself in India’s EV industry with a market share of 75% and has already started reaping the benefits of first-mover advantage. During 2020, owing to the COVID-19 pandemic, while on one hand, the sales of passenger cars in India saw a stark drop of around 15%, the sales of Electric Vehicles by Tata went up by three times. In the initial stages of the launch of its first electric car- Tigor EV by the company in 2018, its sales were restricted to the commercial fleet buyers and the government. Later on, Nexon EV was launched in 2020 for the personal segment with 65% of the total market share.
On Feb 15, 2021, Tata Motors came up with its press release titled “Jaguar Land Rover reimagines the future of modern luxury by design.” JLR sales contribute around 82% to Tata Motors’ total revenue. In the press release, it informed the public about its new strategy- ‘Reimagine’. “We are harnessing those ingredients today to reimagine the business, the two brands, and the customer experience of tomorrow. The Reimagine strategy allows us to enhance and celebrate that uniqueness like never before. Together, we can design an even more sustainable and positive impact on the world around us.” These are the words of Mr. Bolloré, the CEO of JLR.
Under this new global strategy, Tata Motors' wholly-owned subsidiary JLR plans to spend $3.5 billion on electrification technologies and the development of connected vehicle services. By 2039, it intends to become a net-zero carbon business. Jaguar has started its journey and is on its way to becoming an all-electric luxury car brand from 2025. In the next 5 years, Land Rover plans to come up with six pure electric variants, with its first-ever electric variant all set to hit the roads in 2024.
Currently, the automobile sector in India is fuel-driven. According to the Bloomberg report, less than 1% of vehicles sold in India are electric. Owing to the exhaustible nature of crude oil, we cannot continue to depend on it in the long run. We need some alternatives and EVs are those alternatives. Also, the operational cost of Internal Combustion Engine Vehicles is very high. The government is raising taxes on crude oil and petrol prices are setting new records by reaching all-time highs. On an average, Indians spend 17% of their daily income on fuel. This makes EVs an even convenient choice. While their initial price might seem to be very high to the Indian customers, the subsequent operational cost is lower in comparison to fuel-based vehicles.
This industry is not free from challenges. From high initial cost to lack of EV ecosystem, there are a lot of things that need to be catered to in this sector. Manufacturing EVs is not enough. To support their functioning, a proper EV ecosystem is required. There is a need for charging infrastructure, localized part manufacturing to ensure the sustainability of the industry, cell manufacturing. Generally, EVs are 2-2.5 times more expensive than conventional vehicles. India’s weak consumer appetite stands as a major hurdle in its adoption. Tata Nexon EV’s affordable pricing is working out in its favor and has helped it become a mainstream choice. Its price range lies between Rs13.99 - 16.40 Lakh. This is very low in comparison to similar electric cars such as MG ZS EV and Hyundai Kona which are priced between the range of Rs20.99 - 24.18 Lakh and 23.75 - 23.94 Lakh respectively. According to Shailesh Chandra, president of the passenger vehicle business unit of Tata Motors, the company aims to reduce the price of the EVs below $10,000 as 75% of the total automobile sales in India take place within this bracket.
Another major factor that gives Tata Motors an edge over its competitors is the conglomerate nature of Tata Group. Because of this, it does not need to rely on any outsider company and can harness great benefits from this structure. Most of the work in the direction of developing EVs and their infrastructure is done by different companies under the Tata Group itself. This has helped it overcome the problem of the EV ecosystem to a great extent. For charging infrastructure, Tata Motors has collaborated with Tata Power, which is not only working in the direction of providing public charging solutions but also home charging solutions. The problem of battery packs for the EVs is solved by Tata Automotive Components. Tata Chemicals is working towards the development of cell manufacturing required in the EVs.
A huge investment is required to realize the goal of making EVs easily affordable and accessible by all. This transformation cannot come about without the support of the government. While the government across the country is moving in the direction to make this goal realizable by taking various steps such as providing subsidies on EVs, Delhi Government is taking the lead by making constant efforts to bring about this change. ‘Switch Delhi’, one of its campaigns is to create awareness and promote the EV industry. It plans to install additional 100 charging stations with 5 charging points each across Delhi. Commercial and institutional buildings that have a parking capacity of more than 100 vehicles have been directed to set aside 5% of their parking area for the EVs. In the case of new constructions, 20% of the parking area needs to be kept aside for EV parking. Apart from this, the government has announced a waiver on registration fees and road tax. Also, we cannot continue to rely on current non-renewable sources as electricity generation’s major contributors in the long run. The government needs to work in this direction and look for other alternatives that are renewable, sustainable, and can contribute to the smooth functioning of EVs.
The EV industry in India is still in its nascent stage but it has huge potential and high growth prospects. According to a CEEW Centre for Energy Finance study, its value in the coming decade could reach $206 Billion. This is just the beginning and we still need to go a long way. Tata has made its plans clear to go solo and does not intend to get into a partnership with Tesla anywhere in the near future. A lot lies ahead and it would be quite interesting to witness how Tata takes over this industry and see if it can single-handedly manage and drive the entire industry and emerge as a leader that India’s EV industry has been waiting for.
By Sehaj Gambhir