Tata, India’s electric car king, takes a sparse road that is less traveled

PUNE, India, May 2 (Reuters) – To make its first electric vehicle for the consumer market, India’s Tata Motors Ltd (TAMO.NS) reused an unused shop floor at the flagship factory. There are no fancy assembly lines here – Nexon SUV bodies designed for petrol models are wired and equipped with battery packs by hand.

The area, which can be confused with a prototype laboratory, initially made only eight SUVs a day. But demand has picked up over the two years since the Nexon EV was launched. Tata now earns more than 100 per day, although much of it is now handled at another facility nearby.

Even with this humble start, which draws on India’s tradition of “jugaad” – a word that refers to frugal do-it-yourself innovation and solutions, Tata dominates the country’s new electric car market.

This is in stark contrast to other major automakers who have invested billions of dollars in EV tools and technology from the start, although Tata’s success is also largely due to government subsidies and high tariffs that keep imports from rivals such as Tesla Inc (TSLA.O) ) out. .

When Tata entered India’s untested electric car market, Tata knew it had to make an affordable car for an extremely cost-conscious population. Instead of building an electric car plant or line that would be expensive and time consuming, it decided to choose an existing successful model and work on equipping it with a battery pack.

An EV plant for an emerging market would have been “a huge investment based on the potential for new volumes. We did not want to do that,” Anand Kulkarni, vice president of product line and operations at Tata Passenger Electric Mobility, told Reuters.

Tata also limited pre-investment by relying on companies in the Tata Group for a range of EV components and infrastructure, and by choosing a cheaper type of battery chemistry.

This made it possible for it to price the Nexon EV around 19,000 dollars – not necessarily cheap in India, but affordable for the upper middle class and not much more expensive than the top version of the Nexon petrol model.

With only the Nexon EV and one other fleet sales model, Tata controls 90% of India’s electric car sales, giving it a significant first-time advantage even though electric cars make up only 1% of the total car market.

In June last year, Tata outlined aggressive plans to launch 10 electric models by March 2026. This financial year alone wants to quadruple EV production to 80,000 cars, sources have said.

These ambitions attracted $ 1 billion in investments from the American private equity company TPG, and valued its EV business at $ 9 billion – far below some EV startups, but equivalent to 40% of Tata Motor’s market value. read more

“This has definitely given us a significant head start. It now gives us a power multiplier to move aggressively on electric cars,” said Shailesh Chandra, CEO of Tata Motors Passenger Vehicles and the EV subsidiary.

Tata has also earmarked $ 1 billion of its own money to fund its EV plans, and by 2025, Chandra expects electric models to account for a quarter of sales.

In the longer term, Tata is working on an EV-specific car platform and wants its first car to use this architecture to be launched in 2025. The company is also considering the need for a dedicated EV system, Kulkarni said. read more

In the meantime, it plans to modify internal combustion engine platforms to build electric cars with larger batteries and longer range. These models are likely to hit the market in about two years. read more

The Nexon EV has a relatively modest range in the real world of around 200 km per charge.

However, the range is sufficient for most potential Indian buyers, a Tata survey showed among consumers, and led it to choose a 30 kilowatt-hour iron-based battery from China’s Gotion High Tech Co (002074.SZ) that is cheaper than other lithium batteries. ion batteries. Tata has also considered it safer for India’s tropical weather conditions, Kulkarni said.

Gotion is collaborating with Tata AutoComp Systems (TASY.NS) to assemble the battery packs and the battery management system.

Tata AutoComp, which picks up most EV parts, is one of several Tata conglomerate companies that Tata Motors relies on – a big advantage at a time when many car manufacturers are plowing funds to become more vertically integrated and less dependent on suppliers.

Tata Power Company Ltd (TTPW.NS) sets up charging stations, Jaguar Land Rover contributes with design while Tata Chemicals Ltd (TTCH.NS) has plans for battery recycling and local cell production.

When Tata started production of electric cars in 2020, most of the parts were imported. Today, Tata AutoComp produces around 50% of the components internally, CEO Arvind Goel told Reuters.

“Our plan is to locate everything,” he said.

All engine parts except the magnet will be produced locally over the next few years. Apart from the cells, the battery will be made internally, and the company is working on its own battery management system, Goel added.

However, Tata’s EV business faces challenges. The government wants 30% of all cars sold in the country to be electric by 2030, and although the goal may look optimistic, competition is on its way.

South Korea’s Hyundai Motor (005380.KS) and Kia Motors (000270.KS) plan to start selling electric cars in India this year, although their models are set to get bigger and more expensive. Expectations are also high for some rivals to launch petrol-electric hybrids.

“The biggest threat will come when competitors such as Hyundai launch EV models in a similar price range and when Toyota and Suzuki’s hybrid cars enter the market,” said Gaurav Vangaal, assistant director of S&P Global Mobility.

And like other car manufacturers, Tata is struggling to acquire semiconductors in the midst of a global shortage that has become the biggest challenge in increasing production and has caused a 5-month lag in EV orders.

That said, Tata intends to get the most out of its enviable lead in India’s EV market. It has collected a lot of data from monitoring the 25,000 electric cars it has on the road – especially relevant for the development of electric cars in hot climates, says Kulkarni.

“India has several hotspots that make it a challenge for electrification. Developing electric cars in this market gives us rich data, information that can flow back to our development process. I can not tell you what kind of lead this gives us.” he said.

Reporting by Aditi Shah; Edited by Kevin Krolicki and Edwina Gibbs

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