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MUMBAI -- Tata Motors, a trailblazer in India's electric vehicle market, is doing everything it can to ensure it maintains the dominant position as the market grows and more competition emerges.
This includes sticking to a low-price strategy even amid persistent inflation. When the automaker announced on Feb. 10 a small price hike for the new electric version of its Tiago hatchback, it stressed that it had still kept the car accessible for the mass market.
The "nominal" increase of 20,000 rupees ($240) from the lowest introductory price shows Tata Motors is "committing to our promise of democratizing the EV market and keeping the product accessible to all by retaining the starting price below" 1 million rupees, the company said.
Prices had started at 849,000 rupees when Tata Motors began taking preorders in October, lower than the 1 million rupee-plus price tag on other electric models. This was originally meant to apply only to the first 10,000 orders, but after hitting that mark on the first day, Tata expanded the promotion to 20,000 orders.
Even before the release of the Tiago, Tata Motors -- a core company in the Tata Group conglomerate -- dominated India's electric market. It accounted for over 44,000 of the 51,172 electric passenger vehicles sold in the country in 2022, according to U.K.-based researcher LMC Automotive.
This is still a small fraction of what has become the world's third-largest auto market, where about 4.72 million new passenger and commercial vehicles were sold last year, based on data from the Society of Indian Automobile Manufacturers. But electrics are widely expected to pick up speed amid the global pivot from fossil fuels, and Tata Motors aims to stay ahead of the pack.
A key part of this plan is securing an in-house source of batteries, which would bring down production costs and make the company more competitive. Tata Motors is considering building battery plants in India and Europe.
Also in the works is charging infrastructure, without which the market's growth potential would be limited. Fellow group company Tata Power plans to expand its network of charging stations to 25,000 from around 4,500 over the next five years.
The automaker is partnering with IT giant Tata Consultancy Services and Tata Chemicals to develop new models, materials and components as well.
A recent recovery in earnings is giving Tata Motors more resources to work with, letting it reinvest money from the gasoline-fueled vehicles that still make up the bulk of sales into the growing electric business.
It had reported two years of net losses amid the global semiconductor shortage, but moved back into the black last quarter with a net profit of 29.5 billion rupees last quarter, thanks in part to strong sales of sport utility vehicles.
However, it is unclear whether Tata Motors will be able to hold onto its current favorable position. One concern is maintaining its low-cost path. If profitability deteriorates, the capacity for investment will decline, and this will inevitably harm competitiveness.
Tata Motors is not just adhering to a low-price strategy for the Tiago, it also reduced the price of its flagship Nexon EV, last month. Tata Motors said the price cuts were due to multiple factors, and the EV rollout by local heavyweight Mahindra & Mahindra appears to be one. If prices were kept unchanged, there was the risk that price-sensitive customers would flow to the competition.
India's preliminary Consumer Price Index rose by 6.52% on the year in January. With prices continuing to rise on soaring resource costs, cutting prices will be a major obstacle to earning profits. If 2023 is another year of losses, the funds available for EV investment will dwindle, and Tata Motors may fall behind competitors.
Another concern is that competition will intensify.
Japanese automaker Suzuki, the largest passenger car manufacturer in India, had previously stated that it would roll out EVs in India by 2025, but at a briefing held in late January, the company clarified the timing to be in "fiscal year 2024," which ends March 2025. That can be interpreted as moving up the date. Investment in production facilities in Gujarat could be accelerated to prepare for the launch of EVs.
Other foreign companies are beginning to move aggressively. Chinese automaker BYD has stepped up the EV business in India with leasing agreements for businesses and teamed up last summer with Japanese financial services group Orix to offer EVs in major cities. Nissan Motor and France's Renault said Monday they will invest $600 million in Indian production that will include EVs.
The question is whether Tata Motors can maintain its current advantage as a first mover and the backing of its large business group.
asia.nikkei.com
This includes sticking to a low-price strategy even amid persistent inflation. When the automaker announced on Feb. 10 a small price hike for the new electric version of its Tiago hatchback, it stressed that it had still kept the car accessible for the mass market.
The "nominal" increase of 20,000 rupees ($240) from the lowest introductory price shows Tata Motors is "committing to our promise of democratizing the EV market and keeping the product accessible to all by retaining the starting price below" 1 million rupees, the company said.
Prices had started at 849,000 rupees when Tata Motors began taking preorders in October, lower than the 1 million rupee-plus price tag on other electric models. This was originally meant to apply only to the first 10,000 orders, but after hitting that mark on the first day, Tata expanded the promotion to 20,000 orders.
Even before the release of the Tiago, Tata Motors -- a core company in the Tata Group conglomerate -- dominated India's electric market. It accounted for over 44,000 of the 51,172 electric passenger vehicles sold in the country in 2022, according to U.K.-based researcher LMC Automotive.
This is still a small fraction of what has become the world's third-largest auto market, where about 4.72 million new passenger and commercial vehicles were sold last year, based on data from the Society of Indian Automobile Manufacturers. But electrics are widely expected to pick up speed amid the global pivot from fossil fuels, and Tata Motors aims to stay ahead of the pack.
A key part of this plan is securing an in-house source of batteries, which would bring down production costs and make the company more competitive. Tata Motors is considering building battery plants in India and Europe.
Also in the works is charging infrastructure, without which the market's growth potential would be limited. Fellow group company Tata Power plans to expand its network of charging stations to 25,000 from around 4,500 over the next five years.
The automaker is partnering with IT giant Tata Consultancy Services and Tata Chemicals to develop new models, materials and components as well.
A recent recovery in earnings is giving Tata Motors more resources to work with, letting it reinvest money from the gasoline-fueled vehicles that still make up the bulk of sales into the growing electric business.
It had reported two years of net losses amid the global semiconductor shortage, but moved back into the black last quarter with a net profit of 29.5 billion rupees last quarter, thanks in part to strong sales of sport utility vehicles.
However, it is unclear whether Tata Motors will be able to hold onto its current favorable position. One concern is maintaining its low-cost path. If profitability deteriorates, the capacity for investment will decline, and this will inevitably harm competitiveness.
Tata Motors is not just adhering to a low-price strategy for the Tiago, it also reduced the price of its flagship Nexon EV, last month. Tata Motors said the price cuts were due to multiple factors, and the EV rollout by local heavyweight Mahindra & Mahindra appears to be one. If prices were kept unchanged, there was the risk that price-sensitive customers would flow to the competition.
India's preliminary Consumer Price Index rose by 6.52% on the year in January. With prices continuing to rise on soaring resource costs, cutting prices will be a major obstacle to earning profits. If 2023 is another year of losses, the funds available for EV investment will dwindle, and Tata Motors may fall behind competitors.
Another concern is that competition will intensify.
Japanese automaker Suzuki, the largest passenger car manufacturer in India, had previously stated that it would roll out EVs in India by 2025, but at a briefing held in late January, the company clarified the timing to be in "fiscal year 2024," which ends March 2025. That can be interpreted as moving up the date. Investment in production facilities in Gujarat could be accelerated to prepare for the launch of EVs.
Other foreign companies are beginning to move aggressively. Chinese automaker BYD has stepped up the EV business in India with leasing agreements for businesses and teamed up last summer with Japanese financial services group Orix to offer EVs in major cities. Nissan Motor and France's Renault said Monday they will invest $600 million in Indian production that will include EVs.
The question is whether Tata Motors can maintain its current advantage as a first mover and the backing of its large business group.
Tata Motors goes all-out to defend EV lead in India
Broad strategy includes affordable prices, battery factories, charging stations
asia.nikkei.com
