The global growth of the electric vehicle industry has been outstanding since 2010. Many car manufacturers are either focusing on the production of EV’s or including EV’s in their production line. Vehicle manufacturers like Tesla, Waymo, Hylion, Envoy Technologies, and more are leading the race globally, developing and creating newer EV’s and the ecosystem to support this growing industry. The global stock of electric cars reached 10 million units in 2020, up 41% from 2019, with countries like China and the USA leading the charge. Where does India stand in this fast-evolving industry?
India’s automotive industry is the fifth-biggest globally and is expected to rise to the third-biggest by 2030. With this potential increase, how does the EV industry snag its own share of this enormous sector? CEEW Center for Energy Finance (CEEW-CEF) estimated that India’s electric vehicle market was valued at USD 5 billion in 2020. This is expected to rise to USD 47 billion by 2026 and USD 206 billion by 2030 if India continues to meet its ambitious 2030 goal.
Tata Motors is one vehicle company that is really taking advantage of this potential growth and is trying to stamp its territory as the Indian EV giant. Tata Motors is a gigantic motor enterprise that has its wheels spread in over 125 countries. It is valued at about 35 billion, and like every ambitious company, it seeks to grow its value. The Indian EV market is still relatively small, with a lot of room for tremendous growth. Only a couple of motor companies in India have their foot in the EV industry, such as Mercedes, Hyundai, and MG.
Tata Motors has moved to secure its chunk of the industry. It has done this through a move by US private equity firm TPG’s Rise Climate Fund and Abu Dhabi holding company ADQ. Both companies said they would inject a total of USD 1 billion. As a result, Tata’s EV business will be spun off into a new company valued at $9.1bn, with TPG and ADQ holding up to 11% and 15% stakes. This would be a massive boost for the company’s EV business and would invariably affect the entire EV ecosystem in India.
What Does This Mean For The EV Industry In India?
Tata Motors’ investment, which represents the first significant fundraising by a car manufacturer in the electric vehicle segment, will have a tremendous impact on the company and the broader industry. One of these impacts is the increase in trust in the current EV market in India as such an investment would mark the beginning of more investments from other potential foreign investors in India.
“The TPG and Tata Motors deal may redefine India’s auto landscape as investments of such magnitude indicate confidence about India’s future EV potential,” says Raghunandhan NL, an analyst with Mumbai-based Emkay Global Financial Services. “We believe that large investments and more product options will accelerate the pace of EV adoption.”
The plan and forecast of the Indian government is to have 30% of its vehicles as EVs by 2030, but with the numbers of EVs sold at the end of March 2021 standing at 5,905 ars, this goal seems a bit far off. The low sales of EVs in India are due to a couple of factors: first, the high cost of getting an EV compared to the average fuel-based vehicle. Second, electric vehicles require charging infrastructures to function well, which are not yet completely available in India.
Tata Motors is placing itself in a position where it can make EVs available for the Indian market. As one of the largest car manufacturers in India, Tata Motors also has the most significant stake in the Indian EV industry, accounting for about 70% of electric vehicle sales in the country.
Tata Motors says the USD 1 billion investment is only the beginning of future investments in the electric vehicle industry. The company plans to invest more than USD 2 billion in its electric vehicle business in the next five years. Tata intends to revolutionize the electric vehicle industry. It aims to do this by developing more electric vehicle charging structures in India to ease widespread use. The company also has in its plans the intention to focus on other areas, such as the development of its own battery technology.
In India, there are 1,300 public charging ports, while China has 950,000. This disparity in numbers shows the number of opportunities available for Tata Motors in the Electric Vehicle space in India. This has positively influenced the share price of the company, having increased by 18% after the announcement of the USD1 Billion investment, while over the course of the year, their share prices have more than doubled. It is important to note that Tata Motors is doing these numbers despite a general downturn in the car industry in India, as the sector was already having trouble before the pandemic.
Morgan Stanley recently upgraded its rating on the carmaker. After eight years of losses, the investment bank expects the company’s India business to post a profit this year. Industry insiders also view Tata’s plans positively since it intends to develop areas such as India’s insufficient charging infrastructure.
What Technology Should You Expect From Tata Motors Electric Vehicles?
In the development of its EVs, the Car Manufacturer has employed the use of Ziptron technology which promises zero emissions, zero noise and zero vibrations. It also promises 60 minutes of fast charging, meaning you will be able to enjoy more extended usage of your car while keeping the planet safe.
The competitive environment in Tata Motors’ home market is likely to intensify rapidly in the short term. There are reports that Tesla will launch its vehicles in India. There could be a reduction in import duties for electric cars in the near future.
It has been a busy year for the Indian government in the electric vehicle space, and incentives have been offered to promote the faster adoption of electric vehicles. In spite of the government looking at withdrawing subsidies as batteries’ costs drop, as companies such as Tata Motors venture into the battery manufacturing space, this is not expected to have a tremendous impact on Electric Vehicle sales in India since projections are still being met.
Tata Motors’ new electrical vehicle business is really taking the initiative in India. If it keeps to its plans, there is massive room for more growth, as the Indian market is quite primed to fully embrace eco-friendly vehicles. However, Tata Motors needs to remain innovative and provide people with the best service to stay ahead of the competition.