Tata Motors acquires Rs 7,500 crore funding for EV business: How it could become invincible

Tata Motors is looking to raise $1 billion to help grow its electric car business. With already a head start, what will it mean for the brand and the industry? We take a look.

By:October 12, 2021 10:22 PM
2021 Tata Tigor EV static front

Tata Motors and TPG Rise Climate have entered into a binding agreement. TPG Rise Climate along with its co-investor ADQ is looking to invest in Tata Motors’ Passenger Electric Vehicle business. The subsidiary is said to become newly incorporated as well. TPG Rise Climate and co-investors shall acquire between 11 % to 15 % stake in the newly incorporated company with an investment of $1 billion (~Rs 7,500 crore). It would result in an evaluation of $9.1 billion (~Rs 68,900 crore).

Through the new investment, Tata Motors will channelise them into electric vehicles, develop battery electric vehicle platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.

Tata Motors is looking to create a strong portfolio consisting of 10 battery-electric passenger vehicles. While Tata Power will help create the infrastructure to support the anticipated rapid EV adoption in India.

N Chandrasekaran, Chairman Tata Motors Ltd commented, “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delights customers while meticulously creating a synergistic ecosystem. We are excited and committed to play a leading role in the Government’s vision to have 30% electric vehicles penetration rate by 2030.”

2021 Tata Tigor EV driving left

Jim Coulter, Managing Partner TPG Rise Climate and Founding partner of TPG commented, “We are excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India. There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions. The investment aligns with TPG Rise Climate’s focus on decarbonised transport and builds on TPG’s long history in India.”

Tata Motors: The Dominator of EVs In the Future

The battery-electric passenger vehicle is still fairly a luxury good in the Indian market. Only a handful of models are available on sale. They include either high-end luxury models from Mercedes-Benz, Audi, and Jaguar which cost over Rs 1 crore. On the other end of the spectrum, we have the Hyundai Kona Electric and the MG ZS EV, both of which sit in a premium position above the Rs 20 lakh range. Maruti Suzuki has been working on the development of an affordable electric vehicle for India, but it is yet to bring it to market.

As far as affordable electric cars go, Tata Motors is the only automaker to sell not one, but two models under the Rs 20 lakh barrier. The Tata Nexon EV and the recently introduced Tigor EV show that lithium-ion battery-powered vehicles can be available to the masses. Both of these models offer a heavy dose of localisation as well.

It is why, in a price-conscious market like India, Tata Motors has been dominating the electric vehicle space. In 2018, Tata Motors had just 11% market share in the EV space. With the new Ziptron platform that underpins the Nexon and Tigor EVs, Tata Motors has since captured the lion’s share. The Indian automaker currently holds 71% of the market share for electric vehicles in the country.

As we head towards the transition to electric vehicles, Tata Motors clearly has the upper hand by a huge margin over its competitors. With the injection of Rs 7,500 crore, supplemented by the knowledge it already has, Tata Motors could be invincible in the battle of EVs in the near to distant future.

The first round of capital infusion is said to be completed by March 2022. The entire funding would be disbursed by the end of next year.

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