With the board of directors of TVS Motor Company approving the incorporation of a wholly-owned subsidiary to undertake its electric mobility business, the Chennai-based company is gearing up to explore the electric vehicle (EV) space. TVS Motor has set up a team of over 500 engineers to work on EV designs and concepts, ranging from scooters to three-wheelers to goods vehicles. The company recently also formed a strategic partnership with Tata Power to implement EV charging infrastructure across India. The decision to speed up the EV plans came close on the heels of the company reporting its highest-ever revenue of Rs 5,619 crore in the second quarter of FY22, besides posting the highest-ever EBITDA of Rs 562 crore.
KN Radhakrishnan, director and CEO, TVS Motor, said in an earnings call that the company is investing more than Rs 1,000 crore to create an EV portfolio. “This will be in addition to the iQube. We will see new EV products in the forthcoming quarters. This subsidiary will give us the flexibility and freedom to scale up the business. We will look at global markets, developed and developing, under this strategy.”
TVS Motor’s first all-electric scooter, iQube, was launched in January 2020. The scooter, with a range of 75 km, is available in New Delhi, Chennai, Pune, Coimbatore, Kochi and Bengaluru. The company plans to expand iQube’s reach pan-India by FY22-end, while it intends to increase monthly capacity to 10,000 units by January 2022. Analysts have commented positively on TVS Motor’s Q2 performance and decision to form a separate subsidiary for EV.
Motilal Oswal, in a research note, said the company is incorporating a wholly owned subsidiary for the EV business to increase focus, flexibility, and freedom. On the company’s performance, it said TVS Motor’s retail sales during Navratri declined on a high base (pent-up demand in FY21), while rural demand was affected by erratic rain. Retail sales are expected to pick up during the Diwali season, supported by normalisation of the monsoon and reduction in Covid-19 cases. TVS Motor expects to do better than the industry on the back of new launches such as TVS Raider 125 and Jupiter 125, it said.
Radhakrishnan said semiconductor shortage is currently impacting iQube production, and has affected Apache volume by 25,000 units in Q2 FY22. However, supplies are now improving for Apache. Emkay Global Financial Services, in a note on TVS Motor, said the domestic two-wheeler volume outlook is positive, and premium motorcycles/ scooters could outperform. In addition, the export outlook is encouraging, owing to healthy demand in Africa and Latin America.
TVS has lined up capex of Rs 750 crore for FY22. Gopala Desikan, CFO, TVS Motor, said, “We have invested Rs 500 crore in the first half and there will be another Rs 250-300 crore in second half. The investments will be made in EVs and other products. So far, we have invested Rs 140 crore in EGO (movement), Rs 100 crore in TVS Credit and Rs 120 crore in Norton.”
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