`Will work with residential hubs to provide common EV charging spots’: Tata Motors MD

How have we been able to optimise costs? Firstly, we had the benefit of converting an internal combustion engine (ICE) car into an EV. This gives us economies of scale because you have a commonality with the larger volume base of ICE.

We sell about 7,500 Tiago ICE cars every month. The capital cost comes down because we’ve developed it at a fraction of what a ground-up EV would cost.

Over a period of three years, we have also been driving localisation, and domestic value addition is high. So that has helped us bring down the cost. We have been able to optimise the energy capacity required without compromising on the range, through learnings and analytics from our previous EVs.

Speaking of learnings, what have you learnt from the Tigor EV sedan, considering it wasn’t a volume success despite being priced lower than the Nexon EV? What is the customer not willing to compromise on, even at the budget end?

As far as the Tigor is concerned, the inherent demand for sedan EVs has been less. If you compare the volume of the Nexon vs the Tigor, the sedan sells less. The Nexon EV rides on the advantage of being based on a very popular car — the Nexon. It had an inherent advantage because it had a five-star safety rating and unique styling. Increasing customer preference towards SUVs also helped it.

It struck the right balance between price, features, and range. I think we’ve been able to hit a similar if not better sweet spot as far as the Tiago EV is concerned. We will be able to see as good penetration as we have seen with the Nexon EV.

You mentioned last year that we are likely to see price parity between EVs and ICE cars by 2023. With battery component prices being what they are, do you see that date being extended?

I’m not looking at price parity between the same version of an ICE car and its EV counterpart — because the EV will always command a premium because of convenience, low running costs, and battery costs.

You have to consider whether the lower running cost will translate into a faster payback to justify the premium paid.

Let’s take the Tiago. The petrol AMT’s on-road price would be about Rs 8.5 lakh. Now take into consideration the fact that you don’t have to pay road tax for EVs in several states. Every year you'll be saving Rs 70-75,000 in running costs. So you’re already winning from a total cost of ownership (TCO) perspective.

You mentioned that with the Tiago EV, one will save about Rs 6,500 per month in fuel expenses. Given the roughly Rs 3 lakh price gap between the entry-level Tiago petrol and the EV, that means it will take approximately 46 months to recover the additional cost.

You have to compare it with an AMT because the Tiago EV is an automatic car. You’re getting more sophisticated automotive technology. The numbers are clearly in favour of the EV.

In that case, how quickly do you expect the first 10,000 to fly off the shelves,  given that Tata Motors sold over 17,000 EVs between April and August this year?

When we start the deliveries in January 2023, we expect that we will be able to ramp up supply to meet the requirement. The first three months will be a demand discovery phase and it should lead to a much higher penetration than we are expecting at the moment. This will create a larger base of customers who will start upgrading to other EVs coming in the future.

Besides competitive pricing, what are other factors that, according to you, will lead to widespread penetration in the hatchback segment?

You know, there are three categories of customers who will be very excited. There are already customers who can afford more expensive cars. But in congested city driving conditions, they’re looking for a car with premium features. That’s one category.

The second is a group of people, who, due to high congestion, are moving towards automatics. And in automatics, they will definitely see the EV as the smoother, more cost-effective option.

Then there are customers who drive 70-80 kilometres daily. For them, this will make tremendous sense, as they can recover the cost premium in a year.

The Nexon EV became the best-selling version of the Nexon, in part because there was no CNG option. With the Tiago CNG version around, do you expect some level of cannibalisation, or are the customers very different?

CNG Tiago customers have the advantage of being able to go very long distances. They have the advantage of having a petrol fuel tank in addition to a CNG fuel tank. There will be customers, who because of the price difference, will opt for the CNG. So while there will be cannibalisation, it won’t be major, but there’s certainly a case for the CNG customers to consider the Tiago EV as an option.

You also wish to penetrate Tier II and Tier III cities with the Tiago EV. What are the measures being taken to improve the domestic and public charging system in these places?

Two things. When you go to smaller cities, everyday usage is less. Range anxiety is less. Wherever people have to travel long distances, we will see which are the dense highway routes and then work with Tata Power to see how to bring up charging infrastructure in those places.

Even if we’re able to provide one or two chargers in key spots, it’ll help reduce range anxiety. If you see, roughly two-thirds of the cars travel a distance of 170-180 km per day. Only a few people go beyond 200-300 km.

The current crop of cars is capable of handling this but still, the customer can get anxious. So you have to identify critical spots along the highway. Typically, where a food kiosk is situated. Tata Power has seen interest among other charging infrastructure providers also.

Is there anything being done at the residential infrastructure level?

In bigger cities, with Tata Power’s help, we have begun to get a domestic charger installed even before the customer has taken delivery of the car.

For those who do not have a dedicated charging spot, we are working with residential societies to provide common chargers. These are smart chargers which you can book through an app, pay through a payment gateway, and charge for whatever amount or time you like.

This is the model we’ve been driving in Mumbai, Delhi and Pune. Now we’re going to take this to more cities. In any case, new residential projects are coming-up with parking lots which have chargers.

Where does Tata Motors stand on localisation of battery cell manufacturing?

Tata Motors is not going to invest in battery cell manufacturing. But the Tata group might consider investing. When the Tata group is able to freeze that decision, is when we will talk about it. There is intent at the group level, but not at Tata Motors.

The Tiago EV being the last Gen 1 EV (Gen 1 EVs use existing ICE platforms), how will the Gen 2 and Gen 3 platforms contribute to the low-cost EV space?

Gen 3’s biggest advantage is a bigger battery pack. As of today, you don’t have a case for a bigger battery because the car will become very expensive. Only when battery prices come down to a certain level will it start making sense.

Even with a Gen 2 product, we can stretch the range to 500km, but if I start giving that range today I will get out-priced on the battery front. Our strategy for Gen 1, Gen 2, and Gen 3 EVs is to evolve along with the market, the customers, and battery prices.

Tata Motors currently occupies 88 percent of the EV market. With Mahindra stepping into the EV game, what kind of market share are you targeting with the Tiago?

If you are the biggest player in the market, from a market share perspective, you can only lose. That is not a worry for Tata Motors.

We are more focused on volume growth. That can only come if you’re expanding the portfolio. We are focussed on bringing 10 products in the next five years. And we are focussed on working with ecosystem players to increase localisation levels, and working with Tata Power to provide multiple solutions to the charging problem.