Against the backdrop of a thrust on electric vehicles (EVs) by the government, TVS Motor Company stated that both internal combustion engine (ICE) and battery-powered vehicles will co-exist in the market in the foreseeable future. A senior company official stated that while it will be sharpening its focus on EVs, it will also widen its offerings across categories in the traditional two-wheeler segment.
“We constantly look at the white spaces, and this (financial year) 2024-25 will be very, very exciting. There will be launches both in ICE and EVs this fiscal,” K.N. Radhakrishnan, Director and CEO, TVS Motor Company, told analysts in a post-earnings conference call.
While the Chennai-based automaker has just launched a new variant of the iQube, its electric scooter, it is also working on its maiden electric three-wheeler (E3W) that it aims to launch this fiscal. The company is also gearing up to roll out the TVS X, a premium crossover electric two-wheeler initially showcased in Dubai last year, in the coming weeks.
“With a well-planned product line-up and improvements in supply chain and infrastructure, we are confident that we will continue to be a formidable player in the EV segment,” added Radhakrishnan. The company's MD Sudarshan Venu had earlier said battery-driven products will account for 25-30 percent of its two-wheeler business by 2027.
When asked if the company is moving towards electrification of scooters in the long term, Radhakrishnan maintained, “Around 30-40 percent of the scooter category will further expand. So there is a great opportunity to both grow ICE as well as EV because customers will choose their products depending upon their convenience and comfort. They are technology-agnostic and go for products as per the usage. So we should be investing in both and making sure that we keep this opportunity on both EVs and ICEVs.”
In the ICEV space, the country's third largest two-wheeler maker is looking at a major upsurge in volumes in both commuter and deluxe segments during this fiscal. In the 250cc-plus segment, plans are also afoot to roll out more premium motorcycles to take on rivals like Bajaj Auto, Hero MotoCorp, Royal Enfield, etc.
“We are expecting during this year the two-wheeler industry will have a healthy growth. While we expect the growth to come from urban markets, the rural ones will start improving this year, ” affirmed the director and CEO. He expressed confidence that with models Apache, Jupiter 125, Ntorq 125, Ronin, the Star range, King (three-wheeler), etc., the company will continue to "grow faster" than the industry both in domestic and international markets.
Interestingly, he said that both the entry-level and executive motorbike segments will witness an increase. In his view, “Thanks to the population and the demography, I think those people who are having commuter bikes want to upgrade and will upgrade to 125 (cc bikes). But more people will get into 100 (cc bikes) because there are enough young people who want to start the two-wheeler experience because (of) the public transport challenges and India's growing population, and the flexibility a scooter provides, even in cities."
TVS Motor, which in FY24 posted its highest-ever vehicle sales, revenue and net profit, has earmarked a capital expenditure of about Rs 1,000 crore in FY25. About 70 percent of the outlay would be invested in new product development and digital capabilities, while the balance would be invested in capacity augmentation.
During the analysts' call, Radhakrishnan said that the company has invested in various digital technologies such as software, electronics and innovation across areas to improve the customer experience, and augment retail and service management, manufacturing, and supply chain, apart from imparting additional features to all its new customers and new products.
“We are investing in many of the technologies which will be incorporated in both EV and ICE models. So whether we are investing in software or in electronics or digital or connectivity, or any kind of new technologies, they will be definitely useful to delight the customer in the overall portfolio,” added Radhakrishnan.
The Venu Srinivasan-led company revealed that it has secured accreditation under the production-linked incentive scheme for its electric two-wheelers portfolio in April 2024. However, the company didn’t share a timeline for becoming EBITDA (earnings before interest, taxes, depreciation and amortisation)-positive in its EV lineup due to the subsidies accrued from the policy.
As Radhakrishnan said, “I think we need to continue to invest in R&D, technology, products, as well as in digital and analytics domains . But I'm pretty confident that with new products getting launched in the domestic market and then going into international markets, both developing and developed systematically, we can move it to a positive EBITDA.”
During 2023-24, TVS Motors’ total volumes exceeded the 4-million mark for the first time, reaching 4.19 million units, a 14 percent increase over the same period last year. Its domestic two-wheeler sales grew 19 percent compared with the industry’s 13 percent growth. Due to all-time high numbers, its revenue from operations during FY 24 grew by 20 percent to Rs 31,776 crore against Rs 26,378 crore recorded in 2022–23.
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