Tata Motors sees latent demand for EVs in rural markets: Shailesh Chandra, MD

Shailesh Chandra, Managing Director, Tata Motors, Passenger Vehicles and Electric Vehicle Mobility

Tata Motors, the largest electric passenger vehicle manufacturer in the country, aims to be net zero by 2040 by moving towards electric vehicles (EVs) at an accelerated pace. Speaking on the sidelines of the launch of the facelifted versions of both the Nexon ICE (internal combustion engine) and the Nexon EV, Shailesh Chandra, Managing Director of Tata Motors, Passenger Vehicles and Electric Vehicle Mobility, said that the company will be making a foray into the rural market, where it sees a lot of latent demand.

The earlier version of the Nexon was the first five star-rated car.  As the safety testing protocols have changed now, what changes have you made? Also, why have you not considered ADAS (advanced driver assistance system) for this model?

At times, you have to make choices for a certain positioning. Hence, we have come with a certain package. The vehicle will keep growing (in features) as it has over the past six years. Of course, safety rating requirements have changed and the car incorporates all those changes. We are in the process of getting the certifications as Bharat NCAP comes into effect from 1st October, 2023.

What is the size of the compact SUV market? What is your current and projected market share?

When we had launched this car in 2017, the total market was 30,000 units a month across  seven to eight players. Today, every player has a product in this segment, totalling roughly 14 models, and the volume has gone up to 90,000-plus per month. In the compact SUV segment, we have two products, Punch and Nexon, and our market share hovers around 30 percent, plus-minus two. We are the market leader in this space. We will be able to share our projected market share once we see the incremental volumes  in the coming months.

Also Read: Tata Motors unveils Tata.ev, its new home for passenger electric vehicles

With the launch of the facelifted EV, which looks like a bridge between the gen 1 and 2 models, what is the gameplan?

The gameplan is to continuously grow, make people more convinced about EVs. Given the  novel features, we don’t want people to contemplate buying an ICE  vehicle. When there is a  spectrum of EVs on offer, people consider them more. With the higher range that we have in the updated version, the barriers to adoption get diminished. Hence, we expect that with this launch, the adoption will further increase. And many people who were considering ICE will consider EVs. Going forward, more such models are going to come in.

How do you plan to take on the competition?

We don't have any control on how many models and what products competitors come up with. But the more and better products there are, the better it is for the market. With ICE vehicles, we have seen that demand grows with the advent of new products. We have been seeing this in EVs even more. And so, there’s been a lot of launch intensity in the last five to six months. I was selling 3,000-3,500 units in December 2022. Today, I clock about 6,500 units.

Also Read: Tata Motors to open exclusive EV sales network this fiscal year

Will you be opening exclusive EV showrooms?

Given the customer profile who are abreast of next-generation  technologies, we felt the need to create a different brand philosophy and personality for EVs and therefore, on 28th August, we came up with the new brand identity — Tata.ev. We will have exclusive EV dealerships from the coming quarters.  We will start in phases, and the showrooms will be experimenting, learning, and perfecting. We are setting up only a  few,  which is logical because you need to see the implication, the viability  of this.  At the same time you need to see that exactly the experience that you want to deliver is being delivered, and what are the things that you need to work on.

What have you invested in the updated Nexon? And what are your export plans for this model?

We don't disclose investment figures, and I’m not in a position to say whether it would be exported or not. I can only disclose that we are trying to test our vehicles in select markets and see if any changes are needed. When we crystallise our international strategy, we will talk about it.

What are your localisation plans in order to avail of benefits for the electric variant?

Fifty percent localisation is the minimum for us, but we want to ensure that we achieve 5-10 percent more than that. You're also aware of the PLI ACC production-linked incentive for advanced chemistry cell batteries. We, as Tata group, are investing in this. So cell manufacturing will also get localised in the coming years. I think there will be significant value addition.

Assuming that you're expecting more demand for Nexon and Nexon EV, are there any plans to increase the production capacity or start a new assembly line specifically for this model?

We have a production headroom that we created before this launch, and can go beyond what we were producing earlier. Therefore, we will be able to respond to any increased demand.

Also Read: Tata Motors rolls out facelift for Nexon, revamps electric variant

Are you planning to phase out diesel engines from your portfolio?

We aim to be Net Zero by 2040, which means a very fast acceleration of EV production. At the same time, there are thousands of people who want diesel engine models. So, as an OEM, our policy is simple. We will keep adapting to the market and to regulations. We now have diesel models in only a few segments, and maybe those too will come under further pressure after BS-7, and we will have to discontinue them. It's unfortunate that people are talking about diesel when they should be talking of moving to EVs. Diesel will decline on its own.

Also Read: Everything you need to know about the facelifted Tata Nexon.ev

What kind of demand do you foresee in rural markets?

There will be latent demand for EVs and I believe that because people have started using electric two-wheelers in rural areas. They are exposed to this technology. We as a company have been leading the charge in EVs. We have been testing our products in 21 cities and will be extending that to 180 cities with roughly 450 touchpoints. Going forward, like with ICE, we see 40 percent of the demand emanating from rural markets as more affordable EVs enter the fray. There will be a big shift because they are very sensitive to the lower running costs of an EV.