Tata Motors halts passenger vehicle stake sale as EVs shift to top gear

The passenger vehicle (PV) business of Tata Motors will have to wait a little more for the right partner as the electric vehicle business steals the show.  

Tata Motors has shelved the hunt for a suitable partner for the PV business for the time being, confirmed a top company official, as the carmaker turns focus to roll out seven EVs in the next five years.  

“It is fair to say that it (divestment of stake in PV business) is not on the front burner but that does not mean we are not open to conversations. We now have to land this (stake sale in the EV vertical) deal and take off on EVs and this is what our focus would be,” Chief Financial Officer PB Balaji said. 

TPG Group and ADQ will pump in Rs 7,500 crore ($1 billion) into a new Tata Motors company which will develop and manage the electric vehicles business. The stake sale, which will be around 11-15 percent, has valued the new company at $9.1 billion. The deal was announced on October 12.  

Following approval from the National Company Law Tribunal (NCLT) in August, Tata Motors secured all the clearances for hiving off the PV business into a 100 percent subsidiary. It has been talking about a strategic partner since the past one year.  

The EV business took off swiftly in between despite a turnover of Rs 500-600 crore with almost no assets of its own. Tata Motors makes its electric vehicles at the PV-making plants as the models are derived from internal combustion engine-powered variants.

Through the subsidiarisation of the PV business, Tata Motors hopes to secure strategic alliances that would provide access to products, architecture, powertrains, new-age technologies and capital.  
“This (hive off) shall help in providing a differentiated focus for the passenger vehicle business and commercial vehicle business and help each of them realise their potential and unlock business value and enhanced management focus and operational flexibility in each of the businesses,” Tata Motors had said in a notice earlier. 

The PV business recorded a growth of 69 percent in sales in FY21 with volumes of 222,074 units and an 8.2 percent share of the domestic market. Led by Nexon and Altroz, Tata Motors turned around its PV operations to push it back to the third spot from the sixth spot earlier. “There is no change as far as the PV strategy is concerned. We are saying that the PV business will go cash positive from FY23 onwards,” Balaji said.