Reaffirming its commitment to leverage the government’s Production Linked Incentives (PLI) schemes for electric vehicles (EVs), Tata Motors asserted that it will be go beyond the maximum investment limit of Rs. 2,000 crore required in a five year-timeframe starting from FY2022-23.
The Mumbai-based automaker is among the handful of Original Equipment Manufacturers (OEMs) that managed to get its investment proposal approved by the government under the “Champion OEM Incentive’ category of the scheme.
The company is also taking measures to ally with its affiliate Tata AutoComp in its indigenization of critical components for EVs across all segments of its auto business.
Pathamadai Balachandran Balaji, Chief Financial Officer (CFO) of Tata Motors, told reporters in a conference call: “There is a very clear line of action for localization (of electric vehicles). Tata AutoComp (will be) one of the key players we will be working with to ensure we localize some of the technologies that are needed for this. Between the localisation plans and investment plans, we are confident of hitting the target that we have set for ourselves in the PLI schemes.”
He added: “Of course, we are trying to max it out. Let’s see where we reach in that journey. Though we are not the only participants, we will be ahead of others in our investments.”
Tata AutoComp provides products and services to Indian and global automotive OEMs as well as Tier one suppliers. At present, the company’s offerings to the emerging EV segment include motors, controllers, integrated drivetrain (integrated motor, inverter and reducer), battery pack, battery management system, battery thermal management system, battery cooling plates, inverter cooling modules, chillers, E-compressors, radiators as well as electric vehicle chargers.
When asked to share investment figures, Balaji responded: “We have applied for PLI for Tata Motors Group and it is applicable for CV, PV, EV and JLR together, including Tata Marcopolo (bus-making unit). So that is for everybody. So the investment outlay will also be looked at accordingly.”
CV and PV are short for commercial vehicles and passenger vehicles, respectively. JLR stands for its Jaguar Land Rover unit.
Under the scheme, companies on the champion category will have to make investments to the tune of Rs 2,000 crore over a period of 5 years. During this time, two- and three-wheeler makers will have to make an investment of Rs 1,000 crore, while component makers will need to make Rs 500 crore of investment.
Tata Motors had earlier announced that it was planning to invest Rs 15,000 crore in the EV segment in the next five years. The company, which is a leader in the newly emerging EV segment with offerings such as Nexon, is also planning to develop around 10 more new offerings in the segment.
“We have applied for the PLI schemes and are one of the companies qualified for that and that envisages an investment of Rs. 2,000 crore on EV-related investments over the next five years and we will be comfortably ahead of that (amount) in terms of how we intend to invest here. A broad reference point is Rs. 15,000 crore investment to be made (by Tata Motors) over the next 5 years. PLI accelerates some of the work we are trying to do. We are very thankful to the government to introduce it. It helps think about common unified way to create an ecosystem,” Balaji said.
Tata Motors has reaffirmed its investment plans for EVs despite posting a loss of Rs. 5,000+ crore in Q1 of FY 2023.
Bullish on EVs
In the quarter to June, Tata Motors sold 9,300 units of passenger EVs, which accounted for 7% of its total PV sales. In the last financial Year, Tata Motors had registered 353% growth in the segment with 19,106 electric cars sold vis-à-vis previous financial year.
The company now expects that EV penetration will continue to expand and hopes to post growth during this financial year.“We remain quite bullish with respect to our game plan on EV. The recent launch of Nexon EV Max has just proven the point even further that the consumer is ready and willing to migrate. It’s a question of how much we are able to supply. So, the challenge is more supply rather than demand,” Balaji said