With the price drop in EVs, has Tata Motors set the cat among ICE pigeons?

The company has reduced the prices of Tiago.ev by up to Rs 70,000 with the base model now starting at Rs 7.99 lakh

Tata Motors on February 13 slashed the prices of its two key electric vehicle (EV) models and maintained that it is “passing on the benefits” of a reduction in battery prices to consumers as it looks to make EVs more affordable vis-à-vis Internal Combustion Engine Vehicles (ICEVs) for their “faster adoption”.

With this announcement, the Tiago.ev will be available at a starting price of Rs 7.99 lakh and the Nexon.ev from Rs 14.49 lakh onwards. However, the prices of the recently launched Punch.ev (Rs 10.99-14.49 lakh) remain unchanged as the battery price reduction was factored in, as stated by the company.

As Vivek Srivatsa, Chief Commercial Officer, Tata Passenger Electric Mobility (TPEM), puts it, “Battery cost constitutes a substantial part of the overall cost of an EV. With battery cell prices having softened in the recent past and considering their potential reduction in the foreseeable future, we have chosen to proactively pass on the resulting benefits directly to customers.”

Some of the EV manufacturers, while commending Tata Motors for its decision to reduce the prices of all their EVs, believe that as the market for EVs continues to develop and mature, the EV industry is witnessing a decline in overall prices, particularly driven by the decreasing cost of batteries.

Uday Narang, Founder and Chairman, Omega Seiki Mobility, states, “This step by Tata is undoubtedly in the right direction, and it reflects the ongoing shift towards a more affordable electric future. Looking ahead, as volumes increase and the electric vehicle ecosystem expands, we can anticipate further reduction in prices. The trajectory is clear –- as the market grows, economies of scale and a robust ecosystem will contribute to making electric vehicles more accessible to a wider audience.”

Puneet Gupta, Director, S&P Global Mobility, believes that the total cost of ownership (TCO) for EVs is a vital factor when making a car purchase decision and is increasingly proving to be advantageous, making them a compelling choice for consumers.

In his words, “The recent cost cut by Tata Motor will undoubtedly shake up the market. This reflects that India is moving towards reducing the gap between ICE and EV cars, and price parity between the two may let consumers move towards the EV world.”

Tata Motors’ move comes close on the heels of MG Motor India reducing the prices of the Comet EV by up to Rs 1.4 lakh (depending on the variant), thus making it the most affordable electric car (starting at a price point of Rs 6.99 lakh).

Some of the ICE models that are priced closer to the Comet EV and Tiago.ev are Maruti Suzuki Swift (Rs 5.99 - Rs 9.03 lakh), Baleno (Rs 6.66 - Rs 9.88 lakh) WagonR (Rs 5.54 - Rs 7.38 lakh), Tata Tiago (Rs 5.65 - Rs 8.90 lakh), Hyundai i20  (Rs 7.04 - Rs 11.21 lakh), and Tata Altroz (Rs.6.65 - Rs 10.80 lakh).

With more options of e-cars at affordable price points, industry observers reckon that there will be a huge pull from “cost-conscious” buyers who were earlier dissuaded by the huge price disparity between ICE vehicles and EVs.

As Ravi Bhatia, MD, JATO Dynamics India, puts it, “The markdown in prices of these models will certainly attract a select set of customers who had concerns about high upfront costs vis-a-vis ICEVs.” However, he maintained, “It is unlikely to disrupt the traditional ICE market as other challenges like range anxiety, charging infrastructure, and resale value continue to plague the EV market.”