Tata Motors, India's leading automaker, expects electric vehicles (EVs) to account for 25-30% of its total sales within the next two years, a significant jump from the current 10-12%, according to comments made by the company management in an analyst meeting.
In the last financial year, the company had sold around 50,000 electric vehicles, which constituted around 9.2% of its total vehicle sales of 5.41 lakh units.
In the current year, the expectation was that the company would double its sales to 100,000 EVs.
However, with data for March sales pending, the company's total EV sales is on track likely to be between 75,000-80,000 for the current year. The company attributed the miss to a lack of expansion in its charging infrastructure.
Because of the miss, the share of EVs continues to remain in 10-12% range. But, said the analyst who met the company company management, it is confident of raising this to 25-30% soon.
"Over the next two years, it aims to increase the current EV mix from 12% to approximately 25-30% and to 50% by FY30," said Himanshu Singh of Prabhudas Lilladher after interacting with Tata Motors management.
Tata Motors, despite entering the EV space after rival Mahindra & Mahindra, is the undisputed No.1 in India's EV space. However, it is expected to face tougher competition from rivals, such as China's MG, in the coming financial year.
The Indian company, which already has nearly half a dozen EV cars and SUVs on offer, has been focusing on expanding its EV portfolio to maintain its market leadership.
It recently launched its Punch.ev model, which has reportedly received a strong response from customers.
The management feels that this new vehicle could add an incremental volume of around 2,000-2,500 units per month to its current tally of 5,000-6,000.
Additionally, Tata Motors is in the process of launching the Tata Curv EV and Harrier EV, which will further increase its offerings on the EV platform and aid in volume growth.
The company has a long-term goal of deriving 50% of its sales from EVs by FY30.
CV Outlook
The management told analysts that it is seeing decent retail sales of commercial vehicles such as trucks and pick-ups as individual customers try to time their purchase before prices are increased on April 1. However, this has not been a factor in bulk buying, and wholesale volumes is moderate, the management said.
Overall, the management expects sales in the first nine months of calendar year 2024 to remain muted due to a slowdown in the implementation of infrastructure projects ahead of the general elections.
However, it expects volumes to recover from October onwards, driven by a revival in government investment in projects such as construction -- which typically drives CV demand.
Tata Motors started out as a CV maker, and ventured into the passenger vehicle segment later, with models such as the Indica.
However, earlier this month, it announced that it would separate the two businesses.
The management said this decision has been taken since the passenger vehicle business has achieved critical mass.
"Given the significant product improvement backed by strong volume growth in its PV business, the management is optimistic its PV business will be self-sustaining going forward leading to the de-merger of the CV business," Singh said.
Jaguar Land Rover
The UK-based Jaguar Land Rover business, acquired from Ford in 2008, has been all over the place as far as its contribution to Tata Motors is concerned, given its increased sensitivity to global financial conditions.
However, the JLR business has delivered consistent performance for the last one year as the availability of semiconductors has become predictable. This led to an improvement in the production rate of key models like Range Rover and Range Rover Sport, helping the company reduce waiting times.
The management said the demand momentum in the US has been strong, while Europe has remained stable.
Considering this, JLR expects its margin to improve consistently and to reduce its net debt of Rs 290 billion over the next 12-15 months, Singh added.
Meanwhile, JLR also plans to launch its first EV for the Jaguar unit towards the end of this year or early 2025, and will gradually phase out the internal combustion engine (ICE) models.