If you have been reading us for a while now, you know we have written extensively about Elon Musk and Tesla. As of writing this, Tesla has been offered 1k acres of land in Gujarat to set up a plant in India (1).
We are on the edge of seeing a major shift from the green economy, with the Modi government taking several policy reforms to have sustainable mobility. However, it is not about Tesla or government policies; today, we are talking about how Tata, the Indian automaker and industrial powerhouse, has been a trailblazer in the Indian EV ecosystem, where Tesla stumbled.
It is quite difficult to navigate the Indian streets, which are clogged with motorbikes, rickshaws, busses, cows, pedestrians, all trying to share the roads. Even in 2021, it is a quintessential cultural, economic, and class struggle plaguing the country. However, as a fellow Indian, I can say that the tide is changing; it is changing really fast.
The Indian Prime Minister Narendra Modi has an unprecedented economy-first agenda and has been fearless with his legislative actions to breathe life into a pandemic grappled economy. The post-pandemic green era is for India, and the best company to reap the benefits is Tata Motors.
India’s EV Dream
About a year ago, we remarked on the future of electric vehicles in India, its promising future, and the challenges. It would be a cuckoo to believe that there has not been any progress in the domestic EV market since then.
It is very clear to India that EVs are a sustainable mobility solution and the future. Besides eliminating tailpipe emissions, it also excludes the concerns about sharp swings in petroleum prices, which also drains India’s foreign exchange reserves (2, 3).
Over the years, several Indian states have announced EV policies (4, 5), and the central government is providing overarching support. The government has taken a progressive stance on the EV policies and is open to hearing and implementing suggestions. India is committed to being more pragmatic with its policy support to grow its EV ecosystem.
However, there is a hitch in India’s push for electric vehicles. While the government offers a cohort of incentives, they are only for domestic EV makers and buyers and not foreign EV makers. A push for “Make In India” projects, basically encouraging EV makers to use India as a manufacturing hub.
Moreover, India is still not good enough when it comes to infrastructure. A key area where Tesla may trip, but the homegrown Tata has the upper hand.
Tata Biggest Competitor for Tesla in India
“If you wish to do something right, do it yourself.”
It was the ideology Tata Group took to set foot into the EV market.
Earlier this year, several reports had surged on how Tesla is looking at Tata for a partnership and how the salt-to-software conglomerate blew the war bundle against Elon Musk-owned car maker when it decided to go solo (6).
The speculations about an impending collaboration between Tata Group and Tesla went on for quite some time. The possible alliance reports had even made a tiny spike in Tata Motors’ share price (7).
However, N Chandrasekaran, chairman of Tata Sons, cleared it up when he revealed that there had been no exchange with Tesla about collaborating in India. In turn, it started a race to dominate a sizable portion of the premium EV market space between Tesla and Tata Motors.
Tata Has a Dominating Position in India Over Tesla
While Tesla is revving up to make its way in India with its Model 3 Sedan, Tata Motors is all set to move forward with its Jaguar I-Pace.
Jaguar Land Rover Ltd, a Tata Motor subsidiary purchased from Ford Motors in 2008, had unveiled its first luxury crossover last year at the Geneva Motor show, where it also bagged the “Car of the Year” award.
According to reports, the Indian EV Market was valued at 5 billion USD in 2020. It can reach 47 billion USD by 2026 at a 44% CAGR (8). The Electric Vehicle Market Outlook Report also suggests that India will become the largest EV market worldwide by 2030, making India a key EV market for Tesla and other electric car makers. However, a closer look at Tata Motors and Tesla depict an interesting scene that can make the Tesla boss quite anxious.
At present, Tata Motors is a few head and shoulders above Tesla. It has already put up charging outlets for its Jaguar I-Pace and SUV Nexon.
In a recent interview (9), Tata Power’s Sandeep Bangia had disclosed how much Tata had increased its presence in the Indian EV ecosystem.
For Tata Power, India’s largest integrated power organization with a strong presence in its entire energy value chain, EV charging is the next logical extension for its business line. It has made its presence across all the segments in the ecosystem: public charging, home charging, captive charging, workplace charging, and more. It has also deployed all types of charges, including DC 001, Type2, AC, Fast DC chargers up to 50 kWh, and even 240 kWh for buses.
So far, the company has established its presence in over 65 cities with more than 400 charging points and soon will be present in 100 cities with its Public Charging Network with an aim to have over 700 charging stations before the end of 2021.
Moreover, the company also offers a mobile application, the Tata Power EZ Charge app, which offers the location of its public charging stations, available for download on both iOS store and Android Play Store. And it is currently focusing on putting charging infrastructure at common access places like commercial complexes, public parking spaces, railway stations, highway locations, and similar spaces.
On the other hand, Tesla has not even begun manufacturing in India. It has only wormed its way to launch its car in the country and only registered a company in Bangalore and selected Karnataka’s Tumkur location to set up its plant (10). According to sources, Tesla plans to start importing its cars as CBUs, completely built units, and then assemble them to sell in India.
Hence, we can say that all other upcoming competitors aside, Tata Motors is a big shark when it comes to taking a sizable chunk of India’s rapidly growing EV market. However, that is not all that put Tata Motors ahead of Tesla and others in India.
Tata’s Business Strategy
While Tesla commands the global EV industry, Tata Motors has created a niche in the Indian EV market with over 75% market share. It is already reaping the benefits of being the first-mover.
Last year, owing to the coronavirus outbreak, in which the sales of passenger cars in India witnessed a sharp fall of about 25%, the sales of EVs by Tata went up by three folds. In the initial stages of the launch of its first EV – Tigor in 2018, its sales were limited to the commercial fleet purchasers and the government (11). Later, Tata launched Nexon EV in 2020 for the individual segment with about 65% of the total market share.
In February this year, Tata Motors came up with its press release, “Jaguar Land Rover reimagines the future of modern luxury by design.” JLR sales made up about 82% of Tata Motors’ total revenue. In the press release, the company informed the public about its new business strategy – “reimagine.”
“We are harnessing those elements today to reimagine the business, two brands, and customer experience of tomorrow. The Reimagine strategy would allow us to celebrate and enhance that uniqueness like never before. Together, we can be more sustainable and create a positive impact on the world,” said Thierry Bolloré, JLR’s CEO (12).
Under this new international strategy, Tata Motor’s wholly-owned subsidiary JLR is looking to spend over 3.5 billion USD on electrification technologies and the development of connected vehicle services. It is looking to be a net-zero carbon business by 2039.
Jaguar has already embarked on that journey, and it is on its way to being an all-electric luxury card brand from 2025. Land Rover comes with six pure electric variants in the upcoming years, with its first-ever electric variant set to hit the roads in 2024 (13).
Tata Motors in India
At present, the Indian automobile sector is fuel-driven. As per a Bloomberg report, less than 1% of vehicles sold in the country are electric (14). And considering the exhaustible nature of crude oil, India can’t depend on it in the long run. It urgently needs alternatives, and EVs are presently the perfect candidate.
Additionally, the operation cost is very high for internal combustion engine vehicles. The government is also increasing taxes on crude oil, and fuel prices are setting new high records each passing day. On average, as noted, Indians spend over 17% of their daily income on fuel, making EVs an even convenient choice. While the initial price may seem very high to Indian consumers, the subsequent cost is low compared to fuel-based vehicles.
When Tata Motors had decided to enter the space, forget about choices, hardly any EVs were available in India. And the subcontinent has come a long way from that.
Today, the Indian market is very capable. It has globally competitive electric cars such as Tata Nexon, Hyundai Kona, MG EV ZS, Jaguar I-Pace, Mercedes EQC, Tesla, and Volvo XC40.
And Tata Group has played the role of a catalyst in rapidly increasing India’s charging network, which is compatible with all EVs.
While Tata’s charging infrastructure is suitable for all EVs, it has tie-ups with carmakers like January Land Rover India, Tata Motors, and MG Motors. They are working closely to find potential areas and cities to set up charging infrastructure.
The key strategy here is that when these companies launch their vehicles in those areas, the charging infrastructure is already there while also giving the entity to learn and improvise as they go along.
Tatas is currently deploying a mix of charger types from 7.2 kWh regular charges to 50 kWh fast DC chargers. They are optimally deploying these chargers according to the location and application so that they have right-sized their network for the needs of their customers and vehicles.
In a nutshell, Tata Group is going strong in the Indian electric vehicles business.
Challenges are Still There
Whether it is Tesla or Tata, the industry is still not free from challenges. From the initial high costs of EVs to the lack of an ecosystem suitable for electric vehicles, many things still need to be built from scratch in the industry. Only manufacturing cars is not enough.
To support the functioning, India still needs a proper EV ecosystem. There is still a need for greater charging infrastructure, domestic part making to ensure the industry’s sustainability, and cell making.
Generally speaking, EVs are two times more expensive than traditional vehicles. And India’s weak consumer appetite is a major barricade for its adoption.
Tata Nexon EV’s affordable price is working in its favor and has helped it be a mainstream choice. Its price range is between 13.99 to 16.40 lakh INR. It is very low compared to similar EVs such as MG ZS EV and Hyundai Kona, priced in the range of 20.99 to 24.18 lakh INR and 23.75 to 23.94 lakh INR (15).
As per Shailesh Chandra, president of Tata Motors’ passenger vehicle business unit, the company is looking to reduce the price of EVs below 10k USD, as 75% of total automobile sales in India take place within this section (16).
Tata’s Competitive Edge
The conglomerate nature of Tata Group is another major factor that gives Tata Motors an edge over its competitors. It is the reason why Tata Motors does not need to rely on any third-party company and harnesses great advantages from its structure.
Most of the work of Tata Motors in the direction of creating EVs and its infrastructure is done by different companies under the Tata Group itself. It has helped Tata Motors to cover the challenges of the Indian EV ecosystem to a great extent.
At the launch of Nexon, Chandrasekaran had announced that seven Tata Group companies, Tata Motors, Tata Power, Croma, Tata Auto Component, Tata Chemicals, and Tata Motor Finance, would work together to create a complete ecosystem for electric vehicles (17).
Tata Motors collaborated with Tata Power for charging infrastructure, which is not only working in the direction of offering public charging solutions but also home charging solutions.
The issue of battery packs for EV is solved with Tata Automotive Components. Tata Chemicals is also working towards the development of cell manufacturing needed in EVs.
All of it highlights the fact that Tata has been an early identifier of the EV ecosystem creation challenge in India and has been working on marshaling the expertise of group companies into building it.
Businesses need huge investments to realize the goal of making electric cars easily accessible and affordable by all. The transformation can not come without the government’s support. And as we noted, the Indian government is taking various measures to make this goal realizable by taking several steps and constant efforts to bring the change.
And who is a better candidate than India’s own Tata Group?
While the Indian EV industry is still in its nascent stage, it has huge potential and high growth prospects. As per a CEEW Centre for Energy Finance Study, its value can reach more than 206 billion USD in the upcoming decade.
It is only a beginning, and India still needs to go a long way.
Tesla is nowhere near making any green revolution in India, and Tata has made its plans to go solo with no intention to partner with Tesla or anyone else.
A lot lies ahead, and it is quite interesting to see how Tata takes over the Indian EV industry. Stick with us to see if Tata can single-handedly manage and drive the industry and emerge as the EV leader India has been waiting for.