🚗 India's EV Race: Who's Winning?
Indians may still be skeptical about EVs, but Tata cars are flying off shelves. Here’s why.
India’s attitude about EVs is changing.
Though the country is still concerned about EV charging and burning EVs, rising oil prices have forced many to consider electric cars.
Der aaye, durust aaye (Well, better late than never).Â
Collectively, EV sales grew 257% year-on-year.
And despite there being many EV players in the market right now, there is one clear winner: Tata Motors.
Its EV sales grew 300% in April.
Despite other companies like Mahindra and Hyundai having a headstart over Tata, it is leading the EV four-wheeler segment.
Why?
ReadOn.
🤫 The Secret Behind Tata’s Success
In one way or the other, Tata has always been ahead of the game. It knows when to innovate and when to play safe.
In the 1990s, when most other companies were manufacturing cars that featured the same boring designs, Tata took an innovation risk and introduced the Safari, "India's first true SUV".Â
But when it was entering the EV space back in 2019, it knew it had no time to waste.
It had to take an execution risk: to make the manufacturing process cheaper and faster.
So, Tata went the jugaad way.
Instead of setting up new EV manufacturing plants, and coming up with a new car design (which would take lots of time and money), the company just took its existing cars like Nexon, removed the fossil-fuel powered engine and replaced it with battery packs.Â
All in a single warehouse that produced 8 cars per day initially: giving birth to a power-packed yet affordable EV.
Here, look why Tata's Nexon EV is the more popular choice than Mahindra's eVerito despite being more expensive:
That’s not all. Tata’s other businesses have also helped the company.
Tata AutoComp provided the company with EV parts, Tata Chemicals helped with battery production and recycling, while Tata Power set up charging units.
Basically, the whole Tata Group came together to make this venture a success. Teamwork, indeed.
Explains why Tata is ruling the EV space with an 80% market share, no?
Wait, why don’t other companies follow Tata’s suit and just turn their existing cars into EVs?
Well, first, this move may not be feasible for all companies.
An electric car and a fossil-fuel-powered car (Internal Combustion Engine or ICE cars) are inherently different.
While Tata managed to find and make space for battery packs in existing cars, many other companies may find it difficult or even impossible to do so.
Plus, adding smaller battery packs (to make them fit) in ICE cars may impact their performance in the long run.
Even Tata isn’t a big fan of this approach and will be switching to making EVs from scratch.
Yes, Tata is betting big on the EV space.
It has also created a subsidiary Tata Passenger Electric Mobility Limited to handle EV manufacturing and production and plans to launch 10 electric vehicle models by 2026.
Here's a glimpse of its upcoming EV which many claim is giving tough competition to Tesla:
What’s more?
Tata is now even entering the EV trucks and bus space.
It is already the market leader in the normal passenger vehicle segment and this could help it win contracts with several delivery companies like Amazon, which are now looking to go the EV way to meet their climate targets.
In fact, it is soon set to sign an agreement with some of these companies and may also win a government contract for producing 5,500 electric buses.
Entering the EV commercial vehicle sector could unlock a yearly sum of $500-$700 million for the company each year!
However, the company still has many challenges ahead.
🚧 The Roadblocks
The EV space is getting hotter day by day with more and more legacy carmakers like Maruti and Toyota making an entry.
There are also talks about Tesla entering India and manufacturing its cars here.
This could take away a significant amount of market share from Tata (probably why it is pivoting to the commercial vehicles business).
And, how could we rule out the semiconductor crisis?
Even with India setting up semiconductor plants, it will take a long time for the semiconductor shortage to end.
This could pose a major problem for Tata’s growth.
However, the company is in a relatively better position than other carmakers in this aspect.
You see, Tata Elxsi is already in the business of semiconductor services, so sourcing semiconductors could be easier for Tata.
Plus, it is also considering launching its very own semiconductor plant so that it never has to worry about such crises again.
Basically, the company seems prepared to meet all challenges and risks.
But with so many new and old players entering this space, how long will it remain at the top?
âš¡ In a line: Indians are quickly embracing EVs as oil prices dig a hole in their pockets, and their buying motto is clear: In Tata Motors we trust.
💡 Quick question: Are you buying Tata EVs or at least Tata Motors’ stock? Let us know in the comments.
Wait, there’s more. While we were working on this piece, we got a massive surprise.
RBI finally announced it will be raising interest rates from 4% to 4.40%. It is also raising the cash reserve ratio (the amount of money banks need to keep with themselves) to 4.50%.
This is expected to take away Rs. 87,000 crores worth of money currently in the market.
This excess money is the reason why you and I are paying more for stuff like Maggi and tea. More money in the market has caused inflation to rise to a 17-month high of 6.95%.
This interest rate hike is set to calm this inflation. But it will also increase loan EMIs, FD interest rates, and the returns on bonds.
And because of this, people are pulling money out of the stock market.
Here’s our in-depth explanation of how an interest rate hike impacts the markets and the economy. Let us know your thoughts on this as well.
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