Tata Motors said in a statement on Thursday that the electric Nexon would be priced at ₹15-17 lakh. This will make the vehicle much cheaper than Hyundai Motor India Ltd’s Kona electric compact SUV, which has a dealership price of about ₹23.71 lakh. MG Motor India Ltd, a unit of China’s SAIC Motor Corp., plans to start selling its first electric vehicle eZS by the end of December.
Maruti Suzuki India Ltd is expected to unveil the electric Wagon R, its first electric vehicle, in 2020.
Hyundai is also developing affordable electric vehicles for the Indian market.
This comes amid a push by the government towards eco-friendly vehicles to cut rampant pollution and reduce costly oil imports.
A bevy of steps by the Modi administration, such as lowering corporate taxes on new manufacturing units, tax rebates on interest payments on loans for electric vehicles and customs duty exemption on lithium-ion cells, were aimed at accelerating the adoption of electric vehicles in India by making them more affordable.
Tata Motors’ decision to opt for the Nexon as its first EV for the personal vehicle market underscores its strategy to piggyback on the booming compact SUV segment.
Nexon was the second-largest selling car for Tata Motors in the last fiscal year, fetching an average sale of 4,500 units per month.
Also, unlike the intensely competitive small car segment where margins are the lowest, the compact SUV segment offers more elbow room on pricing a vehicle.
“I would not want to position an electric car in the small car segment because of price constraints," Shailesh Chandra, president, electric mobility business and corporate strategy, Tata Motors, had said in a recent interview.
The Nexon will target a range of about 300km per charge along with fast-charging capability, besides an eight-year warranty on the electric motor and battery—the two most critical components of any electric powertrain.
Analysts said the popularity of Nexon and its high safety ratings make the vehicle an attractive option for the EV foray.
“Also, Nexon has been awarded a 5-star adult safety rating by Global NCAP, which makes it a better proposition in terms of safety and premium quotient. Secondly, foraying with an electric Nexon is a calculated opportunity. Acceptance for an expensive hatchback is less than that for a compact SUV in the domestic market," said Gaurav Vangaal, country lead, light vehicle production forecasting, IHS Markit.
On 19 September, Tata Motors declared a shift in its EV strategy with a focus on the personal segment. The company currently produces and sells only an electric variant of its Tigor model to corporate fleet and taxi segments.
An auto analyst said, on the condition of anonymity, that Tata Motors aims to be the first to bring a locally-made electric car, offering superior value for money than existing electric vehicles.
“An electric Nexon from Tata Motors would be a showcase of its capabilities. Although per unit profitability is lower for electric cars as compared to the internal combustion engine models globally, rolling out electric cars will have no meaningful impact on the company’s already stressed financials in the near term," the analyst said.
Tata Motors’ all-new modular powertrain platform aims to address fundamental barriers such as running range per charge, safety, durability and others that largely kept buyers away from adopting electric vehicles.
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