TVS bets on sub- ₹1 lakh EV scooter to retain lead, but profitability remains unclear

TVS, based in Tamil Nadu’s Hosur, on Thursday added the TVS Orbiter to its electric vehicle portfolio, which is currently dominated by the sales of the iQube. In a media briefing after the launch of its new product, the company’s management pinned hopes on the new model to bolster its leadership in the EV segment. Electric vehicles accounted for nearly 10% of TVS’s revenue from operations of ₹36,251 crore in FY25.

TVS saw its two-wheeler EV sales surge 29% to 237,576 units in FY25 to grab the second position, behind Ola Electric. In the first three months of the current financial year, however, the company raced past Ola to become the top EV two-wheeler seller in India with a 24% market share. It sold 69,000 electric scooters during the April-June period, as per the government-run vehicle registration portal Vahan.

With the latest addition of a sub- ₹100,000 product to its portfolio, TVS is sharpening its challenge to Ola Electric, which sells the lowest-priced electric scooters in the market but has struggled recently to hold its ground. Its market share has fallen below 20% from more than 50% in March last year.

TVS’s shares fell 0.38% on Thursday as against a 0.54% decline in Nifty Auto index.

However, TVS has still not said when it expects to achieve profitability for its EV segment and how it sees its new products contributing to achieving breakeven at operating profit margin level. This is in contrast to its rivals like Bajaj Auto, Hero MotoCorp and Ola Electric that have given an indication of their path to profitability.

While Bajaj has said that it is very close to breakeven for its electric two-wheeler segment, Hero MotoCorp has said that profitability is at least two years away as it will first look to scale up its monthly sales volume to 25,000 units.

This comes at a time when the erstwhile EV two-wheeler leader Ola Electric has shifted its focus away from aggressive expansion to achieving profitability by vertically integrating the supply chain.

Although TVS has not clearly laid out a timeline for the push for profitability, it has said that it is also working to vertically integrate its electric vehicle play.

“We make our own battery packs, we make motors of certain categories, we make some controllers ourselves and we have the IPs with us," Manu Saxena, executive vice-president, global product planning and design, at TVS, told reporters.

Previously, the company’s director and chief executive KN Radhakrishnan said in the earnings call on 31 July that the company is gross margin-positive for its EV business for both two-wheelers and three-wheelers. But he shied away from committing any specific timeline for breakeven at the earnings before interest, tax, depreciation and amortization level.

“I have not spoken anything about breakeven. I already said we are positive on gross margin. In any business, when you start, first is to make sure that the gross margin is positive," Radhakrishnan had said, responding to an analyst’s question.

Gross margin takes into account revenue from selling vehicles and the direct cost of producing them. Ebitda margin takes into account other key expenses like research and development, sales and marketing, and other administrative costs.

“The customers are delighted about our products, and the top line is growing. We have some short-term setbacks in terms of magnet availability. But I'm very sure we will become more resilient with many other alternatives going forward," he had added.

But the push for localisation of the supply chain is facing a severe challenge from the rare earth magnet shortage, which has forced TVS to look to production on a day-to-day basis despite robust demand from consumers, said Gaurav Gupta, president at India two-wheeler business of TVS Motor Company.

“We are looking at alternatives just like the entire industry," Saxena said responding to a question on the rare earth crisis.

As a consequence of the rare earth magnet crisis, the company is unable to commit to the volume of sales it is looking to target for its new products. “We don’t want to commit to a volume we are not able to deliver," Gupta said during the briefing.