TVS Motor: Born ICE, now ready for electric

A production line of TVS Motor Company in Hosur, an industrial town in Tamil Nadu, which churns out the iQube. The scooter is leading the company’s charge in the electric vehicle race.
A production line of TVS Motor Company in Hosur, an industrial town in Tamil Nadu, which churns out the iQube. The scooter is leading the company’s charge in the electric vehicle race.


  • The company is a distant third in the two-wheeler ICE market. But it is banking on technology to lead the EV pack

New Delhi: Late in August, with Dubai’s iconic Burj Khalifa in the background, Sudarshan Venu, the 34-year-old managing director of TVS Motor Company, unveiled the TVS X, an electric motorcycle-scooter hybrid. Venu was joined on the stage by Sir Ralf Speth, chairman of the company, and K.N. Radhakrishnan, the company’s CEO. The TVS X is a ground-up, ultra-premium, ‘born-electric’ two-wheeler that will be sold in India and in developed markets. At 2.5 lakh, it will never be a mass market product. But the purpose of the event was to showcase its technology, create a brand halo, and underline the company’s global ambitions.

Indeed, the word technology trips off the tongue freely for TVS’s top management. At the TVS X launch, when this reporter asked Speth what had drawn him two years ago to take over as chairman of an Indian two-wheeler maker, after a career spent in turning around luxury car businesses, notably Jaguar Land Rover, he responded with one word, “Technology."

In an interview with Mint a few weeks after unveiling the TVS X, Venu said, “TVS has a 2030 transformation vision, and it is focused on four pillars: technology, talent, great products, and global expansion." 

TVS, he noted, harnesses technology to be a trailblazer. “In our beginnings, mopeds empowered people with affordable mobility, then the Scooty empowered young women. The Shogun was the first racing bike, the NTorq was India’s first connected scooter, and Apache transformed racing. HLX revolutionized commercial mobility in Africa, and iQube pioneered sustainable mobility," Venu told Mint.

Now, TVS is on a mission to build electric vehicle (EV) capabilities in-house. “The intention is to drive more vertical integration and that’s why we’ve shown a product, the TVS X, where the battery management system, battery design, motor, software, UI/UX is entirely designed in-house," Venu said.

In India, the world’s largest market for two-wheelers, TVS will certainly need to lean heavily on technology to stand apart. It has to take on intense competition from Hero MotoCorp, Honda Motorcycle and Scooters, and Bajaj Auto, at a time when the market is in a transitory phase. Almost one in every three two-wheelers sold in the Indian market is projected to be electric by 2025. And premium motorcycles are growing twice as fast as entry-level ones. These are risks for incumbents who derive the bulk of their volumes from one product or segment.

TVS executives, however, say they view this rapidly changing market obsessed with features and value-for-money as an opportunity.

Being technological

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Technology and EVs are TVS’s strongest competitive advantages in the Indian two-wheeler market today. Those two factors are the reason why stock market analysts and industry experts are so “overweight" on this company, ascribing it better odds of success in an electric universe, and higher volume growth than any of its peers.

“Most of our new vehicles are designed with embedded technology and connected features. This has been made possible due to the steadfast focus on in-house R&D. With the changing technology landscape, the mix of our talent pool is also changing. Now, more than 50% of our new hires are from a non-mechanical background. Software, data & analytics, AI, design, electric & electronics are some of our key focus areas," said Venu.

The numbers reveal TVS’s early EV success. The company is currently the only legacy two-wheeler maker contending for the top spot in the electric two-wheeler segment, going up against Ola Electric, which had a 24% share in October, with only a fraction of the distribution the latter has. Ola started off with the direct-to-consumer digital sales model, while TVS currently has over 300 touchpoints, which it aims to expand to 1,000.

The iQube is leading TVS’s charge in the EV race. “It is the only “full-sized" electric scooter in the market. It is a scooter that can be used for families, unlike what most of the competition offers. That draws a lot of families who carefully weigh their choices to the brand," said a Delhi-based dealer.

At the end of the September quarter, TVS’s share in the nascent electric two-wheeler market was 23%, against just 10% in the same quarter last year. Meanwhile, Bajaj Auto closed the quarter with 10% market share (up from 5% in Q2FY23) and is now closing in on Ather Energy, the third largest player. Hero MotoCorp had only 1.7% share of the market in October, but it has an almost 35% stake in Ather Energy.

Eggs in many baskets

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TVS has a clutch of successful products spread across the entry-level scooter, performance scooter, commuter motorcycle and premium motorcycle segments, a distinction it enjoys over its competitors, who dominate a single segment or a few geographical regions. For instance, Hero MotoCorp tops in commuter motorcycles with the Splendor (61% of sales), while Honda leads in scooters (the Activa accounts for 50% of its sales), and Bajaj in 125cc motorcycles (the Pulsar accounts for 55% of its domestic sales).

For TVS, however, no single brand accounts for more than 30% of its sales. Indeed, a JP Morgan report calls TVS a House of Brands with the NTorq, Apache, Jupiter and Raider. In a market characterized by customer loyalty for a particular brand, creating multiple successful brands directly translates to market share gains.

“While all OEMs have several brands, most of them (unlike TVS) rely on the top two to deliver the bulk of their volumes (82-86% for Hero/Bajaj/Honda). The top five brands of TVS contribute 79% of its volumes," the JP Morgan report noted. “TVS’s concentration has reduced since FY15 while it has increased for its peers. This has meant steady market-share gains across most sub-segments. Its peers have leadership in one category but lag in others."

TVS is the only two-wheeler company to have gained market share over the last decade, albeit on a smaller base of around 13% share at the end of FY14, while its competition has either lost share (Hero MotoCorp, on a much higher base of nearly 43% in FY14) or held steady (Bajaj Auto, Honda, both at approximately 18% in FY14).

To be sure, Hero Motocorp is still the runaway leader, with a 32.5% share in FY23, and Honda is still second with a 25.4% share. TVS was a distant third with 16.4% and Bajaj was fourth with 11.4% last fiscal year. So, TVS has a long way to go in the ICE market. But it is hoping to follow a different script in the EV lane.

The EV opportunity


Sudarshan Venu, managing director, TVS Motor Company (For representation purposes)
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Sudarshan Venu, managing director, TVS Motor Company (For representation purposes) (X:PowerDrift)

TVS’s factory in Hosur, an industrial town in Tamil Nadu on the border with Bengaluru, hums as it churns out the iQube, a product that has surged past competition. The factory (Factory 1), established in 1979, feels almost analog compared to the more automated production lines seen at its not-so-distant neighbour Ola Electric’s factory in Krishnagiri, also in Tamil Nadu. It has the capacity to produce 1,200 iQubes a day, alongside its IC-engine twin Jupiter, in a two-shift operation. Just a few metres away, at Factory II, which was established in 1984, the company manufactures motorcycles and kits for its global partner BMW Motorrad.

“German engineers also learn from TVS," Markus Schramm, CEO, BMW Motorrad, who was recently at the Hosur factory to mark the beginning of production of BMW’s electric bike CE 02, said in response to a question on the training TVS receives from the German auto giant. “The learning goes both ways," he said. BMW’s confidence in TVS’s engineering prowess also meant it collaborated in design and development with TVS, a deeper collaboration on product development instead of a simple contract manufacturing arrangement for its new electric product, which is destined for the Western world first, and then eventually, perhaps, India.

TVS’s EV bet is more aggressive than that of its peers, who are mindful of the expensive costs of manufacturing EVs, which negatively impact margins when produced at a suboptimal scale.

“There is a lot of investment in EVs in India, and consumer demand is growing fast. Electrification will only grow from here. I expect 30% of scooters to be electric by 2025," Venu said. But TVS has been improving its margin steadily despite this EV push—its Ebitda (earnings before interest, taxes, depreciation, and amortization) margin expanded to 11%, a record, in the September quarter.

TVS expects its own portfolio will be 40% electric by 2025, higher than the industry average. Its strong presence in the scooter segment—one in every four scooters sold in India is made by TVS—will help, as the scooter segment is witnessing the fastest conversion to EVs, and is expected to account for 50% of India’s two-wheeler market by 2030.

“The bulk of our capex going forward is going to be in EV. Investments in EV will be to the tune of 3,000 crore over the next three-four years, some of which is already made," CEO Radhakrishnan told Mint.

Competition heating up

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The TVS stock has run up over 40% in the last six months, higher than its competition, amid the anticipated recovery in demand for two-wheelers, as sales are yet to achieve pre-pandemic levels.

TVS’s competitors are gearing up to make the most of this recovery—Bajaj Auto has six new variants of the Pulsar lined up for launch over the next few months, including what managing director Rajiv Bajaj has called the “biggest ever Pulsar", which could eat into TVS’s share in the motorcycle segment, which accounts for just over 30% of its total volumes, in the short-mid term. TVS’s Raider will likely see renewed competition from a resurgent Pulsar and competitively-positioned Hero MotoCorp models in the entry segment.

Even in the premium segment, which has witnessed a flurry of activity over the last few months from all two-wheeler makers, whether with new products in their own portfolio or with international partners (Harley, Triumph), TVS will have to protect its turf with what has proved to so far be a highly successful partnership with BMW.

“Triumph sold 3,200 units in August 2023 and management expects it to sell 10,000 units/month by 4QFY24", JP Morgan said in a report published after Triumph’s Indian partner Bajaj Auto announced its second-quarter earnings performance.

By the end of the September quarter, Bajaj had also managed to attain a double-digit market share (10%) in electric two-wheelers, which means its scale-up on EVs is now playing out with the Chetak. The company is planning more launches through this fiscal and the next and plans to scale up production to 10,000 EVs a month.

TVS, under Sudarshan Venu, acquired British motorcycling brand Norton in 2020, followed by Swiss e-cycle and e-bike brands Ego Movement and SEMG in 2021 and 2022, respectively, after Sir Ralf Speth had taken over as chairman. However, while TVS has said these are long-term, strategic investments, which give it “great opportunities to enter developed markets" (CEO Radhakrishnan, during TVS Motors’ May conference call), its investments in the e-bike companies have been debt-funded, and the company is yet to articulate a strategic road map for these entities. “As far as investments are concerned, they’re all strategic, long-term, involving cash outflow, and also requiring support for a few more quarters. And therefore, that has to be funded over and above the internal cash generation through loan funding", K Gopala Desikan, group chief financial, TVS Motor, had said in an earnings call.

The Chennai-headquartered company has demonstrated advanced EV technologies, launched successful brands across categories, and built a market share that has risen amid a challenging environment. But TVS Motor will have its work cut out to maintain that momentum in an industry that is transforming rapidly and where competition is heating up from old players and new.

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