Home / Markets / Mark To Market /  Tata Motors cements pole position with Tiago EV launch

Shares of Tata Motors Ltd.’s were up more than 2% in morning deals on Thursday. The automaker, already the leader in the electric vehicle (EV) space, unveiled its first EV hatchback, Tiago, on 28 September.

With this, Tata Motors has expanded its EV offerings, which include Nexon and Tigor. The three EVs are modified versions of their respective existing internal combustion engine (ICE) vehicles.

The introductory pricing for Tiago for the first 10,000 customers starts at 8.49 lakh, ex-showroom. Bookings for the EV are likely to begin on 10 October and deliveries would commence in January.

“The learnings from Nexon EV on customer usage pattern and improving supply chain have helped the company price Tiago EV more attractively. Its brand is likely to benefit from this strategy," said analysts at Nomura Financial Advisory and Securities (India) in a report on 28 September.

Though the EVs are priced at a significant premium to their ICE counterparts, the total cost of ownership of an EV is relatively low. Analysts at Nomura estimate Tiago to have a real-world range of about 180km (for lower battery pack). “With EV’s running cost of 1/km vs Rs7/km for ICE, the breakeven period could be ~3 years," they added.

In August, EVs formed about 8% of Tata Motor’s domestic passenger vehicle (PV) portfolio. But with increasing traction such vehicles, this share would only inch up. And while Tata Motors holds the largest market share in this EV segment, Mahindra & Mahindra Ltd is emerging as a strong competitor with deliveries of its first electric sport utility vehicle set to begin in January.

Tata aims to expand its EV portfolio from three currently to 10 by FY26. “It is also expanding its EV availability from about 85 to 165 cities as it expects Tiago EV to see good acceptance in tier-2/3 cities," said analysts at Jefferies India in a report on 28 September.

They added, “We like Tata’s EV strategy, which we believe should drive market share gains for the company as EV adoption rises in India, although capacity constraints might limit its total PV volume in the near term."

Meanwhile, Tata Motors faces challenges in its Jaguar Land Rover business in the near term due to semiconductor shortage. On the other hand, cyclical recovery in the commercial vehicle segment and increasing demand for PVs augurs well. Nomura’s sum-of-the-parts target price for the stock stands at 520 apiece. Tata Motors shares closed at 399.10 apiece on Wednesday on the NSE.

ABOUT THE AUTHOR

Vineetha Sampath

Vineetha Sampath is a chartered accountant and is experienced in the field of research analysis. She joined Mint's Mark to Market team recently and this is her first stint in journalism.
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