Tata Motors looking for Local Battery Options as EV Competition is on Rise

The EV industry is constantly on a rise and EV manufacturers are working on bringing the costs down for less reliability in other countries for battery imports. Thus Tata is strategically finding alternatives to invest in local battery options to strengthen their supply and cost structure as competition is increasing in the EV industry.

Current Market Conditions

1. The share of Tata motors has witnessed a significant drop to 62% in 2024 from 73% in 2023, primarily due to stiff competition from JSW and MG motors.
2. There are new entrants coming in the industry as well. Some of the major auto players like Mahindra & Mahindra, Hyundai and Maruti Suzuki are gearing up to launch their EVs in 2025.
3. There might be a possibility of global players like Tesla coming in the Indian market which can further make the competition intense.

Tata’s Strategy

The Tata group is planning to make an initial investment of $1.5 billion to set up a battery production factory in Gujarat, which is scheduled to start its operations in 2026. This strategy is made by Tata to achieve:

1. This will help Tata to exercise control over Battery, which is the most important component of an EV.
2. Going local will help Tata to lower down the costs of batteries and other components, thus helpful in pricing their cars competitively.
3. Setting up a proper factory in India will help Tata to make a competent EV ecosystem to regulate proper flow of production to meet the rising EV demand of the country.

P.B. Balaji, Group CFO of Tata Motors has stated that this investment will solidify Tata as a dominant player in the EV market, with the battery plant achieving its full potential till 2028.

Tata Motor’s Strength

1. Tata Motors have solidified their position in the Indian EV industry and it is also well-funded, as they have received more than $1 billion from a US private equity firm TPG and are expected to secure more than $750 million over the next four years under India’s EV incentive schemes.
2. The first lot of $17 million has already been spent.
3. The company makes EV cars with reduced costs in mind, which makes their EVs more attractive and profitable to buy.

Market Scenario and Growth Opportunities

1. The current market scenario is constantly on a rise as EVs accounted for 2.5% of the 4.3 million cars sold in India in 2024, with a healthy 20% growth rate compared to the overall car market growth of 5%.
2. Current EV analysts have predicted that EV sales will double in 2025, attracting more customers looking for efficiency and reliability.
3. Tata Motors is planning to increase their EV sales to 30% by 2030, as the current sales constituted 12% of its 2024 car sales.

What Makes Tata Different from its Competitors

The biggest key differentiating factor is that Tata offers EVs in diverse segments to all consumers, from SUVs to hatchback, they have given EV options in all models. Tata is the only company to offer cars in all powertrains. For Example Tata provides Nexon in Diesel, Petrol and EV versions.

1. They have also made a complete EV ecosystem and provide an end-to-end EV solution, from manufacturing to charging infrastructure.
2. As Tata is planning for local battery production, Tata Motors will be having a greater advantage over competitors like Mahindra, Hyundai and Maruti.

Tata Motors innovative strategy in local battery manufacturing has clearly stated their ambition to stay at the forefront of India’s evolving EV market. By reducing the costs associated with EVs and smoothening the supply change management, Tata is all set to position itself as a big and dominant player in electric mobility.