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India’s Tata Motors Ltd repurposed an unused shop floor at its flagship plant to make its first electric vehicle (EV) for the consumer market. There’s no fancy assembly line – Nexon SUV bodies designed for gasoline models are wired and fitted with battery packs by hand.
The area, which could be mistaken for a prototype lab, initially made just eight SUVs a day. But demand has shot up over the two years since the Nexon EV’s launch. Tata now makes more than 100 a day though much of that is now handled at another plant nearby, reports Reuters.
Even with this humble start, which draws on India’s tradition of ‘jugaad’ – a word referring to frugal do-it-yourself innovation and workarounds, Tata dominates the country’s fledgling electric car market. This contrasts sharply with other major automakers which have poured billions of dollars into EV tooling and technology from the get-go, though Tata’s success also owes much to government subsidies and high tariffs that keep out imports from rivals like Tesla Inc.
Going into India’s untried market for EVs, Tata knew it had to make an affordable car for an extremely cost-conscious population. Instead of building an EV plant or line which would be expensive and take time, it decided to pick an existing successful model and work on outfitting it with a battery pack. An EV plant for a nascent market would have been “a huge amount of investment sitting on the potential of emerging volumes. We didn’t want to do that,” Anand Kulkarni, vice president of product line and operations at Tata Passenger Electric Mobility, told Reuters.
First Mover Advantage
“I really do encourage other manufacturers to bring electric cars to market. It’s a good thing, and they need to bring it to market and keep iterating and improving and make better and better electric cars, and that’s what going to result in humanity achieving a sustainable transport future. I wish it was growing faster than it is.” – Elon Musk
Tata limit upfront investment by relying on Tata group companies for a range of EV components and infrastructure. This enabled it to price the Nexon EV at around $19,000 – not necessarily cheap in India but affordable for the upper-middle class and not much more expensive than the top version of the Nexon gasoline model. With just the Nexon EV and Tigor EV for fleet sales, Tata commands 90 percent of India’s electric car sales. It’s giving an all-important first-mover advantage even if EVs account for only 1% of the country’s annual sales of about 3 million vehicles.
Tata outlined aggressive plans to launch 10 electric models by March 2026. In FY23 alone, it wants to quadruple EV production to 80,000 cars. Tata is working on an EV-specific car platform and wants its first car using that architecture to launch in 2025. In the meantime, it plans to modify combustion engine platforms to build EVs with bigger batteries and longer driving ranges. Those models are likely to hit the market in about two years.
The carmaker has termed its existing EVs as Gen 1 — those that were developed from internal-combustion engine (ICE) cars, such as the Nexon EV and Tigor EV. Gen 2 cars will be launched in 2024, and will be developed first as EVs and then as ICE vehicles. Gen 3 cars will be only electric.
Support from Tata Family
Tata is relying heavily on the group companies, which are having domain knowledge as required for EV manufacturing and setting up supporting infrastructure. This is helping them to get the best from suppliers.
The Nexon EV has a relatively modest real-world driving range of around 200 km per charge. The range is, however, sufficient for most potential Indian buyers, a Tata survey of consumers showed, prompting it to choose a 30-kilowatt-hour iron-based battery from China’s Gotion High Tech Co which is cheaper than other lithium-ion batteries. Tata has also judged it safer for India’s tropical weather conditions, Kulkarni said.
Tata AutoComp, which sources most of the EV parts, is one of several Tata conglomerate firms that Tata Motors leans on. It has a huge advantage at a time when many automakers are ploughing funds into becoming more vertically integrated and less reliant on suppliers. Tata Power Company Ltd is setting up charging stations, Jaguar Land Rover contributes to design while Tata Chemicals Ltd has plans for battery recycling and local cell manufacturing.
When Tata began EV production in 2020, most parts were imported. Today, Tata AutoComp produces around 50 percent of the components in-house, its CEO, Arvind Goel, told Reuters. “Our plan is to localize everything,” he said.
All of the motor’s parts except the magnet are due to be produced locally over the next couple of years. Excluding the cells, the battery will be made in-house and the company is working on its own battery management system, Goel added.
Tata Power, one of India’s leading electric vehicle (EV) charging infrastructure providers, has collaborated with the National Real Estate Development Council (NAREDCO), Maharashtra. The company will be installing up to 5,000 electric vehicle charging stations across NAREDCO’s member developers’ properties in the state. This will include installation, maintenance, and up-gradation of the electric vehicle chargers as and when required.
Way Ahead
Tata’s EV business is, however, set to face challenges ahead. The government wants 30 percent of all cars sold in the country to be electric by 2030 and while that goal may look optimistic, competition is on its way. All the car manufacturers have either launched their EVs or announced the launching of EVs in the next couple of years.
Like any other automaker, Tata is struggling to source semiconductors amid a global shortage that has become its biggest challenge in ramping up production and has caused a 5-month backlog in EV orders. This requires a rapid set-up of related infrastructure.
Rolling out EVs is central to Prime Minister Narendra Modi’s carbon reduction agenda, and his administration is offering companies billions of dollars in incentives to build electric cars and their components locally. “While the government aims to have EV sales accounting for 30% of private cars by 2030, we are aiming higher,” N. Chandrasekaran said. He is Chairman of the Board of Tata Sons, the holding company and promoter of more than 100 Tata operating companies with aggregate annual revenues of more than US $100 billion. (Content source Reuter & Financial Express)
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