Electric sparks: M&M flags issues with Tata Motors e-car pricing

Pawan Goenka says not sure about selling cars in phase-II

M&M, which is competing with rival Tata Motors in the country’s largest electric car tender, said the company finds it “difficult” to comprehend the latter’s pricing in the tender. Tata Motors quoted a price of Rs 10.16 lakh for its electric Tigor sedan in the tender for 10,000 electric cars when M&M offered to sell its e-Verito at approximately Rs 12 lakh (both prices are exclusive of the goods and services tax).

“This pricing is difficult for us to comprehend given the fact that we have been in the business for more than five years and have good knowledge about the industry,” Pawan Goenka, managing director at M&M, said in a conference call on Thursday.

Tata Motors emerged as the lowest bidder in the tender and is selling 250 of the order for 400 units in the first phase. EESL, which invited the bids, gave M&M an opportunity to match the price of the electric Tigor, following which the firm would supply 150 units in first phase that ends on November 30. Goenka, however, said they would not make any profit on the order. 

Goenka said he was not aware if Tata Motors was able to offer the price based on a volume commitment to its vendors. He drew a distinction between the e-Verito and the electric Tigor. He said the e-Verito was a proper sedan with a bigger length (4.24 metre) against the sub-4 metre length of the Tigor. “Our vehicle has a range of 170-180 km upon full charge, which is more than the specified range of 130 km in the tender,” he said. 

“I do not know the specifications of the car (electric Tigor), since it is not yet out in the market unlike the Verito, which has been in the market for some time. But the Verito is a bigger car and has a 20.5 kwh electric motor. We don’t know what the battery size of the car is,” said Goenka.

In response to queries on pricing of the electric Tigor to Business Standard, Tata Motors said its offer for the EESL tender was based on a sound business model. “It reflects Tata Motors’ ambition to be a long-term sustainable player in the electric vehicle space,” said a company spokesperson. 

EESL has not disclosed how the second phase of 9,500 electric cars would be split between Tata Motors and M&M. "We were offered 50 per cent of the tender (500 units) in the first phase but we opted for 30 per cent, as we would be losing money since our product is about Rs 2.3 lakh more expensive,” Goenka said. He said M&M would not make a loss but would get a revenue that would be about Rs 3 crore lower to what it had anticipated. 

The firm also said it was not sure of bidding for the second phase. 

“We will have to take a hard look on whether it would be justifiable to participate in the second phase," Goenka said.

He said it was not feasible for them to redesign the car in such a short notice in order to meet the cost. The company said they needed to make electric cars “affordable” but at the same time make it a sustainable and profitable business. M&M is investing Rs 600 crore in electric vehicle manufacturing, including battery assembly plant and power electronics. It plans to launch two new electric vehicles by 2019.

Anand Mahindra, executive chairman at M&M, had called Tata’s pricing of electric Tigor “terrific” in a tweet after the competitor emerged as the lowest bidder on Friday.