PLI will be among biggest sources of funds for EV biz next yr: Tata Motors

PLI benefits would range from 13-18% of revenue for vehicles approved by the government for the scheme

Tata Motors said on Friday that one of the biggest sources of funds for its electric vehicle (EV) business would be the Production Linked Incentive  (PLI) scheme benefits. The company further clarified that there were no plans for immediate capital raise for the EV business.

PLI scheme provides financial incentives to boost domestic manufacturing of advanced automotive technology products including electric vehicles and their components.

“The total outlay is about $2 billion for the EV business. Of this, the first $1 billion has come from the first fund-raise where TPG Capital also participated. One of the biggest sources of money is going to be the PLI where we believe that the money should start coming from next year onwards now that the ARAI certificate has come through,” said PB Balaji, Group CFO, Tata Motors.

He also added that the EV business, which operates under a separate arm Tata Passenger Electric Mobility Ltd (TPEML), is already Ebitda-break even before product development investment. “We intend to turn Ebitda positive in the coming quarters. This will again generate the funds to continue investments in the EV business. In the meanwhile, we have done some strategic moves like acquiring capacities. The Sanand-2 plant was acquired at competitive prices. These helped to manage the spends,” Balaji said.  He assured that they are “quite secure” on their funding and see no stress there.

TPEML MD Shailesh Chandra told Business Standard last month that the Ebitda margins for the EV business in Q2 were minus 5.5 per cent, better than the Q1 Ebitda margin of minus 9.7 per cent.

“The Ebitda margin is negative only because of the product development expenses – the cost of creating our portfolio. It is an investment not an expense. It’s an accounting principle to charge off a part of your capex through the profit-and-loss statement route. If we remove this element, then we are very close to breaking even on Ebitda. We are definitely eyeing becoming operating cash-flow positive,” Chandra had said.

Balaji said the PLI benefits would range from 13-18 per cent of revenue for vehicles that are approved by the government for PLI. Tata Motors Tiago EV is already in line to receive these benefits. The company is now doing procedural work and then they will start filing for PLI benefits.

He said there were no immediate plans to raise funds from the market because they do not think the markets are conducive for any fund-raise now.