Why is Tata Motors thirsting for competition despite losing EV market share

The year that closes on Tuesday tested the automotive industry with slowing growth and an unsolved puzzle on whether electric or hybrid would lead the transition away from internal combustion engines (ICE), at least in the short term. The year 2025 may not provide an immediate answer, but the major passenger vehicle makers, such as Maruti Suzuki, Tata Motors, Mahindra & Mahindra (M&M), Hyundai, and MG Motors, have lined up a slew of electric vehicles (EVs) for the Indian market. 

 

On the face of it, this means a surge of competition for the first mover and market leader, Tata Motors, which enjoys close to 50 per cent retail market share. So, why is Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, not worried? In fact, Chandra seems to be looking forward to it.

 

“When the larger industry is growing, a new technology tends to do well. When sentiments are not good, people usually do not experiment with technology,” he says in an interview with Business Standard.

 

The EV market was largely stagnant for most of 2024. There was not much growth in the overall passenger vehicle industry, either. 

 

On top of this, the global commentary on EVs was negative, Chandra points out. Thirdly, the second iteration of the government’s Faster Adoption and Manufacturing of Electric Vehicles (FAMEII) subsidy scheme came to an end.

 

The onslaught of fresh launches is likely to expand the EV market. 

 

Losing market share

 

In recent months, players such as JSW MG Motors and BYD have increased their share of India’s close to 100,000 cars a year electric passenger vehicle market (see chart). According to the Federation of Automobile Dealers Associations’ research, Tata Motors’ retail market share slipped from 68.2 per cent in January to 48 per cent in November.

 

The Mumbai-based auto major is confident that as the market expands with new players entering, its volumes will get a boost. TaMo, which has a first mover advantage in this space, has been growing its EV portfolio over the last five years with the launch of the Tiago, Punch, Nexon, and the more recent Curvv. It had started with the Tigor EV for personal segment in October 2019.

 

Chandra says when the market expands, one benefits from a wider portfolio, but when the market is not growing, products start cannibalising among themselves.

 

“Frankly, we hope that compet­ition would have come earlier as that would have helped to expand the market much faster. People like to make choices after considering multiple options. When there are not multiple options, the customer would rather stay away,” Chandra says.  

 

With new launches by other companies, he believes there will be high-intensity marketing campaigns around EVs. Around 50 to 60 per cent of the upcoming launches in the near future are EVs, and this will expand the market. 

 

Hopes of a rebound

 

Maruti Suzuki is expected to bring eVitara, its first EV, next year. It will be a made-in-India car for global markets. JSW MG plans to launch the Cyberstar. Hyundai is readying to launch the electric Creta. M&M is set to bring its BE6 and XEV9e. Tata Motors, for its part, is ready to beef up its arsenal with the Sierra and Harrier EVs.

 

The big question, however, is whether the slew of new EVs will lower prices.

 

Mahindra’s BE6 will start at Rs 18.9 lakh and XEV9e at Rs 21.9 lakh. One will have to see how competitively Maruti prices the electric avatar of its popular Grand Vitara, whose ICE-and-hybrid version comes in the range of Rs 11-19 lakh. Similarly, Hyundai’s ICE Creta is priced around Rs 11-20 lakh.

 

Says a TaMo dealer: “From what we understand, most of the upcoming launches will be in the category above Rs 14-15 lakh. This will bring several people back to Tata showrooms for sure.”

 

Analysts are hopeful that 2025 will see PV growth rebound for Tata Motors. HDFC Securities said in a report last month that PV growth for the company was expected on the back of new model launches and a “comprehensive marketing strategy”, while keeping a check on inventory.

 

Indeed, TaMo is working to mainstream EVs and grow volumes, even if it loses market share in a growing market. The Indian Premier League (IPL) is going to be a big opportunity. “We have identified cities, cohorts, and what kind of below the line action we can do like events. EV buying is a community driven thing, so events play an important role,” Chandra says.

 

Earlier, TaMo was focussing on overcoming the barriers in adoption of EVs. It is now expanding the Tata.ev exclusive showrooms, wherever it sees viability. For example, in Kerala it has four stores where the penetration of EVs is high. This expansion will be cautiously planned, as once a Tata.ev showroom starts, the company stops selling EVs in the nearby ICE showrooms.

 

“We have identified 50 cities which have potential, and then we will plan it accordingly,” Chandra says.

 

Range focus

 

The two new M&M EVs claim to go more than 550 kilometre (km) on a single charge. Tata Motors has already launched a 45 kilowatt hour (kWh) Nexon EV with a range of 489 km, much above its earlier 325 km.

 

“When we started, battery prices were upwards of $220-230 per kWh. Now they have dropped by more than 50-60 per cent. There is a huge opportunity of expanding the battery capacity at the same price,” Chandra tells Business Standard.

 

He adds that the upcoming cars from the Tata stable would all have more than 500-km range. The upcoming electric Sierra and 

 

Harrier would be crossing 500 km range. The Curvv already has a 500-km range.

 

Fleet sales

 

The FY25 second quarter EV sales of Tata Motors suffered because the end of FAMEII hit the fleet segment, which comprised almost 20 per cent of its sales. The company says demand in this segment will be back as it has managed to bring down the price differential (which was almost Rs 2.5 lakh) after the subsidy withdrawal. “This was partly achieved through cost reduction (of batteries) and partly by taking some hit on margins,” Chandra clarifies.

 

Analysts say the EV business margin loss (including product development expenses) was around 5 per cent in Q2FY25, aided by reduction in battery cell prices.

 

Chandra says EVs will see more profitability with the benefits under the production-linked incentive scheme coming in, inventories coming down (with December stock clearance), and planned price hikes in January.