How the Tata Group is Riding India's EV Revolution...

The future of automobiles is here.

According to a report in The Hindustan Times, global electric vehicle (EV) sales stood at 4.6 m units in 2021 surpassing hybrid car sales for the first time.

From 2022-2030, the market size for EVs is projected to grow at a compounded annualised growth rate (CAGR) of 21.7% globally, as per a market research report by Reportlinker.

The report estimates that EV sales will reach 39.2 m units by 2030.

The Indian EV market is not far behind. India could be the third-largest EV industry in the world by 2030.

You read that right. India's top EV companies are driving this megatrend.

EV sales in India rose 168% YoY to approximately 300,000 in 2021. This was on the back of government initiatives such as the FAME scheme, PLI-ACC scheme, and battery swapping scheme.

The government's push for EVs is a part of its mission to reach net zero emissions by 2070.

One factor hindering the meteoric rise of EV sales, despite numerous incentives, is price.

The starting range for petrol cars is Rs 250,000 in India, whereas (non-Tata) EV starts from over Rs 2 m.

On the subject of sustainability and affordability, who is better equipped to steer the Indian green mobility other than the Tata group?

Tata has always developed products that are sensitive to the needs of Indian consumers. Hence people trust it more than any other brand.

The group aims to provide consumers with a service or solution that is both affoadable and feasible.

Although, shareholders of the group companies shell out good money while investing as no Tata group penny stocks are available.

Tata Motors was one of the first companies to develop a fully electric commercial vehicle on its own.

Keeping the price factor in check, the company released the most affordable EV in the Indian market starting at Rs 1 m.

Electric mobility is here to stay and the Indian US$ 103 bn Tata group is once again leading the revolution in the country.

How? Let's take a look...

#1 Tata Motors

First on the list of Tata group companies is Tata Motors.

The company is leading the EV revolution with more than 80% market share in passenger EV sales. It sells three EVs - the Tata Nexon EV, Tata Nexon EV Max, and Tata Tigor EV.

In the past few months, Tata Motors has separated its passenger vehicle business. It has also formed a separate EV focused arm, Tata Passenger Electric Mobility.

Tata Passenger Electric Mobility has committed to invest US$ 2 bn in the EV sector over the next few years.

The new EV arm is asset light and houses only the technology and intellectual property. For a fee, the passenger vehicle division continues to house the manufacturing.

In October 2021, private equity group TPG invested US$ 1 bn in the EV division of Tata Motors. The post money valuation stood at US$ 9.1 bn.

The country's market leader in EVs has seen its volumes rising consistently annually. In financial year 2020, Tata Motors sold 1,000 EV units while in 2021 this number increased to 5,000.

The company witnessed exponential sales growth in 2022 as it sold close to 20,000 units, driving the e-mobility practically independently.

In the meantime, Tata Motors has sounded out vendors on a guaranteed production plan of 50,000 EVs for 2023.

#2 Tata Power

Next on the list is Tata Power.

For EV infrastructure in India, Tata Power is to EVs, what Samsung was to Android. It is the first company to set up an EV charging station.

The company has tied up with Tata Motors to provide home charger solutions to every EV owner.

It has already installed nearly 15,000 home chargers and almost two thousand public chargers in over 160 cities and highways between cities.

Besides this, the company also provides fleet charging facilities along with captive charging for public transportation and buses at their depots.

In February 2022, Tata Power partnered with Apollo Tyres to deploy public charging stations at the latter's commercial and passenger vehicle zones spread across the country.

In April 2022, the company signed a memorandum of understanding with National Real Estate Development Council to install up to 5,000 EV charging points across its member's developer properties in Maharashtra.

In line with Tata Power's 'Do Green' mission, the company has completed the installation of 150 green energy-powered EV charging stations across Mumbai.

The company has also tied up with real estate companies such as Kolte Patil, Vatika Group, and Rustomjee group, among others to install EV charging stations at their properties.

Foraying into the EV charging infrastructure aided Tata Power to deliver electrifying performance in the past year.

#3 Tata Chemicals

Third on the list is Tata Chemicals.

The company plays a significant role in the Tata Group EV eco-system. Tata Chemicals provides the knowhow on battery technology and has its manufacturing plant in Gujarat.

Tata Chemicals has signed an MoU with the Indian Space Research Organisation (ISRO) for the transfer of ISRO's lithium-ion cell technology. The company will acquire the technology to understand its viability for manufacturing lithium-ion cells in India.

The company currently doesn't plan on setting up a battery plant for EVs as confirmed by the Tata group chairman, N Chandrasekaran in the recent AGM.

Although, Tata Chemicals will provide its expertise to group companies as far as lithium carbonate, an important component in EV batteries, is concerned.

Furthermore, the company has signed an MoU with Centre for Materials for Electronics Technology (C-MET) to develop collaborative technology for recycling lithium ion cells / batteries.

Tata Chemicals has established a circular economy in its lithium-ion battery business by launching recycling operations.

By recycling Li-ion batteries, the company recovers valuable materials and delivers sustainable solutions.

#4 Tata Elxsi

Last on the list is Tata Elxsi.

The company is among the world's leading design andtechnology services providers across industries, including automobile, broadcast, communications, healthcare, and transportation.

The company focuses on the application of technologies like Internet of Things (IoT), Cloud, Mobility, Virtual Reality, and Artificial Intelligence to design advanced products for its customers.

Tata Elxsi provides an advanced driver-assistance system (ADAS) technology platform to automotive original equipment manufacturers like Tata Motors.

ADAS technology assist the driver in driving and parking functions using artificial intelligence.

The company has partnered with TCS, to drive advanced research and product design, especially with respect to ADAS systems and connected car tech.

Tata Elxi houses a range of products for the automobile industry including the fast growing EV segment.

• Virtual-Drive is the company's IP solution that provides a lab-based environment validation of Autonomous Driving and ADAS algorithms.
• eMobility HILS is the company's lab based framework. It validates EV systems such as Battery Management, Inverters, DC-DC convertors, etc.

Many automobile industry players are optimising system performance by combining Machine Learning and Artificial Intelligence with sensor fusion.

The growing demand for EVs will urge the makers to create advanced models in the future. The in-house dedicated design team and technology will continue to provide an upper hand to the group.

Tata Elxsi has delivered phenomenal returns to investors in the last couple of years.

Tanushree Banerjee, Research Analyst at Equitymaster, shares with you the one rule that will help you find the next Tata Elxsi.

The road ahead...

The EV push has led the above Tata group companies to provide stellar returns to their investors.

Have a look at the table below showing Tata group companies' one-year performance:

Tata Group Companies' One Year Performance

Company	One-Year Return
Tata Motors	43.5%
Tata Power	75.2%
Tata Chemicals	8.4%
Tata Elxsi	90.1%

Data Source: Equitymaster

But will these companies continue to deliver such performances in the future? Although, Tata has a lead in the industry other companies are investing heavily and will soon catch up.

As the competition in the industry increases, Tata's share of the pie can fall.

Did you know that despite being the market leader, Tata Motors isn't the country's first major EV manufacturer?

Mahindra is the pioneer of EV in the Indian space. It launched its first EV, Mahindra Reva, as early as 2001.Mahindra and Mahindra plans to invest over US$ 1 bn in the EV space.

M&M has raised US$ 250 m from British International Investment at a valuation of US$ 9.1 bn. The investment will flow into a wholly-owned subsidiary of M&M that will be newly incorporated.

Apart from M&M, companies like Hyundai, KIA, and MG also pose tough competition to Tata.

Although, the Tata group has a headstart in the field. It will have to continuously evolve to stay ahead of its competition.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...