How Tatas used ‘jugaad’ to be the king of India’s electric vehicle market

The area, which could be mistaken for a prototype lab, initially made just eight SUVs a day. But demand has skyrocketed in the two years since the Nexon EV launched. Tata now produces more than 100 a day, though much of that is now handled at another plant nearby.

Even with this humble beginning, which is based on the Indian tradition of ‘jugaad’, a word that refers to frugal innovation and alternative solutions, Tata dominates the country’s nascent electric car market.

That’s in stark contrast to other big automakers that have poured billions of dollars into EV tools and technology early on, though Tata’s success is also due in large part to government subsidies and high fees that prevent sales. imports from rivals like Tesla Inc.

Entering India’s untried electric vehicle market, Tata knew it had to make an affordable car for an extremely cost-conscious population. Instead of building an EV plant or line that would be expensive and time consuming, he decided to take an existing successful model and work to equip it with a battery pack.

An EV plant for a nascent market would have been “a huge amount of investment based 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.

Tata also limited initial investment by relying on Tata group companies for a range of electric vehicle components and infrastructure, and by choosing a cheaper type of battery chemistry.

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A worker inspects a Tata Nexon electric sport utility vehicle (SUV) at the Tata Motors plant in Pune.

That allowed him to list 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 petrol model.

With just the Nexon EV and one other model for fleet sales, Tata controls 90% of India’s electric car sales, giving it a very significant early mover advantage, even if EVs account for only the 1% of the overall automotive market.

Last June, Tata outlined aggressive plans to launch 10 electric models by March 2026. This fiscal year alone, it wants to quadruple electric vehicle production to 80,000 cars, the sources said.

Those ambitions attracted $1bn in investment from US private equity firm TPG, valuing its electric vehicle business at $9bn, well below some electric vehicle startups but equal to 40% of the market value of electric vehicles. Tata Motors.

“This has definitely given us a significant head start. It now gives us a force multiplier to aggressively move forward with electric vehicles,” said Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and electric vehicle subsidiary.

Workers inspect Tata Nexon electric sport utility vehicles (SUVs) at a Tata Motors plant in Pune

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Workers inspect Tata Nexon electric sport utility vehicles (SUVs) at a Tata Motors plant in Pune (REUTERS)

Tata has also earmarked $1 billion of its own money to fund its electric vehicle plans, and by 2025, Chandra expects electric models to account for a quarter of its sales.

In the longer term, Tata is working on an electric vehicle-specific car platform and wants its first car using that architecture to launch in 2025. The company is also evaluating the need for a dedicated electric vehicle plant, Kulkarni said.

In the meantime, it plans to modify combustion engine platforms to build electric vehicles with larger batteries and longer ranges. Those models are likely to hit the market in about two years.

SUPPORTING THE TATA FAMILY

The Nexon EV has a relatively modest real-world driving range of around 200km per charge.

Still, the range is enough for most potential Indian buyers, a Tata consumer survey showed, prompting them to choose a cheaper 30-kilowatt-hour iron battery from China’s Gotion High Tech Co. than other lithium ion batteries. Tata also considered it safer for India’s tropical weather conditions, Kulkarni said.

Gotion is working with Tata AutoComp Systems on the assembly of the battery packs and the battery management system.

Tata AutoComp, which sources the majority of EV parts, is one of several companies in the Tata conglomerate that Tata Motors leans on, a huge advantage at a time when many automakers are pouring funds into becoming more vertically integrated. and depend less on suppliers.

Tata Power Company Ltd is installing charging stations, Jaguar Land Rover is helping design, while Tata Chemicals Ltd has plans for battery recycling and local cell manufacturing.

When Tata started electric vehicle production in 2020, most of the parts were imported. Today, Tata AutoComp produces about 50% of components in-house, its CEO, Arvind Goel, told Reuters.

“Our plan is to locate everything,” he said.

All motor parts except the magnet will be made locally within the next two years. Excluding cells, the battery will be manufactured in-house and the company is working on its own battery management system, Goel added.

RISKS AHEAD

However, Tata’s electric vehicle business is poised for challenges. The government wants 30% of all cars sold in the country to be electric by 2030, and while that goal may sound optimistic, competition is on the way.

South Korea’s Hyundai Motor and Kia Motors plan to start selling electric vehicles in India this year, although their models will be larger and more expensive. Expectations are also high for some rivals to launch gasoline-electric hybrids.

“The biggest threat will come when competitors like Hyundai launch EV models in a similar price band and when hybrid cars from Toyota and Suzuki enter the market,” said Gaurav Vangaal, associate director of S&P Global Mobility.

And like other automakers, Tata is struggling to source semiconductors amid a global shortage that has become its biggest challenge in ramping up production and caused a 5-month delay in electric vehicle orders.

A worker inspects the electric motor before it is installed inside a Tata Nexon electric sport utility vehicle (SUV) at the Tata Motors plant in Pune.

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A worker inspects the electric motor before it is installed inside a Tata Nexon electric sport utility vehicle (SUV) at the Tata Motors plant in Pune. (REUTERS)

That said, Tata intends to make the most of its enviable lead in India’s electric vehicle market. It has amassed a lot of data by monitoring the 25,000 EVs it has on the road, particularly relevant to developing electric cars in hot climates, says Kulkarni.

“India has several pain points that make it a challenge for electrification. Developing electric vehicles in this market gives us valuable data, information that can flow back into our development process. I can’t tell you what kind of advantage this gives us”. he said.

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