Tata Wants To Disrupt Electric Vehicle Market Without Owning Any Factory! How Will It Work?

Tata Wants To Disrupt Electric Vehicle Market Without Owning Any Factory! How Will It Work?
Tata Wants To Disrupt Electric Vehicle Market Without Owning Any Factory! How Will It Work?

Tata Motors plans not to own any manufacturing plants for its new electric vehicle (EV) company. 

The company plans to rely on the passenger vehicle factories for output and remain asset-light instead!

How will this work out? Read on to find out all the details!

Tata Motors Will Not Have Any Manufacturing Plants For New EV Unit

Tata Motors Ltd. is developing a new electric vehicles division, and for that, the largest vehicle maker of India is reportedly raising as much as 1 billion USD. As per sources close to the development, the business has been valued at around 7 billion USD. 

The EV company, which is yet to be named, has been valued at $9.1 billion which is nearly half of Tata Motors’ market cap by the end of October 12, 2021. The company plans to build and own all future intellectual property (IP) rights for EVs, but will not have any factories of its own.

As per PB Balaji, chief financial officer, Tata Motors, “The manufacturing capacities of passenger vehicle (PV) will be available on a tolling basis to the EV company. The EV company will not have any asset or any capacity for itself within the company but it will have the access to the PV capacities already created.”

TPG Rise Climate Fund To Invest In Tata Motors

We recently reported to you that the TPG Rise Climate fund will lead a Rs 7,500 crore investment in the new EV company of Tata Motors Ltd. TPG Rise will subscribe to compulsory convertible instruments for between 11% and 15% stake in the new company.

This is equal to an equity valuation of up to $9.1 billion for the new company, said Tata Motors in a statement. 

As per reports,the current generation products of Tata Motors, the Nexon EV and Tigor EV will continue to be manufactured from their current locations. The PV business will benefit from the fees paid to it by the new EV company for using its brand and IP.

The EV unit aims to launch 10 products by FY26; these will be a mix of different body styles and different drive ranges. In the EV segment, Tata Motors is leading with a market share of 71 percent. Additionally, the company is also selling more than 1000 units in sales of Evs every month.

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