Highlights:
- Tata Motors going heavy in its Electric Vehicle venture
- Tata Motors raises investment from TGP Rise Climate and Abu Dhabi Developmental Holding Company PJSC (ADQ)
- Tata Motors to invest $ 2 billion in its EV business
In the next 5 years, Indian automaker, Tata Motors will invest more than $ 2 billion in its Electric Vehicles (EV) venture, a company’s executive said soon after the company announced that it has raised funds from private equity firm TPG Rise Climate.
Earlier, Tata Motors informed that TPG’s Rise Climate Fund as well as Abu Dhabi Developmental Holding Company PJSC (ADQ) had agreed to invest $1 billion which will help the company to expand its EV business for which it would form a separate unit.
TPG and ADQ would hold between 11% and 15% in the new EV entity.
The fundraiser was done at a valuation of close to $9.1 billion, Tata said.
The EV unit will invest heavily in new models, dedicated battery electric vehicle platforms, charging infrastructure and battery technologies.
Tata Motor’s head of Passenger Vehicle business, Shailesh Chandra, said, “The aim is to lead the EV charge in the market,” while speaking with the reporters and added that to achieve its goals the company will work with the investors who share company’s vision of a “carbon free world.”
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This is the first major fundraising done by any Indian carmaker trying to push clean mobility when global automakers such as General Motors (GM), Volkswagen and Toyota Motor are already spending tens of billions of dollars to speed up the EV adoption and also counter China’s dominance in this sector.
The decision from Tata Motors comes when the biggest EV maker in the world, Tesla, is preparing to launch its cars in India and has been lobbying the government to lower import duties on the EVs.
On the global scale, investments in EVs could reach as high as $ 330 billion said the consulting firm AlixPartners, in June and added that it expects EV sales to increase to about a quarter (25%) of total global vehicle sales by 2030 from about 2% today.
India wishes for EVs to make up 30% of the total car sales by the year 2030, a huge task considering it stands at under 1% as of now. In order to achieve its target, the government has launched a lot of incentive schemes which includes one for setting up local battery manufacturing.
In India, as of now, Tata Motors is the dominating force in terms of EV sales with its electric SUV Nexon and Tigor compact EV, and also plans to launch 10 new electric models by 2025.
However, there are several other carmakers such as Maruti Suzuki, India’s largest, who are yet to enter the space.
Tata, which owns the UK-based luxury brand Jaguar Land Rover, also has the advantage of working with other group companies such as Tata Power, Tata Chemicals and Tata Autocomp to create an ecosystem for EVs, Chandra said.
