Tata Motors share price, one of the largest automakers in the country, surged nearly 18% intra-day today (October 13, 2021) on the back of fresh investments from TPG.
About the investment
The company, on October 12, 2021, had announced that the private equity firm TPG would be investing to the tune of Rs 7,500 crore in Tata Motors wholly-owned electric vehicle subsidiary, Tata Motors’ EV unit (TML EV). As per the company’s statement, the investment will be in tranches over a period of 18 months. Further, the first round of capital infusion is expected to be completed by the end of March 2022. The entire capital infusion is expected to be completed by the end of 2022.
The investment is made through TPG Rise Climate, a dedicated climate investing platform. Where the shareholders will be issued compulsory convertible instruments for a 11-15% stake in the TML EV.
The stake will be held by TPG, along with co-investor ADQ, Abu Dhabi’s largest investment company.
As per the company’s statement, it has the vision to have a 30% electric vehicles penetration rate by 2030 in line with the Government’s vision.
TML EV, over the next five years, will create a portfolio of 10 EVs and in association with Tata Power for the creation of widespread charging infrastructure. This should help in faster EV adoption.
The company also plans to expand the product offering across all markets including micro-markets. That is, to reach 100 cities with 255 touchpoints in FY22.
It also plans to offer holistic services to customers including charging facilities, financing options and achieve operational efficiency on battery reuse and recycle.
About Tata Motor’s EV unit
Tata Motor’s electric vehicle unit (EV) is one of the leading players in the EV market in the country. As per various media reports, TML’s EV holds nearly 70% of the market share.
The company already has a few launches specifically under its EV segment including Nexon EV, ZIP Tron and Xpress-T.
As of FY21, TML EV has a presence across 51 cities across the States (60 cities YTD 2022) with over 150 captive charging points and over 700 public charging networks.
With the infrastructure and public acceptance of electric vehicles improving, there is a huge potential for growth for the company. For instance, in FY20, the company was able to sell around 286 Nexon EV cars; while it was able to sell 3,804 cars of the same model in FY21.
In addition to the car launches, the Government initiatives too have helped in the EV sales across auto-makers. These initiatives include State EV policies and PLI Schemes for EV.
Support Required for faster growth
However, there are challenges and it would help if the Government assists in accelerating this growth and adoption in EV. This could be through providing a stringent emission roadmap, initial fiscal incentives to spur the growth of EV, and offering convenient and affordable publicly accessible chargers or charging points among others.
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