Ripe target for Indian EV makers, but slow transition a hurdle: Report

“As the third largest car market in the world, India is a ripe target for EV companies. EV sales in the country more than doubled last year. However, this is from a low base. EV sales accounted for less than 2% total light vehicle sales over the past 12 months,” the report said.

Furthermore, it said that 90 percent of electric vehicles in India are in the two- and three-wheeler segment.

“While there is strong growth potential, the development of adequate charging infrastructure will be key to the adoption of electric vehicles. Given the slow pace of adoption of electric vehicles in the country, no Indian company is likely to be in the global market for electric vehicles in the foreseeable future. The market holds a significant share,” it added.

S&P Global Ratings noted that Tata Motors is the leader in electric vehicles in India with a market share of more than 80%.

“We expect the company to maintain a strong position despite increasing competition from domestic players such as SAIC and Hyundai, as well as Mahindra,” it said.

However, Jaguar Land Rover, the UK subsidiary of Tata Motors, “is behind many of its peers in the switch to electric vehicles. This could hurt its competitiveness,” the report said.

“As EVs account for only around 10% of Tata Motors’ expected passenger vehicle sales in FY23, we expect the impact on margins and earnings to be manageable. There is also no significant funding given the sharing of manufacturing infrastructure with the ICE division. demand,” the rating agency said.

Tata Motors also raised about $1 billion from the sale of convertibles.

The securities were compulsorily converted into an 11% to 15% stake in its Indian EV business.

“The funding significantly reduces its debt in India. We believe there is further potential for further monetization of Tata’s Indian EV business,” S&P Global Ratings said.

Asia will be at the center of the electric vehicle era, the report said.

“The region has the massive resources the industry needs (nickel in Indonesia), highly supportive policies (China) and industry-leading technology (Korea, China, Japan). A number of Asian companies are outpacing established players, especially in China, China’s EV market is larger than the rest of the world combined,” the report said.

First published date: May 16, 2023 at 08:18 AM CST