‘Despite the sharp growth of EVs in the country, demand for ICE vehicles will remain strong’
‘Despite the sharp growth of EVs in the country, demand for ICE vehicles will remain strong’
The demand for passenger vehicles will remain strong during the ongoing and upcoming festival season despite the thinning of the demand-supply gap due to COVID and supply-side disruptions causing acute shortage of semiconductors, said Shailesh Chandra, MD, Tata Motors Passengers Vehicles Ltd & Tata Passenger Electric Mobility Ltd.
“Till FY22, the journey had been more of demand less supply,” he said. “There was more pent- up demand and the industry was struggling to supply. The volumes went down to 650,000 unts last year,” Mr. Chandra said. “But for the last 4 quarters things have been more stable,” he said.
“There has been a strong supply of nearly 3.3 million units in the last 4 quarters,” the MD said. “In this quarter, the industry will hopefully touch one million units which had not happened in the past. Still the demand is strong, it will remain strong for the new models which are being introduced,” Mr. Chandra said.
“So festive season will be good because supplies are good and demand is strong. Post festive season we will see how it continues to increase,” he added.
In the EV industry, he said the struggle had been more on the supply side. “With additional products coming in, it should give boost to further demand. Tiago EV will create mass adoption and a bigger customer base. I see the growth is going to be intense going forward given that general policy environment is going to be supportive of EV,” he added.
In the first five months of the financial year, the PV industry had grown by 33%, while Tata Motors had grown 84%. “As far as the EV industry is concerned first five months, the industry growth has been 305%,” he said.
The company on Wednesday introduced the Tiago EV at an introductory price starting ₹8.49 lakh (all India ex-showroom) for the first 10,000 bookings out of which 2,000 units have been reserved for existing customers of Nexon EV and Tigor EV. Bookings will be accepted from October 10, 2022 and deliveries will commence from January 2023.
This is part of the company’s strategy to introduce 10 electric vehicles in the next 5 years. “Tiago EV will create mass adoption. That is why we have gone with a combination of low footprint car with premium features. It will support our future products as a natural upgrade. So, we are already creating a customer base for our future products,” Mr. Chandra said.
He said the company’s “first-born” electric car would be the ‘Avinya’, which will hit the roads in 2025. All electric cars of the Tatas are housed under Tata Passenger Electric Mobility Ltd., in which TPG has committed to invest ₹7,500 crore. This entity is investing in development of all these 10 products.
Recently, Tata Motors had separated its passenger vehicle business to Tata Motors Passenger Vehicles Ltd., which undertakes the manufacturing and sales of the existing Internal Combustion Engine (ICE) vehicles apart from doing contract manufacturing of electric vehicles of the other legal entity.
Despite the sharp growth of electric vehicles in the country, the demand for ICE vehicles would still remain strong and thus the future of the hived off unit would be ‘very buoyant’, Mr. Chandra said.
“By the end of this decade you will see about 30% EVs [of all the passenger vehicles plying on road]. But still a major portion of the passenger vehicle industry size will be ICE. ICE volumes are going to grow. It is not going to decline with the growth of EVs because today the market which is about 3 million units per annum will grow to 6 million by 2030 out of which 4.5 million units will be ICE vehicles,” Mr. Chandra said.
“So growth is going to happen in ICE. Therefore, we will be coming with more new nameplates [new products]. The existing 7 products might go up. We will be coming with more options for example CNG and the attempt will be to come out with more emission friendly technology and keep expanding. This business which is very profitable will not support EV business which is a separate legal entity. So it is a very clean strategy of growing both EV and ICE business,” he added.
He said the company was in no hurry to rope in an investor into the IEC passenger vehicles unit.
