PremiumNEW DELHI : Tata Motors Ltd, India’s largest automobile maker, will showcase a variety of electric vehicles (EVs) at the upcoming Auto Expo. However, due to rising battery prices, new battery standards for EVs, and the implementation of BS-VI emissions standards for IC-engine vehicles in April, the price of new vehicles is expected to increase significantly. To mitigate the impact of these price hikes on customers, the company may need to implement price increases in two phases, Shailesh Chandra, managing director of Tata Passenger Electric Mobility Ltd and Tata Motors Passenger Vehicles, said in an interview. Edited excerpts:
Do the bookings of the Tiago EV indicate that it may surpass the Nexon EV as the company’s bestseller?
Definitely. When we announced that bookings for the Tiago EV would begin on 10 October, the system crashed on the first day due to the high volume of interest. We received 10,000 bookings and extended the introductory offer price to an additional 10,000 customers due to technical issues. So far, we have received over 20,000 bookings, and the demand is still strong. We hope that after people are able to test drive and see the car in person, the demand will only increase. However, we will be announcing a new price in January for bookings beyond the 20,000 mark.
What are the likely price increases for the Tiago EV in January and for the company’s EV portfolio as new battery standards come into effect in April?
Battery prices have increased by 30-35% at the cell level in the past year, which would translate to a 6-7% increase at the vehicle level. Additionally, the AIS-038 amendment phase-one that was implemented in December also resulted in a 50-60 basis points increase in costs. The second phase will see a similar implication on cost. However, while there is a 6-7% impact on costs, we are considering a 3-4% price increase. The final increase should not be more than ₹30,000-35,000. We want to keep the price positioning competitive, as the initial response to the Tiago EV’s pricing has been positive, and we want to stay as close to that as possible. We are also working on rigorous cost-reduction efforts through localization to offset the price increase.
What about the other EV models that Tata Motors offers? Will there be similar price increases due to the new rules and rising battery prices?
While we have already implemented some price increases on these models and have made cost-reduction efforts, there is a lot of the impact of cost inflation that hasn’t been passed on. We will have a better understanding of the overall industry movements and our own cost-reduction efforts before making a decision on pricing in January. However, it is safe to say that there will likely be some price increases across the board in the IC-engine models as well. There are two impacts we have to take care of - the residual impact of commodity price increases and the transition to BS-VI phase-II.We will have to break up this impact into two tranches and pass on the increase to customers as the new rules are implemented, as the two things together will have a significant impact on prices.
What impact are these price hikes likely to have on the entry-level market in terms of demand?
If price hikes are done in steps, the market absorbs it to a great extent. It definitely puts temporary pressure on the industry, but long term, generally, it settles. But the entry segment is definitely sensitive to a 1%-2% increase, too, because there it also starts competing with used cars.
Have you been seeing waiting periods for models come down as supplies improve?
Waiting periods range from two weeks to three months across our ranges. Automatic variants and EVs have longer waiting periods, but stock levels now are at reasonable levels because we have significantly enhanced our supplies also for quite some time now. We have been able to cater to that requirement. Within the calendar year, the industry will close at over 3.7 million units of supply, which is unprecedented.
What is your pipeline of new EV launches now?
For our next set of EVs, Gen-1 and Gen-2 products will be from our existing portfolio. The Tiago EV was the last of the Gen-1 products, which totals 4 Gen-1 EVs. In Gen-2 (400-500 km certified range), we’ll have four products, which can be one new nameplate and three existing products. In Gen-3 (over 500 km certified range), we will have two new EVs, which will be based on a new skateboard platform. The idea behind the selection of these products is that it opens up a new segment of customers, so it is not overlapping with the current portfolio. There are different price points that we occupy, indifferent body styles, different footprints, and different feature sets. So that is the whole idea. You will get the spectrum of a car starting from ₹8.5 lakh with the Tiago EV, going up to higher prices than we sell the Safari at, with products like Avinya, which will be a more experiential car. These price points will be in close delta with each other, so customers can choose according to their accessibility. The Altroz EV hatch is in the sequence, and the others will be in the SUV segment.