The group has lined up Rs 2,500 crore investment to become a full service parts supplier for EVs in India barring battery cells.
08 Feb 2023 | 16802 Views | By Ketan Thakkar & Shruti Mishra
Playing a pivotal role in $128 billion Tata Group's vision of moving to net zero carbon emission, Tata AutoComp Systems, the auto parts arm of salt-to-software conglomerate is planning to localise almost every element of electric vehicles to help accelerate the shift towards cleaner vehicles.
Barring battery cells and ...
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Playing a pivotal role in $128 billion Tata Group's vision of moving to net zero carbon emission, Tata AutoComp Systems, the auto parts arm of salt-to-software conglomerate is planning to localise almost every element of electric vehicles to help accelerate the shift towards cleaner vehicles.
Barring battery cells and some magnets that will be managed by the group company, Tata AutoComp will be manufacturing and localising every critical part that goes into an electric vehicle and supporting the Government's 'Make in India' vision and help Tata Motors de-risk itself from the vagaries of global supply chain challenges and high import costs. For this, Tata AutoComp has lined up an investment of over Rs 2,500 crore in the next few years across businesses and it is one of the biggest beneficiaries under the Government of India's production linked incentive (PLI) scheme.
Rs 500 crore out of this kitty will be invested on the new Dual Clutch Transmission plant in Chakan. Autocar Professional had exclusively reported this in its January 15 edition. Almost 50 percent of its total investment will be towards EVs, Autocar Professional learns. The investment will be made through internal accruals and debt, said a senior company executive and there is no plan to raise funds through PE as of now. Given the high contribution in Tata Motors EV portfolio, Tata AutoComp is well on course for a billion dollars in revenues in the next two years itself helping the group stay the course in its mid-term vision of attaining $3 billion of Group turnover by 2024-25.
Declining to share specific quantum of investment, Arvind Goel, MD of Tata AutoComp told Autocar Professional the company has a “very high investment plan” lined up and almost 50 percent of its investment for the future will be towards Zero Emissions. “This year, we are making an investment in three digits, next year also we will make an investment in high three digits, they are all for organic growth. I can't give you an exact quantum because of multiple entities we have. But suffice to say, we are investing for localisation, for growth. There is a significant investment going into power electronics, in EV motors, EV battery packs and new plants," added Goel.
The head of Pune based auto component major says whatever is required in an EV Tata AutoComp is going to make, whether it is motor, inverter, reducer, DC-DC converter, onboard charger, charging station, the company will be offering a whole gamut of products for EVs. “Our idea is to localise everything which is possible in India and support the PM's ‘Make in India’ initiative.
Tata Group is always leading in whatever is required socially or what the Government wants. By 2045, the group will be net zero in emission, each company has to work backwards, and Tata AutoComp is doing its part,” he said. Tata AutoComp in tandem with other group subsidiaries has been growing at a compounded annual growth rate of 28 percent over the last five to seven years. With the expansion of portfolio and addition of new orders, the company expects to outperform the market in the coming years.
Goel said, the company is on course for the target of $3 billion in the coming two years with incremental business expected from new order book that has been generated in the recent quarters. With Tata Motors as its biggest customer, Tata Autocomp’s EV business is also growing well, but going ahead, Goel expects other customers and other segments to do better as well. “We are supplying to other OEMs, including two- and three-wheelers and other segments too. We will have a much higher traction in the next financial year. Earlier people were dabbling with what technology to use, whether to go for LMC or NMC chemistry, cylindrical or prismatic construction etc.
Tata Motors was clear, but the other OEMs were figuring it out, now most of vehicle makers have got it clear that will ensure good traction in the market, next year will be a good growth,” said a confident Goel. Interestingly, Tata Motors accounts for 30 percent of the part maker's total revenues and with the rising share of EVs, the share is set to go up further.
Tata Motors is set to end the financial year with 50,000 EV sales, which is expected to double in FY24. The company will be setting up six new factories in the next couple of years including the one in Sanand — dedicated to battery pack and Battery Management System manufacturing.
The products and aggregates include Interior and Exterior Plastic parts, lightweight sheet moulded composites, sheet metal aggregates, engine cooling solutions, exhaust and emission after-treatment solutions, HVAC, seating systems, command systems like park brake lever, gear shifter and washers, inner and outer mirrors, automotive batteries and suspension systems. It has nine joint venture partners and 54 manufacturing plants spread across US, EU, Latin America, China and India. It caters to almost all major Global OEMs across all verticals of the auto industry — Passenger Vehicles, Small and Light Commercial Vehicles, Medium and Heavy Commercial Vehicles, Buses, Two Wheelers, Three Wheelers, Tractors and Off Road Equipment.
Tata Autocomp has over 15000 employees across 16 businesses - 14 plus manufacturing facilities plus two services units. Goel says the shift towards electrification has been “faster” than a lot of people expected and he expects the penetration to jump significantly. He expects a penetration of 30 percent for cars by the end of the decade, but a 100 percent penetration in two wheelers and three wheelers is a strong possibility with the business case turning in favour of vehicle makers and there is value for consumers.
“The penetration world over has only happened due to the regulation, even in India, it is friendly because of FAME, GST benefit. However one has to look at long term as to how it will make sense for a segment to grow without any incentive. The visibility of two-wheelers and three-wheelers viability is there without incentives. The volumes are going up, the localisation will only further aid on cost with volumes,” added Goel.
This feature was first published in Autocar Professional's February 1, 2023 issue.