Tata Motors has emerged as one of the top companies in the passenger vehicle (PV) segment and is No. 1 in terms of electric vehicles (EVs) with two of its products — Tigor EV and Nexon EV. With the announcement of incentives for EVs by various State governments, the demand has gone up by more than 2.5 times, Shailesh Chandra, President, Passenger Vehicles Business, Tata Motors, told BusinessLine in an interview. Excerpts

With the festival season kicking in, how do you see the demand for cars?

I think festival season should be the evolution and growth of where the demand is currently. Demand will not be an issue, but the issue will be on the supply side and it is the only fear that we have. We have seen the semiconductor issue which has been the showstopper as far as industry numbers are concerned. And while we were dealing with uncertainty, the Malaysia Covid restrictions kicked in and we have some big semiconductor supplies from there. So I think this is only just adding to the concern that we already had because of the semiconductor issues globally. We will have to see how it pans out in the next one or two months. As far as semiconductor issue is concerned, Tata Motors has been managing it with multiple levers that we have been using in terms of very closely working with the tier-I suppliers as well as having very close coordination with the semiconductor suppliers.

S o would that be a dampner in the festival season sales?

That will be the only factor to dampen the festival season sales. Otherwise, demand-wise, I don’t see any sign that it is going to be lacklustre. We are managing the waiting period accordingly and it varies from model to model. In certain models we have seen about six to eight weeks of waiting period and certain models we are able to give in four weeks.

You have many launches coming up. What would be your strategy for the next year in terms of products and sales as the market seems to be coming back to normalcy?

We plan to have an additional model, ‘Punch’ (small SUV). We have now reached a certain level where we have been selling around 30,000 cars monthly. And we've also attained a double digit market share, which is kind of doubling in 16 months. There's a brand traction and a momentum in our favour now. We have also done our bit in terms of keeping the intensity and excitement on through different kinds of interventions, with various products. I am very upbeat that with Punch and if semiconductor situation does not worsen, we have a huge opportunity to really go from where we are right now.

What about new designs and new fuel options in your vehicles?

An automobile company has to invest in too many things now…all kinds of fuel options. The demand may remain the same but we will have to invest on fuel options including electrification, CNG, hydrogen.. and for connected/ autonomous cars we will have to manage transition from fossil fuels to these. We don’t have the luxury like in last two decades where you can bring new cars every year. You have to do something with the current set of products to keep the momentum and excitement going. The conventional thinking of mid-cycle enhancement every three years and a major facelifts after six years…those days are gone. You need intervention every six months, and in electric car world, it is more intense.

Do you think the range anxiety is going away slowly in the EVs space?

The whole anxiety around the range is going away because many customers thought that EV would be a second car for them and at times they will use it. But, it is being used as their primary car now. Seven-eight months back, only 45 per cent of customers wanted EV as a first car, but today 60 per cent of them want it as a primary car. Once the primary car usage of EVs starts increasing, it is an indication of mainstream buyer. And this is the big change that we have seen. Also, although Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME) incentive is not applicable to the personal segment, the State government incentives which are coming says that if the car is compliant to the FAME scheme it is applicable, and we have taken FAME certificate for both (Tigor EV and Nexon EV). So, if I want to sell in the fleet Nexon EV, we'll get the FAME incentive because it is below ₹15 lakh and we meet the localisation requirement as per the FAME phased manufacturing plan. We are the only one who qualifies for the State incentives. So with this, there is an explosion of demand now, which is not getting reflected in the numbers because numbers are limited to the supplies. But, just to give you an idea Nexon EV bookings are equal to the bookings of Nexon Diesel, which is also a successful variant. Seven cities including Delhi, Chennai, Ahmedabad, Mumbai, Pune, Hyderabad and Bengaluru are nearly 60 per cent of our demand. Now, it is about bringing more choices, so more customers are going to purchase. Therefore, our strategy is going to be bringing offerings which are at different price points, different range points and different body sizes.

What is your definition of affordability?

For us affordability is the total cost of ownership. At some stage, people will understand the total cost of ownership/ power of electric. Initially when diesel cars were introduced, it took time for people to realise the benefit of diesel because diesel cars used to be expensive. But, people started buying even though it was 50 per cent more expensive than a petrol car. If you see running a petrol/diesel car over the last one year has increased by ₹20 per litre. So buying an EV is saving nearly ₹6.5. Plus you are getting eight year warranty against a three year warranty of an internal combustion engine (ICE) vehicle. When you add all these equations, people will realise that there is a huge savings. So people are ready to pay ₹2-2.5 lakh more for EVs.

Do you think there should be more incentives for EVs?

The government has already given quite a bit of subsidies for EVs and it will be a welcome thing if it is more hinting towards EVs. But, with the State governments also topping up the incentives with what already the FAME-II programme gives, and with a reduced GST rate, no registration tax, I think government has given enough ammunition to drive the adoption now. And I'm sure with the Scrappage scheme, and as we start seeing the enforcement of that, people naturally will start shifting towards electric.

Do you welcome government’s suggestion of 5 per cent discount on new vehicle through scrappage policy?

I can only talk about the associations position on this that we are a very thin margin business and five per cent would completely erode whatever margins we make. Definitely as manufacturers we give discounts in any case and I think market forces will decide. But, there are certain level of commitment that we have communicated to the government that we are ready to give. However, 5 per cent will be fully eroding the margins.

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