In India, electric cars have been too costly for many.
But when Tata Motors launched its Tiago EV (electric vehicle) earlier this week, it lowered that hurdle and posed a challenge to rival carmakers to line up matching offers.
With the Tiago EV’s starting price of ₹8.49 lakh, the price gap between a conventional internal combustion engine car and its electric version in India has narrowed enough to coax all those who had put their electric car plan on the back burner to go for it.
The launch is also seen sparking fresh competition in the country’s passenger vehicle (PV) space, as rival carmakers will have to tweak pricing and parameters of their electric products to match Tata Motors‘ offer.
Tata Motors is the leader in the Indian electric PV segment with its Nexon, Tigor and Tiago. It will see competition from Maruti Suzuki, Mahindra & Mahindra, Hyundai and Kia, and Chinese major BYD, which are lining up new launches. Experts say the Tatas may find it tough to maintain this lead.
Analysts say EV players in India are seeing considerable interest from tier 2 and 3 towns, promoting original equipment manufacturers (OEMs) and financiers to drive into such markets.
Electric PVs, which have the lowest penetration in the country’s automotive sector, are expected to see faster adoption among fleet operators, taxi aggregators and government agencies.
In comparison, electric two- and three-wheelers are seeing faster adoption as these segments account for about 80% of the domestic automobile volumes.
By 2030, the top EV sellers by volume in India’s PV market will be Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Hyundai and Kia, according to LMC Automotive, a consultancy firm.
While Mahindra plans to expand its EV portfolio aggressively in only one segment – SUVs – Tata Motors and Maruti Suzuki will have EVs in both sedan and SUV segments, which will give them more opportunity to grow and expand volumes, said Ammar Master, senior analyst at LMC Automotive.
According to LMC Automotive, the share of electric in India’s PV segment would increase from 0.2% in 2020 to 5.5% in 2025 and 13.5% in 2030.”We are opening EV outlets in 80 cities in India to make EVs more accessible,” said Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Electric Mobility. “In the last five months of this financial year, the industry has sold about 20,000 EVs. Expect industry to cross 55,000-60,000 by the end of FY23. We cover 88% of this market so far and we aspire to end FY23 with the 50,000 sales mark.”
LMC Automotive’s Master said that as more players enter India’s electric PV market, the firm foresees Tata Motors’ market share in the electric PV market declining to around 40% by 2030, and more rapidly in 2024-2025, after Mahindra, MG Motor, Hyundai and Kia introduce new EVs.
A further disruption is anticipated in 2026 when Maruti Suzuki enters the electric PV market. The country’s largest car maker is not expected to have any EV models before the end of 2025.