Tata Group has stepped up its ambitions in the electric vehicle (EV) space with the formation of a new company that will make batteries and cells.
Sources said that the new company, Agratas Energy Solutions, is directly managed by Tata Sons — the principal investment holding company of the Tata Group. Tata Motors’ two top executives — PB Balaji, chief financial officer, and Thomas Flack, chief procurement officer — are the directors on the new company’s board.
A mail sent to Tata Sons seeking details of the new company’s business plans remained unanswered at the time of going to press. A top executive from one of the Tata Group companies, however, confirmed the creation of the new company.
An EV battery cell manufacturing plant augurs well for Tata Motors as this will eliminate the company’s dependence on third-party suppliers based in China and South Korea. These are often exposed to geopolitical tensions, supply chain disruptions and demand spikes by competition.
Last year, Tata Chemicals, the company which experts tracking the group believed would lead the EV battery plans, said it was not interested in entering this space. However, chairman N Chandrasekaran had added that the company would continue to provide critical components for making EV batteries.
According to earlier reports, the Tata Group is also believed to be exploring the idea of setting up an EV battery plant in the UK or Spain to support the electrification plans of British luxury unit Jaguar and Land Rover. The UK government has offered £500 million in subsidies to build a battery plant in the UK for the group.
In 2021, Tata Motors carved out a separate EV company called Tata Passenger Electric Mobility, where it brought in external funding to the tune of $1 billion from TPG and Abu Dhabi state holding company ADQ, giving it a valuation of $9.1 billion. Tata Motors has pledged to invest more than $2 billion in its EV business over five years.
Tata Motors is already the market leader in the passenger EV space with a market share of more than 85% and is among the leading players in the electric commercial vehicle category, where it has buses and small trucks.
Tata Group’s plans of getting into the EV battery cell manufacturing business match those of other players who have recently committed to securing the supply chain for their EV plans.
Passenger car market leader Maruti Suzuki’s parent company Suzuki Motor Corporation has committed to becoming the market leader in India’s EV space. Maruti Suzuki is due to launch its first EV in 2024 and its battery cell manufacturing plant will be completed by 2026.
Korean car giant Hyundai has announced the setting up of a battery assembly unit in Tamil Nadu, which will have a capacity of 178,000 batteries every year. This will support its plans of having six electric vehicles in India by 2028.