By 2027, Tata Motors plans to invest US$ 2 billion and produce 6-7 passenger vehicles
- IBEF
- June 9, 2023
Tata Motors announced that it will be deploying US$ 2 billion towards the development of new products and platforms over the next four years. The Mumbai-based automaker in an investor meeting stated that it will introduce six to seven new passenger vehicle (PV) models by 2027. These models will have different powertrains, including those that run on batteries.
To assure an "uninterrupted supply of key materials," the business would also build a cathode active material facility next to its electronic vehicle (EV) battery gigafactory in Gujarat. High-purity chemicals known as cathode active materials (CAM) determine the performance and use of several rechargeable lithium-ion battery types used in electric vehicles (EVs) and renewable energy storage. Additionally, the car giant wants to increase the localization of its EVs to 85% by 2025. According to Tata Motors, this will enable them to cut the cost of its EV component by 15%.
In outlining its capital expenditure estimates, Tata Motors stated that it had set aside up to US$ 363.42 million (Rs 3,000 crore) per year for PVs and US$ 302.85 million (Rs. 2,500 crore) per year for commercial vehicles (CV). According to the business, its capital expenditures represent its "commitment to investing in the growth and development of the CV and PV segments."
The company also mentioned that Agartas Energy Solutions which is a Tata group subsidiary, can deliver batteries for a wide range of vehicles, and aims to be at the forefront of the global battery manufacturing industry. The company wants to attain a positive EBITDA margin and break-even free cash flow (FCF) in the EV market. Additionally, Tata Motors aims to be debt-free by the 2025 fiscal year.
The current business of Tata Motors carries a debt of over US$ 726.85 million (Rs. 6,000 crore) and it will achieve its goal of being debt free by reducing the working capital, generating strong FCF, and divesting non-core assets, says JM Financials.
It is also claimed that there will be benefits for Tata Motors from the PV and CV upcycle, company-specific margin drivers and a sharp improvement in FCF as well as a reduction in net debt in both the Jaguar Land Rover (JLR) and India businesses.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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