Tata Motors' EV Division Reports First-Ever Profit

Tata Motors’ electric vehicle (EV) division has achieved a significant milestone by recording a three-month operating profit in the December quarter of the fiscal year. This is the first time the company’s EV unit has turned a profit since entering the electric vehicle market five years ago. Notably, the profit was generated without relying on the government’s fiscal incentives under the Production-Linked Incentive (PLI) scheme, marking a historic achievement in India’s electric vehicle industry.

Key Achievement for Tata Motors EV Division

The breakthrough comes as Tata Motors continues to build momentum in its electric vehicle business. For the first time, the EV division achieved an operating profit, which is an indication of the company’s growing strength in the electric vehicle segment. This accomplishment is particularly notable as it excludes the benefits provided by the PLI scheme, making the profit purely driven by the operational efficiency and the growing demand for electric vehicles.

In a statement, Dhiman Gupta, Chief Financial Officer of Tata Passenger Electric Mobility (TPEM) and Director of Tata Motors Passenger Vehicles (TMPV), remarked that this was the first time the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) turned positive, independent of any government subsidies. This reflects Tata Motors’ ability to generate profit through its core EV operations.

Profitability Driven by Strong Model Mix and Localisation Efforts

Tata Passenger Electric Mobility reported a profit before tax (PBT) of ₹200 crore during the December quarter. The profitability was primarily driven by an improved product mix, which included the introduction of the Curvv.ev, a mid-size electric SUV that has proven popular in the market. This product mix, alongside deep localisation benefits such as locally manufactured battery packs, has significantly contributed to Tata Motors' ability to increase margins and generate profitability.

Gupta further emphasized that Tata Motors was focusing on continuous margin improvement through strategic initiatives such as deep localisation of key components and introducing new electric vehicle models. These interventions are expected to drive sustained growth for the company in the future.

PLI Scheme and Future Investment Plans

In the same quarter, Tata Motors accrued ₹182 crore under the PLI scheme. This was part of the government’s initiative to incentivize manufacturers of electric vehicles, particularly those meeting a minimum level of domestic value addition. However, Tata Motors has made it clear that despite receiving PLI benefits, the company’s profitability has not been reliant on these incentives. As a result, Tata Motors plans to reinvest the profits back into its business, which will fuel the next phase of growth.

Gupta further explained that the company had an EBITDA margin of 10% for the quarter, out of which 8.3% came from the PLI scheme, leaving 1.7% from the core business operations. These funds from the PLI scheme are set to support capital expenditure (CapEx) and market development activities.

Impact of Rising Battery Prices and Cost Management

Battery pack prices have experienced a significant decline over recent years, which has contributed to the affordability of electric vehicles. However, Tata Motors has warned that cell prices have now bottomed out and may start to rise in the near future. In response to this, the company is exploring various ways to reduce costs on other components of its vehicles to keep prices competitive.

A senior official from Tata Motors noted that while the overall price of batteries may increase, the company still has the flexibility to reduce costs on other parts of its EVs. This allows Tata Motors to remain aggressive in pricing its electric vehicles, particularly in the sub-₹12 lakh segment, where competition remains limited.

Focus on Tier 2 and Tier 3 Cities

Tata Motors sees a significant opportunity in targeting the smaller cities of India, where demand for affordable electric vehicles is growing. While the competition is more intense in the higher-priced segments (₹18 lakh and above), Tata Motors plans to leverage the relatively untapped potential in the budget-friendly electric vehicle segment.

Shailesh Chandra, Managing Director of TPEM and TMPV, highlighted that the company is focusing on expanding its EV footprint in tier 2 and tier 3 cities. With most of the competition happening in the premium segment, Tata Motors aims to capture a larger share of the market in smaller towns, where electric vehicles are becoming increasingly popular.