For the first time since entering the space five years ago, Tata Motors’ electric vehicle division recorded a three-month operating profit in the recently concluded December quarter. This profit was independent of the fiscal incentives provided by the government under the production-linked incentive (PLI) scheme during the same period. It is perhaps the first instance in India of an electric vehicle (EV) maker (excluding commercial vehicle companies) becoming profitable, and certainly the first in the electric car segment.
Dhiman Gupta, chief financial officer, Tata Passenger Electric Mobility (TPEM) and director, Tata Motors Passenger Vehicles (TMPV) said: “Without the PLI, this is the first time Ebitda has turned positive (for the EV division).” Gupta was talking to analysts in a post-earnings call on Wednesday.
Tata Passenger Electric Mobility reported a profit before tax of Rs 200 crore for the reporting quarter, driven by a richer mix thanks to the introduction of the Curvv.ev, a mid-size sports utility vehicle (SUV).
“Structurally our margins have been improving because of a better mix of Curvv and some deep localisation benefits that we are doing such as battery packs and some of these interventions we will keep doing,” Gupta added.
Tata Motors recognised Rs 182 crore under the passenger vehicle category, received and accrued through the PLI scheme in the December quarter. Since the company has generated profits without relying on incentives, it plans to reinvest this income back into the business.
“Reported Ebitda margin was 10% out of which PLI was 8.3% which means the margins were 1.7% without the PLI benefit for the December quarter. PLI will help fund some of the capex (capital expenditure) as well as fund market development activities,” Gupta added.
Tata Motors’ three models – Tiago.ev, Tigor.ev and Punch.ev — currently benefit from the PLI scheme. Nexon.ev and Curvv.ev are in the process of certification. The company stated that all its EVs meet the minimum requirement of 50% domestic value addition (DVA), which qualifies them for the PLI scheme.
While battery pack prices have seen a significant decline in recent years, Tata Motors has warned that cell prices have bottomed out and are unlikely to fall further.
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