India’s largest electric carmaker, Tata Motors is expecting around $800 million from the government’s production-linked incentive (PLI) scheme for automakers over the next five years, according to the company’s chief financial officer.

Tata Motors is eyeing an investment of about $2.2 billion in Tata Passenger Electric Mobility, its EV arm. “PLI is an integral part of our electric vehicle strategy. $1 billion has come from the TPG Rise Climate investment and almost $800 million will come from PLI,” PB Balaji, chief financial officer of Tata Motors, says in a media conference call after the company announced its third-quarter earnings.

The automaker has so far received ₹350 crore ($40 million) in PLI benefits from the government. “The total monies we have accrued are about ₹350 crore, of which ₹140 crore is for the previous year and the remaining is for the current year. This will play out from here on for the next five years. Now we will be filing every year. We will be accruing every quarter,” he says. The Tata Motors CFO says these funds are being deployed on new EVs.

Tata Motors has the biggest EV portfolio in India with five electric cars on offer. However, despite having multiple models across segments, the company recorded a modest 2.3% year-on-year growth in EV sales in 2024. Its market share fell from 75% in December 2023 to under 50% in December 2024.

On new EV launches from rivals at the auto expo in Delhi, Balaji says competition entering the market is great news. “Suddenly, everyone is talking about EVs, which we always believed to be a destination technology. We expect that to expand the market significantly from here on. We believe we will have our fair share of play given our EV portfolio,” he says. “Everybody is doubling down on EVs. With more product launches from more players, we are closer to EVs becoming mainstream.”

The $165-billion Tata Group, through its subsidiary Agratas, is expected to start production of battery cells by the end of 2026. JLR and Tata Motors will be the anchor customers for cells. Automakers in India currently import battery cells from China.

Balaji says cell prices have stabilised, and from here on, they will gradually start inching up. “As EVs go mainstream, there are opportunities to drive down cost reduction by localisation,” he says.

India's passenger vehicle sales growth moderated to 4% in 2024 with several companies reporting a slowdown in urban sales. “If there are consumption measures in the Budget, then that will help us navigate some of the not-so-great external situations that the industry is facing,” Balaji says, adding that growth is not as buoyant as earlier. “Wherever there is stress building on the customer side, anything that can be done to alleviate that is welcome.”

“Liquidity from a financing perspective is an area where some help would be welcome,” he says, adding that credit availability for first-time buyers is under stress, especially in the small commercial vehicle segment. Tata Motors has around 40% share in India’s commercial vehicle market.

JLR Outlook

Tata Motors, which gets around two-thirds of its revenue from British luxury carmaker JLR, is seeing some stress in China. Like other luxury carmakers, JLR witnessed a slowdown in China where retailers are witnessing financial stress. “We do see stress in China at an industry level. The premium market is down 14% year-on-year from April to December 2024 and if you look at the JLR’s import business, we are doing much better. We have declined 5% in that business,” Balaji says. “So far the performance of JLR compared to the rest of the industry is much better. As the retailers’ financial situation improves, we should see China getting to growth in the coming quarters."

Balaji expects JLR’s volumes to improve in the fourth quarter, which is seasonally the strongest quarter, making the premium carmaker debt-free. “We see good volume uptake coming in the U.S., the U.K. and the rest of the world. We are well hedged to manage China risk by getting volumes from other places,” he says.

As far as the U.S. market is concerned, President Donald Trump, on his first day in the White House, halted his predecessor’s EV mandate.

But Balaji is not worried. JLR is ready in case there is a slower adoption of EVs. JLR’s key products, Range Rover, Range Rover Sport and Defender are available in hybrid, plug-in hybrid and ICE. “We have a portfolio available with us to decide whichever way the market goes," says Balaji.

On the Jaguar brand going all-electric by 2026, Balaji says it’s going to be much more a premium play with volumes probably lower than what they were in the past.