Tata Motors’ Nexon EV marks the company’s entry into the personal electric vehicle (EV) space. And it’s not just electric, it comes with more than 35 connected features. With the Nexon EV, India’s third-largest automaker is making sure it doesn’t miss the bus on electrification and aims to establish itself as a market leader in both private and fleet segments.
In an interview with Fortune India, Shailesh Chandra, president, electric mobility business, Tata Motors, spoke about the company’s switch to the PV segment from fleets, its learnings from past projects and the scope of growth of the segment.
With the Nexon EV, you’ve entered the personal EV space. Is it a change of strategy to not expand in the fleet segment anymore?
The journey of electrification in the country started in 2017 and it started with the demand of the government for 10,000 cars and we had won as the early bidder. That was the starting point. The product was made absolutely specific to what the tender needed. It was a low-range sedan that the tender asked for. Then we saw that it was a natural case for the fleet segment to go for electrification given that the biggest benefit that you get is the running cost which offsets the higher acquisition price. And on top of that, the government was also providing subsidies only to the fleet segment. That’s why we wanted to focus on the fleet segment. Later, we extended the range of Tigor EV from 140 km to 213 km and launched it in October 2019 for the employee transport segment, and since then it has become the highest-selling car in the country. And there has been an increase in the volumes. It is on an average of 150-200 per month. Earlier, in one quarter, we used to sell 300 cars. While we were developing the fleet car, we realise that while we’ll try for higher penetration in the fleet, we’ll hit the ceiling very fast as its 10% of the market while 90% of the market is still personal segment. You test the limits of your technology capability by doing things in personal segment.
The penetration in EV segment is still very low. How do you plan to build demand?
In this financial year, there have been three-four launches in the personal segment. It has created a lot of buzz and demand in the market. That was the starting point for us to enter into the personal segment and we conceived Nexon EV as the first one because we realised that there will be no total cost of ownership case for a personal buyer like a fleet because fleet runs more and they run less. So, we chose a segment where customers are not only sensitive about price but are driven by new technology, performance, connectivity and they will be ready to pay a premium for that. On average Indians drive 30 km per day. I am giving you 312 km. You don’t need to charge it for a week. It’s a great value proposition.
You were one of the first movers in the EV space. How are your present models different from what you had launched earlier? What are some of the learnings?
Nexon EV is a completely different technology. The earlier car was a low-voltage technology and this is a high-voltage one that can support higher motors. This required a new set of experience and development actions. It was a learning for us because this was the first commercial project for us where even at the concept stage you had to very carefully select the targets, what should be the price, range and features should we provide so that it becomes a mainstream choice. A lot of learnings came from the Tigor EV also in the sense that we wanted to verify what we’re thinking from a design perspective will translate into a practical relevant solution.
How much on the product development front came from JLR?
We have a lot of learnings from JLR also. We would ask them to critique our design. And they helped us in the thermal management of batteries, they helped us with the design aspect. We were able to immediately save a lot of time and bring a more robust product.
Why was your first product in the personal EV segment an SUV and not a Sedan? Is it because you wanted to ride the wave of the growing SUV market?
Since SUV is the craze today and compact SUV is at the centre of that, so this was an obvious choice. Second reason was that this was the most successful product for us. Third consideration was that if I have a customer who is environmentally friendly and is considering electric but if it has to become a mainstream choice, it has to be ensured that it is 20-25% of the premium and incremental premium gets justified through low running cost. We are also able to take care of all the fears that the customer has in mind like maintenance cost, range anxiety etc. There was also fear of what will happen if an EV gets flooded in monsoon? That’s why SUV was an option.
What will your next few quarters look like?
On the fleet segment, we’re already significantly leading. Personal segment has just started. We expect that we should be dominating this segment also. Volumes have a direct correlation with the number of models that exist. There were only two models so far. You have 150-200 models in ICE world in different segments. In electric cars, it’s right now only restricted to a compact sedan. We’re seeing that in whichever segment we’re getting electric, there’s a clear value proposition and people are buying. There will be early adopters and a majority of the customers are risk-averse to new technology. In the next three-four years, everything that we see in the ICE world will get mimicked in the electric world.