Tata Motors has announced its plan to allocate a sum of US$ 2 billion over the next four years for the development of new products and platforms. The Mumbai-based automaker shared during an investor meeting that it intends to introduce six to seven new passenger vehicle (PV) models by 2027, featuring various powertrain options, including battery-powered ones.
To ensure a consistent supply of crucial materials, Tata Motors plans to construct a cathode active material facility adjacent to its electric vehicle (EV) battery gigafactory in Gujarat. Cathode active materials (CAM), which are high-purity chemicals, play a vital role in the performance and utilization of rechargeable lithium-ion batteries used in EVs and renewable energy storage systems. Moreover, the company aims to increase the localization of its EVs to 85% by 2025, resulting in a 15% reduction in the cost of EV components, according to Tata Motors.
In terms of capital expenditure, Tata Motors has allocated up to US$ 363.42 million (Rs 3,000 crore) annually for PVs and US$ 302.85 million (Rs. 2,500 crore) annually for commercial vehicles (CV). The company considers these investments as part of its commitment to fostering growth and development in both the PV and CV segments.
Tata Motors also highlighted the capabilities of its subsidiary, Agartas Energy Solutions, which aims to be a prominent player in the global battery manufacturing industry and is capable of supplying batteries for a wide range of vehicles. The company aims to achieve a positive EBITDA margin and break-even free cash flow (FCF) in the EV market, while also striving to become debt-free by the 2025 fiscal year.
To achieve its debt-free objective, Tata Motors plans to reduce working capital, generate strong FCF, and divest non-core assets. According to JM Financials, this strategy, along with the benefits arising from the PV and CV upcycle, company-specific margin drivers, and improved FCF, will lead to a reduction in net debt in both the Jaguar Land Rover (JLR) and India businesses. Currently, Tata Motors carries a debt of over US$ 726.85 million (Rs. 6,000 crore).
