Tata Forms New E-vehicle Company, US Firm To Invest ₹7,500 Crore

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What has happened?

In a major boost to its EV push, Tata Motors on Tuesday closed a deal to raise Rs 7,500 crore from TPG Rise Climate.
This is the first major fundraising by an Indian carmaker to push clean mobility.
The investment will be in a newly formed subsidiary that Tata Motors has formed for EV business.
The Rs 7,500 crore (close to $1 billion) will give a stake of 11-15 per cent stake to TPG-ADQ combine in this subsidiary.
Headquartered in San Francisco, The Rise Fund was founded in 2016 and has $ 5 billion under management.
It primarily invests in companies with environmental and social focus and was formed following the trend of increasing focus on ESG themes by global investors.

The investment will be done in tranches, over 18 months.
The first round of capital infusion will be completed by March 2022 and all the funds will be in by end of 2022.
The investment pegs the valuation of the new company at $9.1 billion.
TML EV Co will own and develop all future IPs of Tata Motor’s EV business.
“The new company shall leverage all existing investments and capabilities of Tata Motors and will channelize the future investments into,
Electric vehicles, dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies,” said a press statement.
Over the next five years, this company will create a portfolio of 10 EVs and, in association with Tata Power, catalyse the creation of widespread charging infrastructure to facilitate rapid EV adoption in India.
Tata Motors is bullish about the EV segment, having sold over 10,000 Nexon EVs since its launch.

TML EVCo will also invest over $2 billion (₹16,000 crore) in the next five years in products, platforms, drive trains, dedicated EV manufacturing, charging infrastructure and advanced technologies.
Other targets for the company include increasing options to access Tata EVs with subscriptions.
EV subscriptions will enable wary customers try the technology by subscribing to the product before buying.
Other targets include building a centre of competence and localisation of automobile components.

N Chandrasekaran, Chairman, Tata Motors, said, “we will continue to proactively invest in exciting products that delight customers, while meticulously creating a synergistic ecosystem.”
Jim Coulter, Managing Partner, TPG Rise Climate and Founding partner of TPG, said:
“There is significant momentum around India’s EV movement, supported by the government’s vision and policies, as well as growing consumer demand for greener solutions. The investment aligns with TPG Rise Climate’s focus on decarbonised transport and builds on
TPG’s long history in India.”
Tata Motors currently makes the Nexon EV model under its namesake brand. Its UK unit Jaguar Land Rover produces the I-Pace EV models.
Earlier this year, JLR announced its pivot towards a fully electric future through the ‘Re-imagine strategy’ wherein,
The company will reposition and redesign Jaguar as an all-electric luxury car brand by 2025.
Likewise, Land Rover will evolve as a maker of luxury electric sport-utility vehicles (SUVs).

The new electric vehicle (EV) company of Tata Motors will not own any manufacturing plants but will instead rely on the passenger vehicle factories for output and remain asset-light.
The manufacturing capacities of passenger vehicle (PV) will be available on a tolling basis to the EV company.
The EV company will not have any asset or any capacity for itself within the company but it will have the access to the PV capacities already created.”
The PV business will benefit from the fees paid to it by the new EV company for using its brand and IP.
These arrangements will be done on an arm’s length basis.

Experts said that the investment signifies global investors interest in India’s effort to electrify transport.
“A company of the pedigree of Tata Motors and TPG dedicating Rs 7500 crores is definitely a welcome step in the right direction to reinforce and support the adoption of EVs in India.
This could be the first step for many on this road at a large scale.”

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