How do you see the stock price impact of Tata Motors EV plans?

Tata Motors has announced aggressive plans to invest Rs.15,000 crore in the electrical vehicles (EV) segment over the next five years. While its Tata Nexon has been a bit hit in the market, it has lined up 10 more models for launch in the next few years so as to stamp its virtual authority over the electrical vehicles space. In fact, the shift from diesel cars to EVs has been one of the big shifts effected by Chandrasekaran under his leadership.

Now apart from Tata Nexon, which is already the veritable market leader in EVs, Tata Motors is planning to launch 10 new model launches. At the current stage, these models are at different stages of readiness and a clearer picture of their launch dates will only be known in the coming days. These 10 models will be launched with varying body styles, price range, driving options, durability and a stratified targeting of customers.

Regarding valuations, it is already the EV business of Tata Motors that is driving most of the valuation accretion in Tata Motors. For instance, Tata Motors EV division raised $1 billion last year from TPG Capital. This translates into an overall valuation of $9.1 billion to the EV business, which has driven the price higher. That is most likely to continue to be the value driver of the company even in the days ahead.

One of the key challenges that Tata Motors does face in this regard is to accelerate the development of the EV ecosystem, which includes the charging facilities, the battery replacement infrastructure and other support services. To a large extent, the ecosystem is the key to the development of the EV market and it must expand at the same pace as the ecosystem for diesel and petrol cars expanded via the fuel outlets. That would be the key to stock price movement.