TPG Rise Cimate’s $ 1 billion fund infusion gives broad wings for Tata’s EV business to fly. Valued at $ 9.1 billion, it is already more than 7 times the size of the traditional passenger vehicle business unit.

Flush with funds from TPG Rise Climate which has decided to invest a seventh of its $ 7 billion corpus, Tata Motors is planning to invest Rs 15,000 crore over the next 5 years when it said it would launch 10 new products.

Already the market leader in the nascent electric passenger vehicle segment with an over 70 percent share, Tata said it would invest in new platforms, technologies and to further localise its EV vertical.

“We have always been bullish about EVs but there is a definite surge in demand right now. A number of factors are helping it. Favorable policies both from centre and states, increase in fuel prices as well as ICE vehicles post BS VI emission norms are working in favor of EVs,” said P Balaji, chief financial officer, Tata Motors. “We have seen a 1.5-2x growth every year between FY 2017 and FY 2021. In the current financial year alone the growth is projected at 2.5-2.7x.”

The TPG investment puts the valuation of the new dedicated EV firm, Tata is calling it EVco for the time being, at $ 9.1 billion (Rs 66,600 crore). That is more than 7 times the valuation of its entire passenger vehicle business unit that the company had put at Rs 9,417 crore earlier this year. It shows the potential for upside that investors see in the electric vehicle business.

“It is not fair to compare the two as the way investors look at EVs is completely different,” Balaji said.

While there are rumours of Tata eyeing Ford‘s factory in Chennai, it said it wasnt looking at a dedicated factory for EVs. Instead, investments would be made at further localisation of the products. Currently, the company has managed to achieve a localisation of 60 percent in its Nexon and Tigor EVs. By fiscal 2025, it plans to increase that to over 85 percent.

“TML will not have a manufacturing facility of its own. Our capacities at Tata Motors will be available for EVco,” Balaji added.

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