Tata reportedly to raise fund for debt reduction and EV business

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

As a leader in India's emerging EV market, Tata Motors is reportedly looking to raise funds for the EV expansion as the carmaker is grappling with debt reduction in the automotive business.

The Economic Times, quoting sources, reported that Tata Motors is in discussion with potential investors to raise funds of up to US$1 billion, involving UAE-based Abu Dhabi Investment Authority and Mubadala Investment, Saudi Arabia's Public Investment Fund4, and Singapore's Temasek Holdings, as well as private equity firms General Atlantic and KKR.

Tata Motors plans to use the fund to reduce part of its outstanding debt and infuse part of it into the EV business, sources told The Economic Times, adding that Tata Motors has sought a valuation of close to US$10.5 billion of its EV arm, Tata Passenger Electric Mobility, which raised US$1 billion from TPG and Abu Dhabi-based ADQ in 2021.

On January 25, 2025, Tata Motors CFO P B Balaji said at the earnings call that its automotive debt, including its British subsidiary JLR, was reduced to INR575 billion (US$6.96 billion). However, according to The Economic Times, Tata Motors may miss its target of becoming a zero net-debt company at a consolidated level by fiscal 2024 (April 2023 to March).

Tata Motors had been at a loss since the third quarter of fiscal 2021 until it swung into profit in the fiscal quarter that ended on December 31, 2022.

Despite huge debt that needs to be reduced, Tata's EV business is gaining ground with about 80% market share in India. Still, Tata will be challenged as foreign carmakers, such as BYD, MG Motor, and Hyundai, are also eyeing a larger piece of India's EV market. Meanwhile, Nikkei Asia reported that Maruti Suzuki, India's top passenger vehicle brand by market share, clarified it would roll out EVs in India in fiscal 2024, which ends March 2025, instead of the slower timeline 2025 it previously stated.

With Tiago EV and Nexon EV priced as low as INR869,000 and IN$1,449,000, respectively, Tata relies on a low-price strategy to cement its status in India's EV market. It has shipped about 50,000 EVs cumulatively and bagged a large order of 25,000 EVs from Uber on February 21.