Tata Motors Passenger Vehicles is accelerating electric vehicle production after demand surged to roughly three times January-February levels, but supply is struggling to keep pace, pushing the Punch EV’s waiting period beyond eight months even as the automaker expects demand to strengthen further during the festive season.
Tata has already raised monthly EV capacity from around 9,000 units to more than 15,000, exceeding its earlier target of 13,000-14,000, and plans further increases as demand remains “significantly higher” than what it can currently supply, MD and CEO Shailesh Chandra said.
“Supply is the real constraint in terms of fully unleashing the potential of EVs,” Chandra told analysts during the company’s post-results conference call. “If in quarter one it is so strong, festive season should be stronger than that.”
Waiting periods climb
The supply squeeze is showing up in customer waiting periods. Tata’s overall passenger vehicle portfolio carries a wait of around four to six weeks, while the wait for Punch EV is substantially higher.
“Punch EV waiting period is upwards of eight months,” Chandra said. Tata sold more than 34,000 EVs in Q1, its highest-ever quarterly volume, up 112 per cent y-o-y. EVs accounted for around 19 per cent of its Q1 volumes, rising to 24 per cent in July.
Sanand, suppliers constrain output
Production could have been still higher but for plant and supplier disruptions. Heavy rainfall halted production at Tata’s Sanand 2 facility for five days during Q1, while a casting supplier and stressed sheet-metal suppliers created additional bottlenecks.
“If we did not have the impact of production loss in Sanand 2 because of the heavy rainfall, the output should have been much better,” Chandra said.
Both Sanand 1 and Sanand 2 are now fully operational. Supplier capacity additions have also begun contributing, with Chandra expecting supplies to improve progressively and further actions to kick in from October. “Every month, the situation is improving for us,” he said.
Sierra demand has been “extremely strong”, but casting availability has restricted production. Punch is capacity constrained, while Tiago has faced sheet-metal shortages as some capacity is shared with Sierra. Tata has ordered additional presses, with some installed last month.
EV costs rise
Supply is not the only challenge. Battery-cell costs have risen around 10 per cent quarter-on-quarter, and Chandra said the inflation outlook could consequently be somewhat more adverse for EVs than ICE vehicles. Tata is pursuing steeper cost reductions but has not ruled out calibrated price increases.
Despite the cost pressure, Tata is sticking with EVs as its principal strategic powertrain bet. EV and CNG respectively accounted for 19 per cent and 27 per cent of Q1 volumes. Chandra expects industry EV penetration, currently around 8 per cent, to reach about 10 per cent by the end of FY27.
While Tata has hybrid technology available, Chandra said the company would deploy it reactively if market conditions required.
“We have bet on electric, we have been proactive on electric, and we’ll continue to do so,” he said.