Fall in battery prices expected to drive electric vehicle growth
In a significant push towards electrifying India's automotive sector, Tata Motors has been at the forefront of making electric vehicles (EVs) more affordable and competitive with their internal combustion engine (ICE) counterparts.
The company's strategy revolves around battery localisation, a critical lever in reducing EV costs. Tata currently achieves 80% localisation at the Tier 1 level and is extending this to Tier 2 and Tier 3 components. This localisation, coupled with significant reductions in battery prices, has allowed Tata Motors to narrow the price gap between EVs and ICE vehicles.
Tata Motors has priced the Harrier.ev at a cost lower than the equivalent ICE version, demonstrating their commitment to affordability. This pricing strategy benefits from the company's extensive localisation efforts and the reduction in battery prices.
The government of India supports EVs through a 5% Goods and Services Tax (GST) rate, while small petrol and diesel cars have a 10 percentage point lower GST rate, making them more affordable. Government incentives and subsidies are also helping to reduce the upfront cost of EVs.
Innovative ownership models such as battery-as-a-service (BaaS) are fostering consumer confidence in the longevity and resale value of EVs. These models, along with dedicated EV platforms and modular architectures, optimise production efficiency, further reducing costs.
Anurag Mehrotra, MD of JSW MG Motor India, and Vivek Srivatsa, chief commercial officer of Tata Passenger Electric Mobility, have both stated that EV costs are becoming at par with ICE due to scaling, tech innovations, and battery localisation.
The push towards making EVs more affordable is evident in the Indian market. Over two million electric vehicles were sold in FY25, representing a sixfold increase in four years. The company in India that holds over 75% of the entry-level electric mobility segment command is Ola Electric.
However, charging infrastructure remains a bottleneck in the EV market. Until it scales up, manufacturers will need to balance offering larger batteries and maintaining cost competitiveness in entry-level models. Despite this challenge, the future of EVs in India looks promising, with leading automakers working tirelessly to lower prices through battery localisation, dedicated platforms, and innovative ownership models.
