India’s pursuit of additional manufacturing for products Make In India has been across multiple industry sectors and global enterprises. Global enterprise Tata Sons combines many elements across sectors (including Tata Group) for chemicals, steel, services, motor vehicles, and others. The Indian domestic market for Tata Motors (USD$44B revenue), and its foreign nameplates (Jaguar, Land Rover, Tata Daewoo, others) is now threatened by an even larger invasion of foreign manufacturers.
In this release EkaLore discusses the different goal conflicts arise from required investment and how the conflict could influence Tata Group investment.
New technologies from automation in manufacturing and vehicle operation, energy distribution for transportation, and vehicles will require tremendous levels of investment. First-movers like BYD, Tesla, and others are looking at a fragmented Indian marketplace as an opportunity. The competition for foreign direct investment (whether in Joint Ventures or direct operations) will also limit Indian exports if not welcomed in India. In each major category of investment there are choices and conflicts.
Tata Motors faces needs for huge investments to evolve into a leading manufacturer of EV/NEVs. Chinee manufacturers like BYD, USA Tesla, and foreign competitors looking for unit growth (Korean) look to India. If these, or other like investment entrants, enter the Indian vehicle marketplace Tata Motors will confront highly mature competitors. Competitors with manufacturing and product capabilities not yet deliverable from Tata Motors would trigger needs for high, rapid, and effective investment beyond the capabilities of even a USD$44B revenue enterprise. At present, no such market competitor has been approved for entry. The conflict for the different Government and state Ministries is many sided.
The larger threat to Tata Motors is to close off export markets and returns from overseas investments. The marketplace transformation from internal combustion to electric vehicles in the mature markets of the North America, EU, UK, Korea, and Japan may extend, or may accelerate. Existing global export centers for vehicles in North America, EU/UK, Japan, Korea, and China will continue to receive government preferences and subsidies in search of future successes. If Tata Motors cannot deliver competitive product across many markets then the eventual consequences may be eventful. The conflict will continue to grow between Indian goals of workforce growth, national champions, efficient investment, export products, and bringing an India-focus to global products.
Competition against large, established, mature global manufacturers will see investment requirements in the USD$10B’s. Sufficient supplies will be an expensive investment for new raw materials (batteries, aluminum, plastics), components (electronic hardware, sensors, displays), and systems (integrated communications, ADAS, user experiences, in-vehicle services, entertainment). These expenses are larger as competitive Indian vehicle manufacturers lack, at scale, inhouse development (Tesla, BYD, Toyota), common suppliers (Bosch, Alphabet, nVidia), or core technologies (batteries, advanced manufacturing, charging infrastructure). The rapid investment to participate, and become globally competitive, can already be seen in its most brutal form at GM, Ford, VW, and Toyota. The competition inside India is also brutal.
The likely result, without effective changes in policy, is for investment to be slower, and smaller, for Tata Motors. This can be viewed as a cause, or an effect, as it lacks the scale (Tesla and BMW are profitable, at scale, at around USD$100B revenue), ability to drive joint ventures for key technologies (batteries at Ford, VW, and GM), and clear path to longer term profitability in EV/NEVs (Chinese, German, and Korean enterprises).
For more perspectives on policy in a Dynamic India please see
For more analysis and insights on global vehicle markets, and what it means for enterprises up and down the marketplace, please contact us at http://www.ekalore.com
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