Rise Climate, ADQ commit $994m to Tata Motors EV unit

The private equity firm has brought in ADQ, an investment holding company controlled by the Abu Dhabi government, as a co-investor. They have subscribed to compulsorily convertible securities that will secure an equity interest of 11-15%, valuing the Tata Motors EV business at up to $9.1 billion, according to a statement.

The unit has been created to consolidate existing EV investments and capabilities and lead future developments in the space, across vehicle manufacturing and related charging infrastructure and battery technologies. Tata Motors wants to create a portfolio of 10 EVs over the next five years, while working with sister company Tata Power on the rollout of charging infrastructure.

Tata Motors – India’s leading producer of commercial vehicles and a top-three player in the passenger vehicle segment – already has a sizeable EV footprint across its global business.

Six plug-In hybrid electric vehicle models and nine mild hybrid electric vehicle models were released in the 12 months ended March, which means 12 out of its 13 brands are now electrified. All Jaguar and Land Rover models will be available in pure electric form by end of the decade.

Meanwhile, Tata Motor claims to be the market leader in India’s passenger EV space with the hybrid Nexon EV, which enjoys a 71% market share. More than 4,000 vehicles are on the roads, supported by a network of 100 captive charging points, 355 public charging stations, and 3,000 AC chargers across over 50 cities. Tata Motors has also deployed more than 350 electric buses.

The company's global vehicle sales revenue reached INR2 trillion in the most recent financial year, down 5.7%. Passenger car sales in India rose 106% year-on-year to INR58.3 billion, while EV sales increased from INR1.52 billion to INR5.71 billion.

The Indian government has set an ambitious target of only selling EVs by 2030. The International Energy Agency (IEA) estimates that 30% of new vehicle sales in the country will be all-electric by that date, with half of those sales coming from the two-wheeler and three-wheeler space.

The IEA noted that it is easier to register two-wheelers and three-wheelers under India’s Faster Adoption and Manufacturing of Hybrid and EV (FAME II) subsidy program. “Only 3% of the allocated funds under FAME II have been used for a total of just 30 000 vehicles. Significant acceleration will be required to reach both the program targets and national targets of 30% EV sales by 2030,” it said.

India’s EV push has attracted other private equity investors. Ride-hailing platform Ola spun out its EV business in 2019 and subsequently raised funding from SoftBank, Tiger Global Management, and Matrix Partners India. It wants to bring one million EVs to Indian roads by 2022.

Jim Coulter, a founding partner of TPG and managing partner of TPG Rise Climate, added: “There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions. The investment aligns with TPG Rise Climate’s focus on decarbonized transport and builds on TPG’s long history in India.”

TPG Rise Climate reached a first close of $5.4 billion on its debut fund in July. The vehicle has a hard cap of $7 billion. The first iteration of The Rise Fund closed at $2 billion in 2017 and the second launched with a target of $2.5 billion. The strategy now claims to have more than $5 billion in assets.

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• Topics
• South Asia
• Expansion
• Technology
• Cleantech
• India
• TPG Capital
• Electric Vehicles
• Growth capital