Tata Motors to demerge commercial and passenger vehicle business

Tata Motors plans to split into two separate listed companies - one for commercial vehicles and the second for passenger cars, including the EV business and subsidiary JLR. The split would enable the companies to pursue their respective strategies to achieve higher growth with greater agility.

According to Tata Motors, the demerger is a logical progression to the strategy it has been pursuing. The manufacturer already separated operations of the commercial and passenger vehicle businesses in 2021, giving them their respective CEOs.

“While there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure,” the company writes in its statement. Tata announced in November 2023 that its Tata Passenger Electric Mobility unit would use the 800-Volt platform EMA developed by JLR to launch the Avinya EV. And just a few days ago, there were media reports that JLR and Tata Motors could produce electric cars on a large scale in India and export them from there.

“Tata Motors has scripted a strong turnaround in the last few years. The three automotive business units are now operating independently and delivering consistent performance,” says Tata Motors Chairman N Chandrasekaran. “This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility. This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders.”

According to the company’s statement, shareholders will continue to hold identical shares in both new companies.

A few weeks ago, Bloomberg reported that Tata could spin off its battery cell subsidiary Agratas. It would allow the latter to raise funds and go public in Mumbai. However, the move has yet to be confirmed. Agratas is a full Tata subsidiary subsidiary and recently announced a battery cell factory in the Indian state of Gujarat with an initial annual capacity of 20 GWh and is planning another cell factory in Bridgwater, UK.

Tata Motors was listed as India’s most valuable carmaker in January due to its strong position in SUVs and EVs. The company sold over 50,000 electric cars in India last year and plans to launch ten electric models by March 2026. However, JLR, also wholly owned by Tata, scaled back its EV plans in February and wants to launch only four, not six, full BEVs by 2026. So far, the Jaguar I Pace is the company’s only electric car.

tatamotors.com