Tata Tiago EV’s Running Cost Makes For A Compelling Buy, For A Few
India’s cheapest electric car, Tata Motors' Tiago EV, has garnered over 10,000 bookings in one day. Still, it’s not for everyone.
India’s electric car market is ripe for the taking. Tiago EV’s day-one bookings is proof. Yet, India’s most affordable electric car is not for everyone.
Tata Motors Ltd.’s latest EV offering in the passenger-vehicle space garnered more than 10,000 bookings on the first day, underscoring the propensity of customers to own electric vehicles if an attractive package is offered, Nomura said in an Oct. 11 research report. The response has prompted the automaker to extend the introductory pricing for 10,000 more customers.
“Tata Motors is taking the lead in EVs with a strategy to position them as premium vehicles and yet make them affordable,” the brokerage said in the research report. “We expect the Tiago EV to sell 3,000-5,000 units per month…”
That estimate compares with 7,000-7,500 units of Tiago (Petrol + CNG) sold every month, according to a Tata Motors spokesperson. The slim margin, then, puts running cost squarely in the spotlight.
According to Nomura's calculations, the running cost of a Tiago EV is Rs 1.1/km or one-sixth of Tiago XE’s Rs 6.9/km. The price gap between the two variants is Rs 2.82 lakh (on-road price, Delhi), which will be recovered in 2.7 years if a customer drives 50/km a day. In less than 50,000 km, a Tiago EV owner would’ve recovered the premium paid for the car.
(Source: Nomura)
Morgan Stanley, in its Oct. 12 research report, corroborated as much. “The EV version is around 40/45% more expensive than ICE (internal combustion engine) version but given the overall running costs, this means it is closer to the ICE version overall.”
Still, the Tiago EV is not for everyone, at least not for Suchit Pandya, a 33-year-old CRM executive in Ahmedabad who uses a Tiago XZ+ Automatic as his daily drive. He travels 1,500-2,000 km per month, or 50-65 km per day, incurring a fuel cost of Rs 9,000-10,000 per month. His weekend drives take him out of town at least twice a month.
“It’s the lack of charging stations for me,” Pandya said, when asked if he would trade in his Tiago for the electric variant. “I drive to Udaipur (250 km from Ahmedabad) quite often, and wouldn’t like to do that with range anxiety.” He is all for a hybrid car though, and an electric car as a second four-wheeler in the family’s garage.
And that’s what Tata Motors is aiming for with the Tiago EV.
The Tata Tiago EV at its launch in Mumbai on Sept. 28, 2022. (Photo: Company website)
“The car (Tiago EV) is for people who drive around 50 kilometres a day, live in congested cities, or are looking for a second car in the family,” Shailesh Chandra, managing director at Tata Motors Passenger Vehicles Ltd., said at the launch event on Sept. 28. With the kind of features and range it offers, it could be the best-selling EV in the country, he said.
The Tiago EV is available in two battery-pack options, 19.2 kWh with a range of 250 km and 24 kWh with 315 km range, with fast-charging available for the top two variants. Prices start at Rs 8.49 lakh (ex-showroom, India) and go up to Rs 11.79 lakh (ex-showroom, India).
Still, while Tata Motors has positioned the Tiago EV in the sweet spot that is Rs 8-13 lakh, pricing is not the only thing to watch for when buying an electric car.
“There are two main ingredients to seal the deal on an EV, the price and the brand. When both meet at an ideal point, the buyer is convinced,” Ambuj Sharma, former additional secretary at the Ministry of Heavy Industries who worked on government incentives for battery-powered mobility, told BQ Prime earlier. “A typical customer is still unable to comprehend total cost of ownership of EV versus fossil fuel-powered vehicles, and therefore is unwilling to pay higher upfront cost.”
The real-world range is another unknown.
According to Morgan Stanley, the Tiago EV’s smaller battery version, which has a claimed range of 250 km, will be good enough for 150 km on the road, whereby consumers may face “range anxiety”. Electric cars also get much less support than electric two-wheelers as there is no FAME-II subsidy for them.
The “real litmus test” for mass adoption of electric cars in India will be how many are bought by first-time buyers as their only vehicle, Arun Malhotra, auto expert and former managing director at Nissan Motor India Pvt. Ltd., told BQ Prime in a previous interaction. Till then, clean vehicles -- electric, hybrid or even flex-fuel -- will remain a new technology to try one’s hands on, instead of a true mobility solution for people at large.