Tata Motors PV Aims for 10% EBITDA Margin by FY30

Tata Motors' passenger car division, which includes its electric vehicle business, hopes to raise its profitability substantially over the coming five years and achieve positive cash flow, according to the company's investor day presentation unveiled today.

The PV division, which had EBITDA margin of 6.9% last financial year, will cross the 10% margin by the end of the decade, the presentation projected.

The profitability improvement is expected to come through three levers – strong volume growth, an enhanced product mix and accelerated reduction in raw material costs.

The PV division has lower profitability compared to other divisions. The overall margin for the company as a whole stands at 13.1%, while it is 14.3% in JLR, and 11.8% in the commercial vehicle business. The electric vehicle business, under the PV division, was earlier expected to achieve EBITDA breakeven in FY26, but the business achieved profitability in FY25. 

“In the EV segment, we became one of the few global manufacturers to achieve positive EBITDA on the back of a higher level of localisation, aggressive cost reduction, and securing PLI benefits,” Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility Managing Director Shailesh Chandra recently said.

Tata Motors is targeting its passenger vehicle volume growth to significantly outpace the market in the coming years, targeting a 16% market share (including EVs) by FY27, and further expanding to 18-20% within the subsequent two to three years. 

In its EV business, the company anticipates maintaining its leadership position, with electric vehicles projected to constitute 20% of its total passenger vehicle volumes by the end of FY27, rising further to 30% by FY30.

These ambitious growth targets follow “a year of consolidation” for Tata Motors in FY2025. After four consecutive years of robust performance, the automaker experienced a dip in its passenger vehicle volume and market share, facing intense competition, particularly from M&M’s strong SUV portfolio.

The competitive pressure was acutely felt in the EV market. Here, Tata Motors' once-commanding market share has plunged from 80-85% just a couple of ago to approximately 55%. This significant decline is largely attributed to the rise of new rivals and models, notably JSW MG Motor’s Windsor EV and M&M’s new-generation EVs.

To supplement its volume growth ambitions, the company is planning to strengthen its product portfolio to over 15 nameplates across multiple powertrains by the end of this decade from the current eight. It is looking at 30 product updates, including seven new nameplates and 23 product refreshes. The new nameplates include one under Sierra, two under the Avinya range, two ICE and two EV products.

Tata Motors will invest Rs 33,000-35,000 crore between the financial year 2026 and 2030 in the passenger vehicle business, including its EV business, with a focus on innovative new products, SDV, advanced technologies and powertrains.

The automaker is leveraging the government’s Production-Linked Incentive (PLI) scheme to boost the profitability of its EV business. Tiago.ev, Tigor.ev and Punch.ev met domestic value addition requirements and are eligible for PLI incentives, and expects to get Nexon.ev and Harrier.ev certified for the scheme this year. Tata Motors’ PV business received Rs 102 crore from the government's PLI scheme for FY24 while it has accrued Rs 250 crore for FY25.

For the ICE business, the company noted that average realization has steadily increased reflecting an improvement in price and mix, while it is witnessing structural cost reduction from scale and engineering improvements. 

Meanwhile, Tata Motors is in the process of demerging the company into two separate publicly traded companies – one housing the commercial vehicle business and the other for the passenger vehicle business, which will include Jaguar Land Rover. The current Tata Motors Ltd will be renamed to Tata Motors Passenger Vehicles Ltd (TMPVL) and the new CV entity will be named Tata Motors Ltd (TML). Both demerger is expected to be completed before the end of this year.