This is the second consecutive year of Rs 1,000 crore investment by the two-wheeler major from South India, which will double its EV production capacity to 25,000 units per month by the end of this year and further increase it to 50,000 units. per month for the next year – taking the annual production volume to 5-6 lakh units per year.
Sudarshan Venu, MD of TVS Motor, told ET that the direction is clear; the company expects EVs to account for 30% of the scooter market and 35% of the three-wheeler market by 2025 and is investing to capture that opportunity.
“I think electric cars are at the forefront of our investment, there is a big focus and a high mix of our investment in EVs in the coming years. A significant part of Rs 1,000 crore of the announced investment has been invested heavily, we will continue to invest at the same pace in the years to come,” added Venu.
TVS Motor is expanding its investment portfolio to drive the growing penetration of electric vehicles by increasing its investment in overseas subsidiaries for the second year in a row.
The company has invested close to Rs 1,100 crore through its arm TVS Singapore, of which about Rs 750 crore was in SEMG, which TVS acquired last year, Rs130 crore in EGO Corporation and the balance in Norton Motorcycle . Total investments at TVS Singapore reached Rs 1,892 crore in FY22, compared to Rs 809 crore last year, according to the company’s FY22 annual report.
A further increase in investment led to the company’s free cash flow turning negative even though performance improved significantly from higher volumes and better costs, emphasizing growth on the part of the company to aggressively pursue higher investments and outperforming the market.
Excluding investments in subsidiaries, TVS Motor has earmarked around Rs 730 crore as capital expenditure in FY22, a growth of 31% YOY. Therefore, it has incrementally invested close to Rs 2,100 crore in capital expenditure and investment in FY22.
Its recently launched iQube has received a very positive response and has a healthy back-order; and the expansion of capacity and sales touchpoints, ready for the production of 25,000 units per month by the end of 2022.
EV production action will continue. There is another EV planned for the second half of the year, TVS’s MD has confirmed.
Venu also said that while there is an increased focus on EVs, the company is not losing sight of the internal combustion engine (ICE) market. The product portfolio will be updated by entering new segments.
“We have many interesting products designed for the ICE space in the lifestyle sector, as well as a complete portfolio of EVs, which means, there is a market opportunity to return to healthy growth after the economic recovery,” he added.