New Delhi: Tata Motors reported a 10.7 per cent year-on-year decline in electric vehicle (EV) sales, reaching approximately 57,616 units in FY25, compared to 64,530 units sold in the previous year. The drop was largely attributed to a slowdown in fleet sales, with the company citing withdrawal of FAME-II subsidy and operational challenges faced by fleet operators that reduced their overall contribution.
However, the maker of the Tiago and Tigor reaffirmed that mainstreaming EVs remains a top priority. Tata Motors is advancing its EV portfolio strategy with upcoming models like the Sierra and Harrier EV, along with planned upgrades to existing models, according to PB Balaji, Group Chief Financial Officer.
The carmaker managed to maintain its market leadership in EVs at 55.4 per cent, even though it has fallen drastically from the earlier 80 per cent. This may be attributed to increased competition from JSW MG Motor and slower interest for its own models.
Its EV penetration stood at 11 per cent while CNG was at 25 per cent in FY25. On a full year basis, the PV business revenue declined by 7.5 per cent. “The decline in revenues was primarily on account of decline in hatches volumes.”
Overall, Tata Motors has turned net cash positive in the financial year ended March 2025. In 2023, ETAuto reported about the plan and how its Indian business delivered a net debt that touched its lowest in 15 years.
The company’s free cash flow (automotive) for the year, was at ₹22.4K crore, as compared to ₹26.9K crore in FY24, owing to cash profits and favourable working capital.
Commercial Vehicles (CVs)
Tata Motors accounted for 37 per cent of the domestic CV retail market in FY25. Balaji said despite a decline in revenues, the company noted improved profitability in this segment—a development it described as a significant milestone, marking possibly the first such improvement in 25 years.
Moving ahead, he sees all fundamentals pointing to stability in the CV segment, with market conditions largely supportive.
However, Tata Motors acknowledged facing stress within parts of its portfolio during FY25. The company identified its small CV business as an area requiring strategic intervention and corrective action.
Additionally, Tata Motors has received shareholder approval for its proposed demerger– which will separate its CV and PV business into independently listed entities– on May 6. The next step involves seeking clearance from the National Company Law Tribunal (NCLT), with an order expected sometime in the second quarter of FY25.
Subject to NCLT approval, the company anticipates setting July 1 as the appointed date and October 1 as the effective date for the demerger.
Meanwhile, internal transition processes are progressing smoothly. The company confirmed that employee allocation between the resulting entities has been completed, ensuring operational readiness ahead of the formal split.
Jaguar Land Rover (JLR)
The recently concluded India-UK Free Trade Agreement (FTA) is expected to benefit the Tata Motors’ luxury segment, Jaguar Land Rover (JLR), as the automotive import tariffs have been reduced from over 100 per cent to 10 per cent under a quota system. However, the duty-free quota for electric vehicles remains limited to only a few thousand units.
Balaji said the implementation of the FTA will significantly enhance customer access to JLR vehicles in India by enabling quicker availability of global models at more competitive prices.
Tata Motors brings Range Rover models in India via CKD (completely knocked down) route. The current cars that are already there in India, the Range Rover franchise, which is the Range Rover, Range Rover Sport, Evoque, and the Velar, these are already being manufactured in India on a CKD basis, so these won’t be impacted by this FTA that is coming in.
“This will support sustained performance for JLR in the Indian market going forward,” he noted. However, Balaji clarified that any decision regarding local manufacturing of JLR vehicles in India remains a longer-term strategic consideration for the company.
Commenting on JLR’s outlook in the US amid ongoing trade tensions, Balaji welcomed the move to lower tariffs on UK auto exports to 10 per cent, saying it is “directionally on the right track.” However, the company is awaiting the fine print in terms of timings, so we must wait to also need a few clarifications.
Tata Motors acknowledged that sales of the Land Rover Defender in the US have been impacted by existing tariffs. The company is actively exploring ways to mitigate the effect of these tariff increases.
“We are working on strategies to offset the impact, while remaining optimistic about the possibility of a trade agreement between the EU and the US—similar to the one already in place between the UK and the US,” said a company spokesperson. “We are hopeful that such a deal will materialise sooner rather than later.”
Looking ahead, Tata Motors expects its investment outlay to remain steady at £18 billion over a five-year period, with funding sourced primarily from operational cash flows. The company also stated it will continue to closely monitor and evaluate the impact of evolving global challenges on its operations and strategy.
