This is the second year in a row of a Rupee 1,000 investment that a South Indian two-wheeler has made to double electric vehicle production capacity to 25,000 a month by the end of this year and further increase it to 50,000. per month in the following year – increasing the annual production capacity to 5-6 lakh units per year.
Sudarshan Venu, CEO of TVS Motor, told ET that the direction is clear; the company expects electric vehicles to represent 30% of the scooter market and 35% of the tricycle market by 2025 and is investing to seize this opportunity.
“I think electric vehicles are at the forefront of our investment, and we are putting a lot of emphasis on and increasing the mix of our electric vehicle investments in the coming years. Much of the announced investment of 1,000 rupees has been heavily invested, and we will continue to invest at a similar pace in the coming years, ”added Venu.
TVS Motor is increasing its investment allocation to take advantage of the growing penetration of electric vehicles by increasing investments in foreign subsidiaries for the second consecutive year.
The company has invested nearly 1,100 crore rupees through its TVS Singapore arm, of which approximately 750 crore rupees were in SEMG which TVS acquired last year, 130 crore in EGO Corporation and a balance in Norton Motorcycle. Total investment in TVS Singapore reached 1,892 crore rupees in fiscal 22, up from 809 crore rupees a year ago, according to the company’s annual report for fiscal 22.
The sharp spike in investment pushed the company’s free cash flow negative, despite a significant improvement in operating performance due to higher volumes and better cost-effectiveness, underlining the company’s commitment to aggressively pursue high investments and market advantage.
In addition to investing in its subsidiaries, TVS Motor pumped approximately Rupee 730 as capital expenditures in fiscal 22, an increase of 31% year on year. So in total, he invested close to Rs 2,100 crore for capital spending and investments in FY22.
The recently launched updated iQube has received a very good response and has a healthy backlog of orders; thanks to the expansion of production capacity and sales contact points, it is ready to produce 25,000 units per month by the end of 2022.
The action of the EV product will continue. There is another EV in the line in the second half of the year, assured the director of TVS.
Venu reiterated that while the focus is increasing on electric vehicles, the company is still keeping an eye on the mainstream internal combustion engine (ICE) market. The product portfolio is being modernized as it enters new segments.
“We have a lot of exciting products for the ICE lifestyle space as well as a full portfolio of electric vehicles, which also means there is an opportunity for the market to return to healthy growth thanks to the economic recovery,” he added.