The new subsidiary will use Tata Motors’ existing investments and capacities and will focus all the future investment into EVs, dedicated battery electric vehicle platforms, and advanced automotive technologies


Tata Motors office and plant in Pune, India. (Credit: Rameshng/Wikimedia Commons)

Tata Motors, an Indian automobile manufacturer, has secured an investment commitment of INR75bn ($1bn) for its passenger electric vehicle (EV) business from TPG Rise Climate and its co-investor ADQ.

The EV business, which is planned to be incorporated, has been given a valuation of up to $9.1bn.

TPG Rise Climate and co-investors will infuse the amount in convertible instruments to acquire a stake of 11-15% in the business.

The parties have signed a binding agreement in this regard.

Tata Motors said that the new EV subsidiary will leverage its existing investments and capacities. The business will focus all the future investment into electric vehicles, dedicated battery electric vehicle platforms, and advanced automotive technologies.

The new passenger EV business will also catalyse the investments in battery technology and charging infrastructure, said Tata Motors.

During the next five years, the new firm is planned to develop a portfolio of 10 EVs. Furthermore, it will work with Tata Power to accelerate the development of widespread charging infrastructure to enable quick adoption of EVs in India.

Tata Motors chairman N Chandrasekaran said: “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delights customers while meticulously creating a synergistic ecosystem.

“We are excited and committed to play a leading role in the Government’s vision to have 30% electric vehicles penetration rate by 2030.”

According to Tata Motors, TPG Rise Climate and other investors are expected to complete the initial capital infusion round by March 2022. The rest of the investment will be made by the end of 2022.

TPG Rise Climate is the climate investing strategy of TPG Rise, which in turn is the global impact investing platform of US private equity company TPG. The deal is subject to preceding conditions and customary approvals.

TPG Rise climate managing partner and TPG founding partner Jim Coulter said: “We are excited to partner with Tata Motors on their mission to lead the electrification of passenger mobility in India.

“There is significant momentum around India’s EV movement, supported by the Government’s vision and policies, as well as growing consumer demand for greener solutions.

“The investment aligns with TPG Rise Climate’s focus on decarbonised transport and builds on TPG’s long history in India.”

In July 2021, TPG Rise Climate had announced the first close of $5.4bn in subscriptions to its inaugural fund. It had attracted subscriptions from institutional investors such as Allstate, The Hartford, State of Michigan Retirement System, Ontario Teachers’ Pension Plan Board, AXA, School Employees Retirement System of Ohio, Silk Road Fund, and others.