(Bloomberg) — Shares of Tata Motors Ltd., the Indian owner of Jaguar Land Rover, surged 20% after the automaker agreed to sell as much as a 15% stake in its electric-vehicle business to a TPG fund and other investors, which valued the unit at $9.1 billion.
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TPG Rise Climate will buy the stake for 75 billion rupees ($993 million), Tata Motors said in an exchange filing Tuesday. The company, which also makes commercial vehicles and sells gasoline cars and SUVs in India, plans to create a portfolio of 10 electric vehicles over the next five years.
The move will strengthen Tata Motors’ lead in India’s nascent electric-car market, where cheap, basic combustion-engine models still appeal to cost-conscious buyers. Maruti Suzuki India Ltd., the nation’s biggest carmaker, doesn’t sell a single electric vehicle citing affordability issues, while SUV maker Mahindra & Mahindra Ltd. only offers one model, despite being a first mover. Tata Motors sells two electric models in the country, the Nexon EV and the Tigor EV.
Tata Motors jumped 19.5% as of 9:50 a.m. in Mumbai on Wednesday to their highest level in more than four years. The broader S&P BSE Sensex index was up 0.6%.
The Mumbai-based carmaker’s electric-vehicle unit will invest about $2 billion over five years, Tata Motors Chief Financial Officer P.B. Balaji said at a media briefing Tuesday. The tightening of emissions norms due to start next year will force carmakers to make the switch faster to avoid penalties, Chandra said. Tata Motors is also looking at building charging infrastructure.
Tata Motors, whose stock has more than doubled this year, is betting on the electric shift even as one of Asia’s most-polluted nations has fallen behind other countries with battery models accounting for just 1% of annual sales. N. Chandrasekaran, chairman of the salt-to-software conglomerate Tata Group, said in July Tata Motors has “aggressive” growth plans for its EV business and expects a quarter of its sales to come from battery cars in future, up from just 2% now.
Tata UniEVerse, a coalition of Tata Group companies committed to developing EV infrastructure and ecosystems, may also invest in a battery-manufacturing facility. It may look for partnerships to begin with, Shailesh Chandra, president of Tata Motors’ passenger-vehicle unit said this month.
(Updates with Tata Motors shares in first paragraph.)
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