India's electric vehicle industry has been slow to take off, despite a push by the government to transition away from internal combustion engine cars to reduce pollution levels and dependence on costly fuel imports.
But the sector received a huge boost when US private equity firm TPG's Rise Climate Fund and Abu Dhabi holding company ADQ said on October 12 that they would inject $1 billion into Tata Motors' passenger electric vehicle business. TPG and ADQ will hold between an 11 per cent and 15 per cent stake in Tata's EV business, which will be spun out into a new unit that is valued at $9.1bn, Tata said.
The investment in Tata Motors, which represents the first major fundraising by an Indian car maker in the electric vehicle segment, is set to be a game changer for the company and the broader industry, analysts say.
“The TPG and Tata Motors deal may redefine India's auto landscape as investments of such magnitude indicate confidence about India's future EV potential,” Raghunandhan NL, a cars analyst at Mumbai-based Emkay Global Financial Services, says. “We believe that large investments and more product options will accelerate the pace of EV adoption.”
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