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TVS Motor Company has committed Rs 1000 crore to the current financial year to make it possible to transition to electric vehicles and expand the production capacity with a vast EV portfolio.
The two-wheeler giant from South India has lined up Rs 1,000 crore in investment for the second consecutive year. This will allow it to double its EV production to 25,000 units per month by the end of 2022, and then increase it to 50,000 units per month next year. This will bring the annual production capacity up to 5-6 lakh units.
TVS Motor Company’s MD Sudarshan Venu told that the company is clearly directing its efforts. It expects EVs will account for 30% of scooter sales and 35% of three-wheeler sales by 2025. The company is also investing in this area.
“I believe that electric vehicles are at our front end of the investment. There is a huge focus on EVs and a higher mix of our investments towards them in the future. Venu said that a significant portion of the Rs 1,000 crore investment has already been invested. He also stated that we will continue to invest at the same pace in future years.
TVS Motor will increase its investment allocation in order to capitalize on the rising use and demand of electric vehicles by increasing its overseas subsidiary investment for the second consecutive year.
Nearly Rs 1,100 crore was invested by the company via TVS Singapore’s arm. Rs 750 crore went into SEMG which TVS bought last year. Rs 130 crore was invested in EGO Corporation, and Rs 135 crore in Norton Motorcycle. According to the company’s annual reports, TVS Singapore had a total investment of Rs 1,892 crore for FY22. This compares with Rs 809 crore last year.
The company’s free cash flow turned negative due to a sharp increase in investment. However, operating performance improved substantially with higher volumes and better cost efficiency. This underlines the bullishness of the company to aggressively pursue high-quality investments and outperformance in the market.
Other than investment in subsidiaries, In FY22, it spent around Rs 730 crore on capital expenditure. This is a 31% YoY increase. It has invested nearly Rs 2,100 crore in capital expenditure and investment over the course of FY22.
The company’s newly launched upgraded iQube received a lot of attention and has a healthy backlog. With the expansion of capacity, sales touchpoints and increased production, the company is ready to produce 25,000 units per month by 2022.
The EV product movement will continue. The MD of TVS stated that there is another EV in the pipeline for the second half-year.
Venu stated that although EVs are being emphasized more, the company does not lose sight of the traditional internal combustion engine market (ICE). With the entry of new segments, the product portfolio is being reorganized.
He said, “We have many interesting products in the ICE space for the lifestyle segment and a full EV portfolio which also means that there is an opportunity to see the market return to healthy growth on top of economic recovery.”