Tata Motors plans a premium push as competition intensifies in EV space

India's third-largest automaker by the number of cars sold launched the EV variant of its Harrier sports utility vehicle (SUV) on Tuesday at an ex-showroom price of ₹21.49 lakh.

The launch of the new electric vehicle comes at a time when Tata Motors' lead in the electric vehicles segment is being aggressively challenged by MG Motor India, Mahindra & Mahindra (M&M) and Hyundai.

Its market share in the EV space slumped to 55.4% in FY25, from 73.1% in FY24 and 84% in FY23. As many as 117,000 EV cars were sold in India in FY25.

However, Shailesh Chandra, managing director at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, noted that the company’s key strength is its strategy to have a presence in each price point.

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“The right way to look at the market is to divide it into three segments based on pricing. Through our launches this year, we will have 2 cars each in the entry segment, mid segment and the high segment," Chandra told Mint in an interview.

“After Harrier and Sierra launches this year, we will go even further in the premium segment with more launches in upcoming years."

Focus on volumes

Sales of higher-priced cars result in an increase in the average selling price, which allows a company to have more revenue even if the volume declines. Mahindra & Mahindra had stated earlier that it is looking to dominate the market through leadership in revenue market share.

During the January to March quarter, M&M garnered a 33.1% revenue share.

However, Chandra says Tata Motors will not shift its focus to revenue market share and instead look to dominate volumes.

“While selling more luxury vehicles can help get more revenue share, whether you are a popular brand among the customers of the country is decided by the share in volumes," Chandra highlighted.

But the car market has not given automakers many reasons to cheer in the last one year. During the last financial year, the growth in the passenger vehicle market was just 2%. Tata Motors sales in the year was at 556,263 units, 3% lower than in FY24.

“You have to try and excite a tepid car market through new launches," Chandra said.

Market share, service challenges

During April and May 2025, Tata Motors' share in the EV market fell to 38% with 9,043 units sold. Since late last year, it has faced pressure from Windsor EV of JSW MG Motor India, Creta EV of Hyundai Motor India and Mahindra electric SUVs BE 6 and XEV 9e.

Shares of Tata Motors fell 1% on Tuesday to close at ₹704.30 apiece on the National Stock Exchange. The stock has fallen 5.5% during 2025 as against a 0.86% rise in Nifty Auto index.

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While Tata Motors is trying to address the challenge by introducing new models in each price range, it is also addressing customers' complaints about the company’s servicing capabilities.

During a meeting with analysts in March, the management acknowledged that there was an issue with service capabilities.

“Management indicated that while most of its products are well positioned, there is a need to enhance the service capabilities of its outlets," analysts at Motilal Oswal Financial Services wrote in a 11 March note. “Given the rise in its market share without a corresponding increase in servicing throughput, customers are now facing challenges in receiving timely service."

Chandra also noted that the company’s focus in the last one year has been on improving servicing capabilities.

“Our growth in the last few years in a few cities was more than anticipated, which led to some hotspots emerging where our service capabilities lagged. We have focused on increasing servicing bays at our service centers, adding more than 1,300 bays over the last one year," he said.

EV offerings, premiumization plans

In 2025, Tata Motors has been trying to increase the premium experience of its cars with refreshed launches of its hatchbacks Tiago and Altroz.

To get growth back in the passenger vehicle market, it is expanding offerings in the electric vehicle space and premiumising its cheaper hatchback cars in the sub- ₹10 lakh range to attract more customers.

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"Refresh launches of Altroz and Tiago (launched in Q4) will help Tata Motors regain lost market share in hatches, while the launch of Sierra ICE and EV and Harrier EV may strengthen Utility Vehicle share," Jay Kale of Elara Capital wrote in a 14 May note.