Tata Motors PV faces key risks as EV adoption slows, competition heats up

Tata Motors PV key risks: Tata Motors Passenger Vehicles Ltd (TMPV) shares began trading as a standalone entity on October 14 following the demerger of Tata Motors Ltd, while the Commercial Vehicles arm listed on November 12.

 

The restructuring marked a key milestone for the auto major, unlocking value and enabling sharper strategic focus across its businesses.

 

However, as TMPV begins its independent journey, analysts caution that slower EV adoption, regulatory headwinds, and intensifying competition could weigh on its growth trajectory.

EV adoption hurdles, policy and cost pressures

 

According to Ravi Singh, chief research officer at Mastertrust, Tata Motors has done “really well in India’s passenger vehicle space, especially after taking an early lead in EVs.” However, he warns that “like every strong story, there are some clear risks that could slow it down in the next few years.”

 

Slower EV adoption remains the biggest challenge. “Even though Tata dominates the local EV market with cars like the Nexon, Punch, and Tiago EV, the overall shift toward electric vehicles in India is still challenging,” Singh said. “People still worry about charging points, long-term battery life, and the price gap compared to petrol cars. If the government pulls back on incentives or infrastructure doesn’t grow fast enough, EV demand could lose steam – and that directly affects Tata’s biggest growth driver,” he added.

 

He also highlighted tighter emission norms and supply chain disruptions as key hurdles. “New norms like BS7 will need more investment in cleaner engines and hybrid systems,” Singh said, noting that could pressure margins for smaller models. He added that “Tata relies on a few key imported parts like semiconductors and battery cells, so even small disruptions can throw off production schedules and delivery timelines.”  ALSO READ | Tata Motors demerger complete: Here's how CV & PV arms stack up financially

Rising competition could erode early EV lead

 

Rising competition is another risk. “Maruti, Hyundai, and Mahindra are all pushing new EVs, while brands like MG and BYD are already growing fast,” Singh said, adding that Tata will need to “innovate faster and keep costs in check to protect its lead.”

 

Kranthi Bathini, director of equity strategy at WealthMills Securities, echoed the concerns. “EV adoption is taking time in India, and the company is also dealing with intense competition, which is putting pressure on margins,” he said. “Sustained growth in domestic sales remains essential,” he added.

 

Despite its early-mover advantage, analysts say Tata’s EV business still faces structural challenges linked to affordability, charging infrastructure, and policy support. The next few years, they believe, will test whether India’s EV transition can accelerate fast enough to justify the company’s heavy investments in this space.  ALSO READ | Tata Motors' CV arm seeks clean mobility, tech-led growth

Domestic PV margins under pressure

 

Financially, the domestic PV business remains under strain. Revenue rose from ₹47,868 crore in FY23 to ₹52,353 crore in FY24 but slipped to ₹48,445 crore in FY25, while PAT declined to ₹714 crore in FY25 from ₹1,089 crore a year earlier. The Ebit margin has stayed weak at around 1 per cent.

 

Analysts say improving profitability will depend on how efficiently TMPV can scale its EV operations and manage costs amid policy uncertainty and input price swings.

Long-term potential, near-term tests

 

As TMPV navigates its first year as a standalone listed company, analysts believe the brand’s strong domestic franchise and EV leadership provide long-term resilience, but near-term risks from slower EV adoption, tighter regulations, and rising competition could test its momentum.