Semiconductor & EV production is next on the TATA Groups list

Semiconductors are the next on the TATA Group‘s checklist as the conglomerate is looking to take advantage of the global chip crisis as well as reduce its own dependence on imports.

Apart from chips, the group is also aiming to begin manufacturing batteries for electric vehicles as well as per N Chandrasekaran, Chairman of TATA Sons Pvt. Ltd.

Chandrasekaran spoke about evaluation partnerships for cell and battery manufacturing in India and Europe in TATA Motors Ltd.’s annual report in June. The initiatives by the group are in line with Prime Minister Narendra Modi’s attempts at making India a leader in semiconductor production in order to reduce its dependence on imports and global chain disruptions. TATA group has set aside $103 billion for this project.

Many international chip makers such as Intel and TSMC are looking at India as a potential manufacturing base, as per Technology Minister Ashwini Vaishnaw. Automakers around the world are struggling to deal with the semiconductor shortage. This situation has worsened due to the lockdowns in China. These restrictions have shook the auto and electronics sector by increasing input costs for makers.

As per Shailes Chandra, MD at TATA Motors Passenger Vehicles, “Supply chain is getting very precarious and uncertain.” Lockdowns in China have worsened the visibility of semiconductors and the logistic aspect of things pose the next challenge for TATA Motors considering the lack of availability of containers.

In order to mitigate the semiconductor crunch, TATA is going for premium freight, searching for alternatives for chips and buying them from the open market, Chandra added. He expects the shortage to last for nearly six months and observes that the fourth quarter will be more uncertain in the previous year.

The impact of the chip shortage is more ‘acute’ in electric vehicles than gas models. The waiting period for electric vehicles at TATA Motors could last for as long as six months in comparison to the four months for cars with internal combustion engines.

Volvo Car AB has claimed that it would have a hard time reaching its production forecast for this year due to issues in obtaining a specific type of semiconductor. Renault SA earlier this month stopped the production of its new EV due to lack of components.

TATA’s entry into the semiconductor manufacturing secoter will help TATA Motors that makes the Jaguar Land Rover cars which have been in shortage due to lack of chips.

TATA Motors has a 70% share in India’s nascent electric-car market, the company also announced its intentions of launching its first ever pure electric car by 2025. The five-seater Avinya will not be available in gasoline models, Chandra told reporters.

At present, TATA Motors currently sells two batery-powered models, the Nexon EV and Tigor EV, however, these cars have gasoline models as well.

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