By Nandan Mandayam
BENGALURU (Reuters) - Tata Motors' electric vehicle (EV) unit on Tuesday said it had reduced prices of its cars by up to 120,000 rupees ($1,450) in what is the first instance of a price cut by an Indian electric carmaker.
Electric variants currently form just 2% of car sales in India, as buyers are wary about the higher upfront costs despite lower running costs and as range anxiety persists.
"With battery cell prices having softened in the recent past and considering their potential reduction in the foreseeable future, we have chosen to proactively pass on the resulting benefits directly to customers," said Vivek Srivatsa, chief commercial officer at Tata Passenger Electric Mobility, which is backed by a fund of U.S. private equity firm TPG.
The price of the top-selling Nexon.ev is now down 1.4% at 1.45 million rupees. Prices previously began at 1.47 million rupees, according to Tata's website.
The company, which dominates EV car sales in India, also cut the price of its electric small car Tiago by 70,000 rupees. The base version now costs around 8.1% lower at 799,000 rupees.
Launched in 2020, the Nexon.ev was India's cheapest electric SUV until the launch of Tata's Punch EV at 1.2 million rupees in 2024.
EV sales have slowed globally, with U.S. carmaker Tesla leading a price-cut war to maintain its sales lead over rivals such as China's BYD.
"Tata's price cut in India could prompt its rivals to also price their cars more competitively and launch newer EVs at aggressive prices," said Jay Kale, vice president, Elara Capital.
However, this is in stark contrast to India's two-wheeler EV market, in which IPO-bound Ola Electric and Hero-backed Ather are locked in a price war.
Tata, which began EV-only dealerships in September, plans to have 10 electric cars in its portfolio over the next three to four years. It also aims to bring up EV sales to 25% of its total car sales by 2025 from 9.3% in fiscal 2023.
Shares of Tata Motors, which competes with the likes of Mahindra and MG Motor, fell as much as 1.9% after the announcement and settled 0.5% lower.
($1 = 83.0140 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru and Aditi Shah in New Delhi; Editing by Sonia Cheema, Janane Venkatraman and Maju Samuel)