Shailesh Chandra, MD & CEO, Tata MotorsWith speculation rife that India and China are in a ‘burying-the-hatchet’ phase, the implications for the auto sector will be interesting.
While it is too early to say whether Chinese carmakers will actually get carte blanche to make fresh investments in India, any rapprochement between the two countries will mean that entry barriers will be removed in due course.
Shailesh Chandra, Managing Director and Chief Executive Officer of Tata Motors Passenger Vehicles, is of the view that even if this were to become a reality, there is no reason to press the panic button.
“Assuming that this will happen, we should not worry about how we will defend ourselves in India,” he told ET Auto in an interview.
This is because aspirations for local automakers will just not be confined to India. “If I were to play globally, this competition (with the Chinese) will become a reality. Our energy should be less spent on worrying about it and we should instead see how we can compete on technology, cost and the quality of the cars that we are going to make,” added Chandra.
The effort, therefore, will be made in these three directions: “How I can scale up my business, how I can significantly work on the cost structures, including levers of localisation, and the design learnings that we are getting”.
Work on these focus areas is already underway, which explains how Tata Motors has been able to reduce the cost structure in its electric vehicles.
Tata Motors Nexon EV
The Nexon experience
For instance, in the case of Nexon, launched in 2020, it was priced at ₹13.99 lakh and lost a bit of money in the process. The model came with a 30-kilowatt-hour battery pack at that time and is retailed today at the same price, but with a 45-kilowatt-hour pack. What is even more heartening is that it is making some money too, which clearly reflects that “significant work” has been done on the cost structure. As Chandra pointed out, while the product might look the same, Nexon has gone through five interventions from the cost and innovation perspective. “Our focus, therefore, will be to ensure that we are able to compete globally with these benchmarks. This will be the main effort going forward,” he said.
Tata Motors entered South Africa last year and has identified certain regions with both ICE and EVs — “maybe different markets for EVs and ICE” — and the key is to do this in steps.
“We must move in a phased manner and not spread our efforts thin in all the places. We also need to ensure that the market we enter turns into a success story. Whenever you go to a new country, it is an evolution that you have to go through by promise versus delivery,” he added.
Ambition and speed of the Chinese
Chandra said he liked the ambition and speed at which China does things, and these are “two very important attributes in a person or a company or a nation”.
Going beyond capabilities and knowledge are two other benefits that China got from outside to start with, he added.
“They were hungry learners, ready to take risks, do things with speed and then take their country to the next level. From a tech perspective, they have moved very fast in the automotive space,” he elaborated.
Some of the capabilities the Chinese picked up from the electronics industry were transferred to the automotive sector, which explains the large number of software engineers in car companies.
“There is also a very strong ambition base, which has brought China to where it is,” said Chandra.
However, in the West, the extent of detailing, precision, system orientation, and the quality of work are vital learnings too, and the answer for India “always lies” in the combination of the two. “We should always choose the best of both worlds,” he added.
According to Chandra, it was important to constantly keep pace with technological changes, unlike two decades earlier, when a car was largely about mechanical systems. “You were literally delivering petrol and diesel cars, and they were incrementally changing. The need for innovation and special capabilities was just not there,” he explained.
Rapid tech transition
It is only in the last decade that things have begun changing and “more intensely” in the last five years. “In many cases when new capabilities like electric are required, we have re-skilled and up-skilled engineers to ensure that they are able to deal with the new technology,” said Chandra.
However, in an all-new area like software, it is a different ballgame: the solution lies in integrating people from outside and then putting the infrastructure and processes in place.
“When that works seamlessly in a live project, there is cross-learning across the organisation. Even people at our level get educated in the process,” he said.
As he put it, the automotive field is a place where “you are continuously learning” on both the tech and consumer sides, which is “what makes this industry” more exciting.
“All the people who do well in the auto industry are curious learners and engineers who are able to adapt to new learnings, especially when it comes to tech,” said Chandra.
Newer car technology means higher costs, especially when it starts with a higher-segment model. However, as the technology begins to trickle down into lower-segment cars like the Punch, the equation changes. For instance, 10-inch screens were only seen in bigger cars, but as the scale kept increasing, the cost of tech also came down.
“Apart from that, we assume that after the launch of any product, the next intervention will have more features. So we need to start the cost reduction programme right now and bring it to a level by which we can give more features without disturbing the price position,” said Chandra.
Packing a Punch
While working on the new Punch, the company was aware that costs would increase with additional features. There was a ramp-down of costs from other elements through commercial negotiations, combined with value engineering, to accommodate these new features.
Tata Motors is confident that the changes will help boost demand for the Punch, which is “one of the few cars” that sells in every corner of the country. “If you have the budget for a hatchback but are aspiring for an SUV, this is the answer. It is safe and feature-rich,” he said.
Tata Motors ended calendar 2025 on a high, securing a place in the Top 3 list, while Hyundai fell to fourth place.
“Numbers matter and, more importantly, market shares also do. Rank gives you the power or an indication whether you are in the Top 3 consideration bracket or not,” explained Chandra.
It was equally important to be in the Top 3 at least in the individual segments that “you are serving”. For Tata Motors, “the obsession is more whether I am in the top three in individual cars and the segments in which we operate”.
The overall ranking also depends on how much of the market is being addressed. In the case of Tata Motors, this was around 53 per cent a year ago but has jumped to nearly 70 per cent with the launch of Sierra.
Bouncing back with a bang
“If we consistently increase the addressable market and ensure that our share and position in each segment is at a certain targeted level, then it (ranking) is a consequence of that. In the last year, we have gone through both sides and slid to number 4 also as the entry-level cars were not doing that well in the first half,” elaborated Chandra.
The industry was declining, but post-GST 2.0, the trajectory changed so dramatically that in Q3 the company raced to the second spot in market share, according to Vahan data.
“As we enter 2026, additional volumes will come in from a new segment like Sierra. Punch, which is already doing well, is going to get a further demand boost. And throughout the year, there will be multiple launches both on EV as well as ICE. So it is a very intense year for us,” he continued.
Calendar 2025 had its share of challenges, like the rare-earth crisis, but Chandra reasoned that it gave the industry an opportunity to innovate even while it found itself in a tough spot. Many companies shifted to other sources while exploring components that could be rare-earth-free. This meant going with a lighter rare-earth compound rather than the heavier one.
“I think all these in combination enabled us to really manage the situation but structurally, it meant that we were reducing our dependence now on these countries. It is good to get cornered at times so that innovation happens,” said Chandra.
Confidence levels were also higher among automakers, thanks to lessons learned from the semiconductor crisis a few years earlier.
“Maybe the rare earth experience is going to teach us one or two more levers to exercise in the event of supply chain disruptions. Perhaps a new kind of crisis can come too but I think we would step into that with some level of confidence,” he added
