Why every investor owns Tata Motors--and should rethink it

For many investors, Tata Motors has become the go-to stock in the automobile space. It's often sold as a story of turnaround and transformation. Post-Covid, the stock saw a meteoric rise, turning into one of the most widely held stocks in India with more than 67 lakh shareholders, surpassing even retail darlings like Yes Bank and Vodafone Idea in terms of shareholder count. The pitch is neatly packaged: it's India’s EV leader, Jaguar Land Rover (JLR) is on the mend, and the stock trades at a significant discount to peers. But beneath the surface, this narrative demands a closer look. When the engine sounds too smooth, it's often worth lifting the hood. The EV story: More sizzle than substance A key selling point of Tata Motors is its position as India’s leading EV manufacturer. But investors must ask: how much does this leadership really contribute? As of now, electric vehicles form a very small fraction of the company’s total sales, both in volume and value (less than 2 per cent of its FY25 revenue). For a company the size of Tata Motors, the EV segment is too small to materially move the needle. It’s akin to attaching a sleek, new spoiler to a 20-year-old sedan—visually appealing, but it doesn't improve the car’s performance. The company’s market share in the EV segment is also beginning to erode. New players, better technology, and wider product choices are entering the scene. Tata Motors may have had a first-mover advantage, but that’s no longer sufficient. In the automobile world, early entry means little if the pace of innovation isn't sustained. This is especially true in EVs, where battery tech, software integration, and infrastructure play a bigger role than legacy branding. Tata Motor's Indian PV sales mix Looks like a CNG story, more than an EV story (%) FY23 FY24 FY25 Petrol 67 58 51 Diesel 16 13 13 EV 9 13 11 CNG 8 16 25 Interestingly, while EV share has plateaued, the share of CNG vehicles in Tata's sales is rising. While this makes sense in the Indian context of rising fuel costs, it also shows that mass-market buyers are opting for cheaper, alternative fuel options over pricier EVs, further casting doubt on the EV growth narrative. Then there’s JLR’s electrification plan, which is also part of the broader EV story. But globally, every automotive player—Ford, Mercedes, BMW, Hyundai—is shifting to EVs. There’s nothing unique in Tata Motors’ ambition to electrify JLR. Without a technologic

This article was originally published on June 07, 2025.