Tata Motors is looking to expand sales outlets in Tier II and Tier III cities in order to cater to the increased demand for its electric model range from such locations, according to a top company executive.

The company, which ended the first quarter with sales of around 19,000 electric vehicle units, is also looking to have a separate sales infrastructure for its electric vehicle portfolio going ahead.

In an analyst call, Tata Motors Passenger Vehicles Managing Director Shailesh Chandra noted that EV adoption is now growing beyond the top 20 cities in the country.

"With the bias now moving to other parts of the country...that's a good sign in terms of how the EV sales will grow from here," he said.

With the launch of Tiago EV, there has been a shift in terms of micro markets now, Chandra said.

He noted that more than 49 per cent of the Tiago EV sales were now coming in from other than the top 20 cities, he added.

"And therefore, we have taken that opportunity to really start expanding our network in those smaller cities through a shop-in-shop concept. As we are expanding in these cities, we are also therefore building the service capability from an infra perspective as well as also training the service engineers for those service stations. So, that is also an ongoing process," Chandra said.

He also noted that in order to cater to customers all across the country, the company may look at separating the EV showrooms from the existing sales outlets.

The company currently has a shop-in-shop concept in the existing dealers to sell EV products.

"And going forward, we also want to separate ICE as well as the EV showrooms, as and when we see the volumes in certain cities, which go to a certain level where the separate channel becomes viable," he stated.

Chandra noted that the company expects significant margin improvement in the EV business on account of enhanced localisation efforts and lower cost of new generation aggregates.

Besides, production-linked incentive (PLI) scheme for Tiago EV and reduction in battery cell prices is going to play a part in the overall growth of the EV segment, he added.

"The cell prices are recovering to the levels where it was in H1 and the impacts should start, being felt from this quarter itself...PLI is going to be a big addition to the margin, and we are confident that we are adhering to all the requirements for the eligibility as has been laid down by the ministry (of heavy industries)," Chandra said.

He noted that the company has been working on localisation for the last two years and that is going to yield significant benefits from a cost reduction perspective.

"There are new generation aggregates, which are also going to come in this financial year, which are at significantly lower costs. And therefore, I'm very confident that in the medium term, within this year, I would say with all the combination of all these factors, the outlook for EV business is going to be very strong," Chandra said.

The company aims to sell around 1 lakh EV units this year.

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