Tata Motors may get notice over EV order

The government is likely to issue a show-cause notice to Tata Motors seeking reasons for not scrapping the first bulk order for electric cars, as it alleges that the automaker was reneging on the contract, people with knowledge of the development said.

The move comes after the performance of the first batch of cars it delivered under the 5,000-vehicle order didn’t meet expectations and as the company is seeking changes to the specifications for further supplies, they said.

In fact, rival Mahindra & Mahindra, which is to supply another 5,000 cars in the second phase of the same tender for 10,000 vehicles, has also been negotiating to downgrade charging and battery specifications from what it had offered, they said. Vehicles will still be within tender specifications post downgrade.


The people said Energy Efficiency Services Ltd (EESL), the state-run agency that is responsible for the procurement of the cars for government departments, had consulted the law ministry and the notice could be issued soon.

Tata Motors said it didn’t receive any warning from EESL and termed other questions, including on performance of its cars, “speculative.” Mahindra refused to comment. EESL managing director Saurabh Kumar said there were no problems with the tender.

The development is a setback to the government’s move to replace petrol and diesel vehicles used by various departments with electric cars, as these are the only two automakers manufacturing electric cars in India at the moment.

EESL had to recently scrap a second tender for procurement of another 10,000 electric cars, because of lack of clarity on standards for charging stations which would allow foreign carmakers also to vie for the contract.

It had issued the first global tender for 10,000 vehicles in August last year, when Tata Motors emerged the lowest bidder. Mahindra got half the order after it agreed to match Tata’s price.

Tata Motors had claimed to be in a position to supply cars with higher specifications than being sought in the tender and sources said the final agreement incorporated those as well. Among other things, it offered a mileage of 130 km on a single charge. The 250 cars it so far supplied allegedly run just 70-80 km on one charge.

Industry sources said the company supplied the first tranche of the electric cars as per the technical specifications in the vehicle supply contracts signed with EESL. “Tata Motors has, however, sought to move back to the original tender specifications for the second phase of supply, which the government has proposed to contest,” one of the people said.

Highly placed government officials said discussions had been held with top executives at Tata Motors and Mahindra on the matter as the intent was to resolve issues “amicably”.

Industry sources, meanwhile, questioned the procedure of procuring cars based on the lowest price offered, suggesting that automakers cannot promise high quality at the prices arrived at through the competitive bidding process. “The range of an electric vehicle, the battery pack and the price are correlated. You cannot supply cars with higher range at low prices,” said an industry insider.

EESL’s Kumar denied any issues with the tendering process. “As regards the price, this was an open tender and the price quoted was through a competitive bidding process. EESL cannot comment on the same any further,” he said.

Tata Motors had quoted Rs 11.2 lakh per car, inclusive of tax and a five-year warranty. The price, 25% lower than that of a similar electric vehicle with a three-year warranty, was later matched by Mahindra.