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Tata Motors Seeks Budget Relief for EVs Amid Rising Costs

  //automotive-transportation.news-articles.net/co .. eks-budget-relief-for-evs-amid-rising-costs.html
  Published in Automotive and Transportation on Sunday, January 25th 2026 at 8:43 GMT by moneycontrol.com
      Locales: INDIA, UNITED KINGDOM

New Delhi, India - January 25th, 2026 - India's leading electric vehicle (EV) manufacturer, Tata Motors, is making a strong case to the Union Government for budgetary relief in the upcoming financial year. The plea comes as escalating input costs, particularly in battery materials, threaten the viability and affordability of Tata's popular entry-level EV models, potentially hindering the broader adoption of electric vehicles across the nation.

Tata Motors, currently holding a dominant 70% share of the Indian EV market with models like the Nexon EV, Tigor EV, and the increasingly popular Punch EV, faces a critical challenge. While the Indian EV sector has seen considerable growth in recent years, propelled by government incentives and rising environmental awareness, the current cost pressures are beginning to significantly impact profitability. The rising price of key battery components--lithium, cobalt, and nickel--are at the root of this challenge.

"Rising input costs, particularly for battery materials, are impacting the profitability of entry-level EVs," stated a Tata Motors spokesperson. "We are hopeful that the government will consider measures to provide relief in the upcoming budget." The statement underscores the urgent need for government intervention to safeguard the accessibility of EVs for a wider segment of the population.

The global surge in demand for EVs, coupled with ongoing disruptions to international supply chains - a legacy of the geopolitical instability seen throughout the 2020s - have created a perfect storm for battery material prices. This situation isn't unique to Tata Motors; the entire Indian automotive industry is feeling the pinch. EV manufacturers are now faced with a difficult choice: pass the increased costs on to consumers, risking a decline in sales, or absorb the costs, which squeezes already tight profit margins.

Entry-level EVs are particularly sensitive to price fluctuations. The current success of Tata's entry-level offerings has been largely attributable to their competitive pricing. Even a modest price increase could make these vehicles significantly less attractive to potential buyers, especially those who are price-conscious and considering alternatives such as petrol or diesel-powered vehicles - a significant concern as the cost of traditional fuels remains relatively high due to continued global volatility.

The timing of Tata Motors' request coincides with considerable uncertainty surrounding the future of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. The FAME II scheme, a cornerstone of the Indian government's EV promotion strategy, is due to expire in March 2026. The industry is eagerly awaiting clarity on whether the scheme will be extended, and if so, what form the extended incentives will take. A sudden cessation of FAME II support would be a significant setback for the burgeoning Indian EV sector.

Industry representatives are actively lobbying the government to not only extend FAME II but also to consider adjustments to address the rising costs of battery materials. Proposals include exploring strategies for securing more stable and affordable supplies of raw materials, potentially through strategic partnerships with mining nations or investment in domestic battery manufacturing capabilities. Furthermore, discussions are ongoing regarding potential tax breaks or subsidies specifically targeted at reducing the cost of battery components for EV manufacturers.

Experts predict that the government's response to Tata Motors' request and the broader industry's concerns will have a significant impact on the trajectory of EV adoption in India. A supportive budget could accelerate the transition towards electric mobility, while a lack of action risks slowing down progress and potentially jeopardizing the long-term viability of entry-level EVs. The upcoming budget deliberations are thus crucial for the future of electric mobility in India.