Tata Motors will raise Rs 7,500 crore ($1 billion) from a foreign private equity group by selling up to 15% in its nascent domestic passenger electric vehicle (EV) business. The external money will boost the $103-billion Tata Group flagship’s efforts to accelerate transition from fossil fuel cars to eco-friendly models.American investment firm TPG along with ADQ of Abu Dhabi will get a share of 11-15% in Tata Motors’s India passenger electric mobility unit against compulsorily convertible preference shares, taking the new entity’s post-money valuation to $9 billion. Tata Motors will transfer assets dedicated to the domestic passenger EV business such as talent and design capabilities to a separate company in which the foreign private equity group will hold a significant minority stake. TOI reported about Tata Motors’ $1-billion fund-raise plan to push EV play on October 8.Tata Motors’s India passenger EV business — it entered the space with Nexon in January 2020 — is expected to clock a revenue of Rs 500-600 crore in fiscal 2021. All liabilities and other assets related to the domestic passenger vehicle business like manufacturing facilities and brands will be housed under TML Business Analytics Services — a 100% arm of Tata Motors. The domestic passenger electric mobility unit, in which the private equity group led by TPG will get one board seat, will pay royalty for “the name plates it will use that belong to TML Business Analytics Services”, said Tata Motors CFO P B Balaji.The TPG-led private equity group will invest 50% of the $1-billion commitment by next March after the new electric mobility unit is set up and will invest the remaining amount by December 2022, said Tata Motors, which has a 70% share in India’s passenger EV market. Tata Motors will channelise the foreign money to develop more EVs and catalyse investments in charging infrastructure and battery technologies. The automaker plans to create a portfolio of 10 EVs by fiscal 2026 (it currently sells three models) and, in association with sister companies like Tata Power (for charging infrastructure) and Tata Chemicals (for battery cells), aims to scale up its play in its home market. Its luxury electric cars are housed separately under Jaguar Land Rover.According to Tata Motors, its domestic passenger electric mobility business will require an investment of $2 billion in the next five years and so it decided to tap external investors. Moreover, EV technologies are still evolving and risks could be shared with partners that bet on decarbonised transport.