Are TVS's Electric Scooters Actually Profitable? The Company Finally Breaks Its Silence
In a landmark disclosure for India's electric vehicle industry, TVS Motor Company has confirmed that its burgeoning EV business is built on a foundation of profitability, a revelation made as the division's revenue spectacularly crossed the ₹1,000 crore mark in a single quarter. However, this moment of strategic triumph for the otherwise flawlessly performing auto giant is dangerously undermined by a severe supply chain crisis. This critical vulnerability not only threatens to cap its growth but also risks ceding market share to its chief rival, Ola Electric, which appears better prepared for the battle ahead.
A Company at the Peak of its Powers
The EV story unfolds within the context of a company firing on all cylinders. TVS Motor reported its highest-ever quarterly revenue of ₹10,081 crore, with operating EBITDA surging 32% and margins improving to a robust 12.5%. This financial might is supported by a record export performance of 3.52 lakh units, strong growth in Latin America, and stabilizing demand in Africa. Even its domestic combustion engine (ICE) business grew steadily, buoyed by the continuing trends of scooterization and premiumization. It is against this backdrop of comprehensive success that the EV division's performance—and its problems—become even more significant.
TVS Reveals EV Profit Secret
The centrepiece of TVS's growth narrative is now undeniably its EV arm. Management finally addressed the industry's most pressing question, confirming that both its flagship TVS iQube scooter and the new TVS King EV Max three-wheeler are "gross margin positive." This means the company makes a profit on the direct cost of every EV it sells, a crucial sign of a sustainable business model.
This profitability is fueled by immense scale. TVS sold 70,000 iQube units in Q1, surpassing the 600,000 cumulative sales milestone for the model. Its portfolio has broadened to six variants, successfully attracting mainstream ICE customers beyond the initial pool of early adopters. The new King EV Max three-wheeler made a spectacular debut with 5,260 units sold, proving the profitable model is replicable. This segment's financials will be further bolstered as it begins receiving government PLI scheme benefits from June.
The Achilles' Heel: A Crisis for TVS, An Opportunity for Ola
While TVS celebrates its financial and operational milestones, it is simultaneously fighting a battle in its supply chain. In a candid admission, management revealed a critical shortage of rare-earth magnets, an indispensable component in EV motors. The situation is so acute that the company is reduced to "managing daily production," a precarious state that has already caused a sequential dip in its sales figures. A company with flexible production capacity that can be scaled in 12 weeks and a three-wheeler network covering 70% of the market is being hamstrung by its inability to source a single component.
This production bottleneck places TVS in a perilous competitive position. As TVS scrambles for parts, its primary rival, Ola Electric, has publicly asserted that it has secured an adequate stock of rare-earth materials for the near term and is deeply invested in developing its motor technologies. This creates a starkly contrasting scenario: while potential TVS customers may face waiting lists, Ola could leverage its supply chain stability to ramp up production and aggressively capture that waiting demand. The risk of TVS losing its hard-won market share due to this vulnerability is now a clear and present danger.
The War Room: TVS's Multi-Pronged Fightback
In response to this existential threat, TVS has mounted a comprehensive defence. The short-term plan involves meticulously managing existing inventory and recycling larger magnets. The crucial long-term strategy, however, is a race against time to de-risk its supply chain by:
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Investing heavily in R&D to develop next-generation motors using HR-free (Heavy Rare-earth free) magnets.
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Aggressively diversifying its sourcing to reduce dependence on any single country.
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Exploring partnerships within India to help build a domestic magnet supply ecosystem.
Even amidst this crisis, the company is pushing its product offensive, confirming the launch of a new electric two-wheeler and a new electric three-wheeler in the very next quarter.
A Broader Vision: More Than Just EVs
TVS's ambition extends far beyond the current EV battle. The company is simultaneously nurturing its super-premium motorcycle ambitions through Norton Motorcycles, with a new generation of superbikes set to be unveiled this year for both European and Indian markets. Its European e-bike business, though currently slow, has been consolidated for efficiency with a clear path to breakeven. Supporting this all is the phenomenally successful financial arm, TVS Credit, which boasts a loan book of nearly ₹26,900 crores and serves over two crore customers.
Conclusion: A Defining Moment
TVS Motor Company is at a pivotal moment. It has achieved the difficult task of building a profitable, high-growth EV business within a larger, well-oiled corporate machine. Yet, its most tremendous success is now threatened by its most significant vulnerability—a supply chain dependency that a key competitor appears to have mitigated more effectively. The coming quarters will be a defining test of TVS's operational resilience. Its ability to navigate this component crisis will determine if it can defend its market position and continue its impressive growth trajectory, or if the brutal realities of global supply lines will stall its electric dream.