Sona Comstar and DENSO form two EV-powertrain JVs

with the Japanese giant taking control of the car business

Sona Comstar has signed definitive agreements with Japan's DENSO to form two joint ventures making electric and hybrid powertrains in India, an arrangement that hands DENSO control of the higher-value four-wheeler venture while Sona keeps control of a two- and three-wheeler business it is part-selling to the Japanese group.

The split is the story. In the larger four-wheeler and commercial-vehicle segment, DENSO, a Toyota-group supplier with revenue of about 7,540 billion yen, will hold 51% and management control, with Sona at 49% contributing manufacturing and engineering. In the two- and three-wheeler segment, Sona keeps 51% and control, and DENSO buys 49% of Sona's existing traction-motor and controller business at an enterprise value of INR 1,750 crore. So Sona gains a heavyweight technology partner and monetises part of its two-wheeler business, but cedes the driver's seat in cars, which raises the question of how much it captures beyond royalties as it shifts from a forgings supplier to a powertrain company.

The four-wheeler tie-up begins as a joint development agreement for liquid-cooled traction inverters, motors and generators, to be commercialised through the India manufacturing JV. The two-wheeler entity, carved out via a slump sale into a Sona subsidiary, will make air-cooled inverters, motors, generators and e-Axles. Both sides will license their intellectual property to the respective majority-owned JVs for royalties, and the deal is subject to regulatory approvals. MD Vivek Vikram Singh called it "an historic milestone" in Sona's journey.

Sona, listed and valued at about INR 44,700 crore, has been expanding through partnerships, including a driveline JV in China announced in December. Its shares were roughly flat on the day.