Automakers are latching on the electric vehicle revolution, says shahkar Abidi.
Early last month, Twitter was abuzz with the exchange of words between Tesla’s Elon Musk and Mahindra Group chairman and managing director Anand Mahindra.
Mahindra gently urged Musk to enter the Indian market in order to capitalise on the much-promised boom in the electric vehicle (EV) segment in the country. “Time you got here Elon. You don’t want to leave the whole market to Mahindra, do you? The more the merrier” tweeted Mahindra, to which Musk responded, “India commits to sell only electric cars by 2030. It is already the largest market for solar power.”
Tesla plans to enter the Indian market by 2019, though it is expected to get delayed due to issues related to sourcing. Though EVs have been in the market for several decades, it was Tesla which made them ‘desirable’ with the launch of its luxury cars in the segment.
The banter of these two honchos aside, Mahindra & Mahindra (M&M), which is the only original equipment manufacturer (OEM) making EV cars in India, is betting big on the segment and has committed to invest around Rs 600-800 crore in the next few years to increase the capacity of its battery assembly plant.
M&M has already invested around Rs 600 crore since its entry in the segment with the acquisition of Bengaluru-based Reva Electric Company in 2010.
However, the new investments will be different from the product development which the company is doing with its Italy-based partner Pininfarina and Korea-based SsangYong Motors, both the foreign companies in which it invested in the recent years.
Indicating the seriousness with which M&M is looking at the EV business, Pawan Goenka, managing director of M&M, in a recent media presentation on the expansion of their EV business said, “Board has asked the management to not be conservative in approach towards EV.”
M&M is not the only company which is showing an interest in the EVs. Another homegrown automaker Tata Motors, which aims to be among the top three automobile players in the country by 2019, has begun trials for its electric vehicles across the country to generate interests among state road transport corporations.
Likewise, Volvo recently surprised everyone when it announced its plans for every one of its vehicles produced to be electric or hybrid by next two years.
The automobile manufacturers’ push for EV comes at a time when the government is trying to drive the segment in a big way, expecting around 5 million electric vehicles to be sold by around next 15 years.
The government also wants all the vehicles produced in the country after the year 2030 to be EVs and that is why even special leeway has been given to EVs in the recently-introduced goods and services tax regime.
As per a report released by Centre’s think tank Niti Aayog, the accelerated adoption of electric and shared vehicles could cut petrol and diesel consumption by 156 million tonne, thereby saving about $60 billion (approximately Rs 3.9 lakh crore) in fuel costs by 2030 while also cutting down carbon emissions by as much as 1 gigatonne.
However, clarity on the policy for EVs as well as infrastructure is still an issue which the stakeholders want the government to address.
Rahil Ansari, India head of German luxury carmaker Audi, agrees.
“Though it seems ambitious on the face of it, it is a realistic target. We also believe that Audi India in the EV segment also has a future. We will have the product ready to be rolled out in the Indian market in three years, if required. There is potential for alternative technologies like electric vehicles. The target of having all vehicles EV by 2030 is achievable and real, provided all the OEMs and government think alike. Creating the infrastructure for it including the charging stations, etc, needs to be done in conjunction with the companies and the government,” Ansari had told DNA Money in a recent interaction.
Similarly, the country’s largest car maker Maruti Suzuki, which has been promoting hybrid technology through mildly hybrid cars said that unless EVs become affordable, people will not buy them.
Kenichi Ayukawa, MD & CEO of the company, said in a recent interview, “Electric technology is there with (Japanese parent) Suzuki. There is a lack of good and affordable electric solutions; low cost is not easy to find. We need charging points for electric vehicles. We have to review these practical problems. We need a road map for the future. You can import cars from a company like Tesla but people are not looking for such options. People expect an affordable vehicle; else, they will not opt for it. They look to buy electric cars in a price range of Rs 5-10 lakh. We have to study options in this range. At this moment, a limited solution is available.”
DRIVING ON THE GREEN ROAD
Mahindra & Mahindra is not the only company which is showing an interest in the EVs. Another homegrown automaker Tata Motors, which aims to be among the top three automobile players in the country by 2019, has begun trials for its electric buses across the country to generate interests among state road transport corporations. Volvo recently surprised everyone when it announced that by 2019 it will produce only electric or hybrid vehicles.