What India Buys

Market share (%) of passenger vehicle companies in 2017/18

tions related to emissions, safety and fuel efficiency. Not all of it can be absorbed by industry.

“Everybody will have to upgrade products, so prices will go up. Initially, that could dampen demand, say the first quarter after norms are implemented, as customers would advance purchases,” says Gurpratap Boparai, Managing Director, Skoda India. “But it will not have a long-term impact. Entry-level cars would lose out since costs would go up for them; it would be toughest for them to comply.”

As emissions take centre-stage and dictate the future of industry, unlike affordability, utility or after sales and service in the past, the push will be towards the bigger disruption that is staring everybody in the face – electrification. The clamour for electric vehicles is growing globally and India, too, has started looking at it actively. A target for complete electrification by 2030 is being spoken about, but there is ambiguity about whether the infrastructure for charging would be ready by then. The other issue relates to whether the cost of the lithium ion battery that powers electric vehicles would decline sufficiently to make it affordable for the masses.

“The Government of India seems to have also opted for the electric vehicle option. This decision assumes that the cost of batteries used in electric vehicles will decline to half its present cost in the next few years. However, there is no certainty that this will happen. It would be prudent to have a Plan B,” points out R. C. Bhargava, Chairman, Maruti Suzuki India in his column later in this issue.

“The nature of the Indian automobile market and its differences with the rest of the world indicates we should not rely on one technology alone, but consider other alternatives, too. India should move to a system where customers can choose between CNG-operated cars, EVs, hybrids and cars using ethanol and methanol. There should be no insistence on any one technology, as better results are likely to be achieved by a mix of technologies,” says Pawan Munjal, Chairman and Managing Director, Hero MotoCorp. “For two-wheelers, the cost of battery is too high right now. The shift will be gradual,” he adds.

The new automotive policy which is currently being drafted provides some clarity. While it does not talk about electric cars per se, it lays down stringent emission targets incentivising cars that are efficient by taxation.

“The new auto policy is a good direction because it is technology agnostic. It talks more about emission targets and lets manufacturers decide how to achieve that. Clearly, at some point in time, manufacturers will have to put electric cars on the road,” Boparai says. “Today, other than Tesla, every company is losing money on electric cars. It definitely is a challenge for everybody. There is

“THE NEW AUTO POLICY IS TECHNOLOGY AGNOSTIC. IT TALKS MORE ABOUT EMISSION TARGETS AND LETS MANUFACTURERS DECIDE HOW TO ACHIEVE THAT”

a lot of investment going into electric cars, without the certainty of demand around them. You may legislate as much as you want, but ultimately it is the customer who makes the choice.”

The transition to full battery electric vehicles will be the most challenging, especially for some homegrown companies. While multinationals are preparing their strategy at a global level, which would then be adapted for India, others would have to find novel ways to tackle that. One of them is partnerships and, as in the case of Ford-Mahindra and Maruti-Toyota, it will turn erstwhile rivals into friends. As the game is reset, it will also open up opportunities for unfancied companies to capture the market.

“All the players that play these three-to-four years of transition well will have a stake and significant presence here. The disruptions like connected, autonomous and electric cars, create a level-playing field,” says Mayank Pareek, Managing Director, Passenger Vehicles, Tata Motors. “Everybody is plus-minus two years – ahead or lagging. We are at the cusp of a complete transition. The changes that are happening now, have never happened in the last 100 years. It was all status quo, but now everybody is a start-up in the electric game.”

“The biggest disruption will be that we have to learn how to deal with a huge amount of complexity in the drivetrain. We have to produce diesel, petrol, electric vehicles targeting about 20 per cent from our side by 2025 worldwide and also hydrogen fuel,” says Roland Folger, Managing Director and CEO, Mercedes Benz India. “So instead of two, like we have now, we are going to have four to five drivetrains. A lot of companies will not be able to sustain that.”

With cleaner, greener, safer and more innovative vehicles, the customer will remain the king. For the others, it will boil down to survival of the fittest.