Automakers indicate tectonic shift towards e-vehicles
NEW DELHI: Chief executives of two of India’s top auto firms have made statements in the last month that indicate a tectonic shift is taking place in the auto industry .“( The) time has come to change the game,” said Kenichi Ayukawa, managing director and chief executive officer of Maruti Suzuki India Ltd, India’s largest car company, in an interview. Pa wan Go enka, managing director of Ma hind ra and Ma hindra Ltd, India’ s largest electric vehicle maker, said in an interview that companies which are industry leaders today will not necessarily remain leaders after the ‘electric vehicle dust settles down’. “New players who are either non-existent or are small players today could become leaders after the dust settles ,” he said.
While Ayukawa’s statement reflect san expected change in the company’ s approach to the market amid the advent of electric vehicles( E Vs ), Go enka predicts a shift in the pecking order in an industry many believe will vast ly change in shape and size in the next five years.
Sure, the shift is driven by the Indian government’s policy to move towards an all-electric vehicle fleet by 2030. The deadline, although not yet official, has set the ball rolling.
Auto makers, however, expect the government to do more on the policy front to clear apprehensions that are palpable not only among original equipment manufacturers( OE Ms) but also component manufacturers.
“If we are not careful, then electric vehicles can take us back to that situation where everything will become imported. So we need to be careful that we put the thrust on local manufacturing of everything that goes into an electric vehicle...” Goenka of Mahindra said separately in another interview.
“So, A: tie-up incentives to local content and B: incentivise localisation because in many cases even today there isn’t enough volume to justify local is ation,” he added.
Over the last year-and-a-half, a number of cabinet ministers have spoken of the government’s intention of shifting to electric mobility.
The centre has also been trying to formulate a policy on electric mobility but nothing substantial has been achieved yet.
“The fear that I have is that the FAME scheme is expiring on 31 st March, and I hope it continues without any major changes to the FAME scheme because with the GST and FAME, the equation is just about working...,” said Goenka.
FAME, or the Faster Adoption and Manufacturing of( Hybrid &) Electric Vehicles, is a policy implemented by the department of heavy industries under which the government subsidises the purchase of electric buses by state transport units.
Apart from policy formulation, availability of Lithium and Cobalt is another major issue facing the industry.
Most of the Lithium reserves are controlled by China. Also, a loss of millions of jobs is expected due to an abrupt move to electric vehicles as vehicle engines would cease to exist, giving way to bat- teries and electric motors. Spare parts in electric vehicles are nearly 40% less than in vehicles run by the traditional internal combustion engines, according to industry executives.
Also, in order to make electric vehicles affordable, governments across countries are offering subsidies and exemptions to manufacturers as well as customers.
For example, in Japan, Germany and Norway, electric vehicles are given parking spaces for free along with tax and toll exemptions. This is over and above the upfront financial subsidy that governments offer to potential buyers. In France, a specials crap page policy has been formulated for customers who want to exchange their current diesel and-petrol-run-vehicles-for an electric one. Incentives run as high as €4,000 per vehicle. Such financial incentives are the highest in South Korea.
In India, the absence of a policy makes selling electric vehicles unsustainable since subsidy and exemptions are still not known. Also, the government’s intent of moving to only battery-run electric vehicles is another challenge as most other developing and developed counties are moving towards electrified vehicles rather than only electric vehicles.
Electrified vehicles include pure battery-run electric vehicles, hybrid vehicles and plug-in hybrid vehicles. In India the union government only plans to promote Lithium-ion-battery-run pure electric vehicles.
Most automobile manufacturers in India have started devising their electric vehicle strategies for India and are likely to manifest their intent at the upcoming Auto Expo.
Suzuki Motor Corp — parent company of Maruti Suzuki-India Ltd— has collaborated with Toyota Motor Corp Ltd — for developing and manufacturing small electric cars for India. The company also plans to set up a Lithium-i on battery manufacturing plant in Gujarati na joint venture with Toshiba and Den so.
A yuk a was aid his company is trying to challenge itself amid the changing times .“Hence, we have to review (our strategy) and start again from zero,” he said.
“We need to decide if we want to buy Lithium from a (Latin) American country or some other country. We need to find a source for that. At this moment, we have
to find concern points and problems and then take countermeasures. At this point, we are just starting off,” he added.
According to a senior executive of a leading automobile manufacturing company, going by the government’s target, 60% of the vehicles in India by 2030 will still run on internal combustion engines.
To curb pollution levels, the development of hybrid and plug-in hybrid vehicles should also be encouraged.
French car maker Renault plans to launch an electric variant of its small car Kwid which was designed and developed in India. The company may bring the same variant in India as well but is waiting for as table policy to be put in place.
According to a spokesperson of Renault India Pvt Ltd, it is a great opportunity for the industry but the government has to put in place a clear policy, time-frame and get the pre-requisite infrastructure ready to enable automobile OEMs to prepare for the proposed switchover to electric vehicles.
Dear th of charging infrastructure is another concern. Energy Efficiency Services Ltd—a company floated by the ministry of power— floated a tender to buy 500 electric vehicles to be used by the government officials as the union government intends to replace its existing vehicles with electric ones in the next few years.
But the date of taking deliveries was postponed twice as the charging stations have not been installed yet. Phase I deliveries of the EESL order happened on time, said Arvind Mathew, head of international operations at Mahindra and Mahindra. “The cars haven’t been employed yet because of a lack of charging infrastructure but I view this as a temporary blip. Phase II will come within six months, it’s the larger order,” he said.
Unlike other vehicle manufacturers, none of the prominent two-wheeler makers have spoken about plans of developing electric scooters or motorcycles. Hero Moto Corp, however, has invested in Ather Energy — a start-up which develops electric scooters, and TVS Motors is developing an electric scooter.