THE WIDER ANGLE. Auto industry must change gears now

This much is clear about the future of India’s auto industry: it’s facing a seismic shift and it’s going to be brutal. The Government’s squeezed time-frame for all-electric vehicles — it’s going to stop registering fossil fuel cars in a scant 13 years — means that a top-to-bottom industry makeover will happen faster than anyone in the executive suite anticipated. And it’s going to upend the auto industry’s business model.

For starters, electric vehicles (EVs) are completely different beasts from the internal-combustion engine cars we drive around nowadays. That means large swathes of the industry will be rendered obsolete. Crucially, internal-combustion cars are put together using parts from about 150 component manufacturers. Making EVs, by contrast, will probably involve about 50 suppliers at the most. “The supplier industry is going to be disrupted. There's going to be a mad scramble in the industry,” says Deepesh Rathore, co-founder and director of Emerging Markets Automotive Advisors (EMMAAA), an automobile industry consultancy.

Just how different are EVs from conventional cars? Well, today’s automobiles have about 1,800 to 2,000 moving parts. By comparison, a Tesla has just about 18. And since there’s a huge amount of electronics, the fixes when something goes wrong will be very, very different. “It will just be a software upgrade done overnight,” says a senior auto industry executive.

In other ways too, EVs are not like cars we’ve driven all our lives. Consider the startling fact that EVs don’t really have brakes as we understand them. One of the world’s most successful EVs, the Nissan Leaf for instance, comes with what’s called “one pedal driving”. Just taking your foot off the accelerator will bring the car to a stop quite sharply. There are two pedals but the second pedal’s only for emergency braking. That will take some getting used to but, at a different level, it means we won’t need all those companies that make brakes and brake pads and parts associated with brakes.

Also, EVs don’t have transmission systems like the ones in ICE cars. In fact, some estimates are that about 60 per cent of component manufacturers would be rendered redundant once EVs start production.

SIAM (Society of Indian Automotive Manufacturers) estimates that India’s auto industry employs directly and indirectly about 33 million people, a figure that includes mechanics and drivers. Obviously, vast numbers could be made jobless by EVs, dealing a blow to the Government’s employment push.

Even parts of the industry that are needed in the new electric order are having to face up to change. Take a look at the tyre industry as it attempts to grab pole position in the race to go electric.

For conventional automobiles, the tyres have to offer good grip even at high speeds. With that in mind, tyres for some cars have become broader in recent years. EVs work differently and will need taller, thinner tyres. Also, since EVs have no engine noise, they’ll have to be engineered to reduce the sound of the rubber on the road. Weight is a key factor in EVs because the battery is heavy. So, in all likelihood there won’t be a spare tyre in the car.

India’s top tyre companies have already begun work and are testing out their new creations. But they won’t be ready overnight. “EVs require tyres with different characteristics from what are needed on IC-engine vehicles. The tyre industry is coming out with new products that meet global standards,” says Rajiv Budhraja, director-general, Automotive Tyre Manufacturers’ Association.

Amongst the top Indian auto companies, only Mahindra has geared up heavily for a switch to EVs and put big bets on the technology. The company’s ready to scale up to producing about 5,000 vehicles a month in a very short time, though that’s still a small fraction of the 3.04 million India produced in the last financial year. And the Tatas are also getting ready with their Tigor sedan.

The international car companies, by contrast, were hoping India would first switch to hybrids and then to electric cars. The component manufacturers, too, were betting on hybrids giving them more breathing room.

The Government, for its part, is conscious of the difficulties but is hoping that by moving quickly, India will be able to turn its automobile industry into a global winner. Initially, the Government had planned to first move to hybrids but in May, the NITI Aayog and the US-based Rocky Mountain Institute which specialises in transportation solutions came out with a roadmap for the 2030 switchover entitled ‘India Leaps Ahead: Transformative Mobility Solutions for All’. The report outlines what it called a “leapfrog” opportunity for India. The Government hopes the switchover will be made easier with India’s still low passenger vehicle penetration of 32 per 1,000 (Germany has 566 motor vehicles for every 1,000).

Still, India will trail the Chinese in the race to go electric. Volvo, which has been bought by China’s Zhejiang Geely Holding Group, has said it will go all-electric from 2019 and it will be launching three EVs between 2019 and 2021. And iconic MG Motors, now owned by China’s giant SAIC Motor Corp, is looking at taking over the GM factory in Gujarat and may produce EVs there. Several battery-makers are also looking at openings in the country.

Automobile dealers will also face challenges initially as a new era dawns in the automobile industry. In the US, it’s possible to see a Tesla in a department store and register for a test drive online. And with only a few moving parts and advanced electronics under the hood, trips to the mechanic are much less frequent. But leading dealers are confident about the future. “The importance of dealers will come when competition sets in amongst different models and brands,” says John K Paul, MD of Popular Vehicles and Services.

With the advent of ride-hailing apps, many in the industry also are taking bets on people abandoning individual car ownership — after all cars spend an average 95 per cent of their time parked on the street. Technology’s moving at such a rapid disruptive pace that the only certainty for now is considerable disruption.

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