Bajaj Auto’s electric scooter Chetak not only marked the company’s foray into electric vehicles, but also the resuscitation of the famous Chetak scooter in its electric avatar and the company’s comeback in the scooter segment after over 12 years. Launched amid much fanfare in January last year, its sales performance has been tepid. In an interview with BusinessLine , Rakesh Sharma, Executive Director, Bajaj Auto, detailed the reasons for the Chetak’s low sales numbers as well as the company’s EV strategy. Excerpts:
The Chetak e-scooter was launched with a lot of fanfare. But its sales performance has been tepid — FADA research says 1,243 units were sold in 2020. What reasons do you attribute to the same? What were the company’s expectations from Chetak?
We launched Chetak e-Scooter with the limited objectives of signalling the entry of Bajaj Auto into the electric mobility space as well as of setting up a learning curve for ourselves. Hence, we had decided right from the initial stages that we would launch Chetak only in two cities — Bangalore and Pune. A marathon rally was flagged off in Delhi and 20 electric Chetaks successfully covered a 3,000-km journey from Delhi to Pune via Goa. This, along with the elegant design of the product invoking the heritage of Chetak, captured the imagination of customers resulting in an outstanding response.
However, our supply chain was overtaken by issues arising out of the outbreak of the Covid-19 pandemic in China. This impaired our ability to service demand. Hence, we ceased booking of Chetak within three months in an attempt to not cause disappointment of a long and uncertain waiting period to a large number of customers. Subsequently, the semiconductor shortage further aggravated supply chain issues delaying the servicing of customers, reopening of bookings and expansion into more cities. Hence, the low sales numbers were mostly a self-imposed restraint for the reasons just described.
Bajaj Auto had to halt bookings for Chetak between March and April 2020 and then again in September due to pandemic-related challenges. The bookings have restarted only now in April. What are the challenges that the company has been facing in this regard? Share with us your learnings from this experience.
We reopened the bookings in mid-April but have still not expanded out of Bangalore and Pune because though there are better supply chain availabilities, uncertainties still persist and we do not want to sign on a large number of customers without having much better assurance on the delivery horizon. However, as things get surer we want to roll into other prominent demand centres progressively hoping to be in 24 cities by the end of this year. We will take a decision after careful observation of the supply flow over the next two-three months.
Our limited and early experience suggests that while the customer is certainly attracted to the electric proposition of smooth and convenient operations, style, performance, quality and a trusted brand also remain as vital factors driving the purchase decision. Indeed the high initial costs of acquisition are also limiting the development of the category.
There are reports of the company starting work on localisation of component manufacturing for Chetak. How is that panning out? How would you describe Bajaj’s plans for localisation of its EVs at large?
There are multiple plans which include alternate supply bases and localisation within the realm of possibilities to mitigate the uncertainties to the maximum extent.
What kind of sales are you targeting for the Chetak this financial year as well over the next couple of years?
We have not set a numeric sales objective or a market share aspiration — we have the limited twin objectives of commencing our electric journey and moving up the learning curve in the category — and there are multiple curves here — the technology side, the vendor side, the customer interface side, etc. We hope to move up rapidly on all of these.
How do you think the second wave of the pandemic will change things for the Indian auto sector’s plans in the EV market, as well as for Bajaj Auto?
The pandemic is causing interruptions and delays as well as adding some management challenges. However, the fundamental direction of the sector’s evolution is unchanged — perhaps only the pace has been impacted.
How would you describe Bajaj Auto’s EV strategy? How do you want Bajaj Auto to be positioned in India’s EV story? How would Bajaj be positioned differently, if at all, compared to other OEMs?
We will aggressively participate in the EV space, both in India and overseas markets. We will calibrate our engagement to be in step with the evolution of the industry with an attempt to be at the forefront, leverage our R&D capability to deliver a differentiated combination of performance, style and customer connect, and work closely with partners to derive synergies and acceleration.
How many more EVs do you plan on rolling out in the mid to long term? Which all segments will they be in?
These plans are still being conceptualised and it is premature to talk of them at this stage.
Do you intend all models of Bajaj Auto’s future line-up to have an EV variant? And do you envisage a time when the line-up would be fully electric (similar to some OEMs’ plans)?
It is difficult to be precise about the development of the industry. While there is a consensus about the inevitability of electric driving mobility in a substantive way, it is also a reality that currently its penetration percentage in the two-wheeler space is in low single digits.
What potential do you see for the electric two-wheeler market? What are some of the reasons why it’s still at a nascent stage?
The issue is simply the high initial cost of acquisition. As that reduces, the EV penetration will increase.