There has been a spate of electric vehicles launched by luxury car makers in India over the past few months but most of these brands are still testing waters ahead of the big entry by Tesla later this year.

Top luxury players, including Jaguar, Mercedes Benz and Volvo, have all introduced their first all-electric variants, in a span of one year. Others like Audi are set to launch their electric bet soon. With Tesla likely to close 2021 with a much-anticipated entry into the Indian market, it seems like India is finally ready for electric mobility spearheaded by the luxury giants.

Select user base

According to Rahul Mishra, Partner at management consultancy firm Kearney, recent launches by luxury OEMs is more of a foot in the door strategy. “It creates presence and shows the OEM’s alignment with electrification agenda, creates the brand association with EVs and possibly also creates a very small, select user base,” Mishra explained.

Mishra believes that the cars are unlikely to be big game changers in terms of volumes, but given the present fuel crisis, luxury car owners might purchase them as their second car. Thus, these purchases will play a larger role in bringing awareness about the EV technology.

At present, sales by volume for EVs in the luxury space are almost negligible, at less than 1 per cent of the total sales, according to Ajay Srinivasan, Director of credit ratings agency Crisil. Srinivasan does not anticipate these volumes to change for the next 2-3 years, but that depends on the launches by the companies and the price points.

Balbir Singh Dhillon, Head of Audi India, concurs with analysts that luxury vehicles are not likely to be the first car of purchase for a long time. “Demand for Etron would be largely driven by car enthusiasts who already own a fleet of cars and are driven by their love for new technology and design”. Audi’s Etron is slated for launch in the coming weeks, but will not be assembled locally in the foreseeable future, since it will take time for volumes to reach a number to make it a viable business case.

Testing viability

Martin Schwenk, Managing Director of Mercedes Benz India, said the car maker is still testing the waters with EQC. Mercedes has a global portfolio of EVs from which it can take its pick for Indian buyers. The launch of EQC is an endeavour to test market viability of EVs in the Indian space.

Ultimately significant electrification will drive mass market EVs. Concerted effort by the government to build a robust electrification infrastructure to address concerns about range, inter-city travel etc will make EVs more adoptable. Partnerships such as those between Tata Powers and Tata Motors to set up charging stations are examples of such endeavours.

Dhillon said: “We estimate that it will be a slow journey, India is a very big country and the geography is very large. To set up infra will be a mounting task, which is not just the responsibility of the manufacturer. It is hard to tell when the inflection point will be”.