Electric vehicles. EV makers getting all charged-up

It isn’t often corporate chieftains congratulate their competitors on a bold move forward. But that’s what Mahindra Group Chairman Anand Mahindra did this week on Twitter. “No matter how this scooter ultimately fares, it is exciting to see courage & risk-taking being rewarded. The more entrepreneurs that follow the lead of @bhash & show no fear of failure, the more robust Indian innovation will become…”

The effusive message was for Ola chairman Bhavish Aggarwal who looks set to translate a daring dream into reality. He’s built what’s billed as the world’s largest two-wheeler factory spread over 500 acres that will one day be able to produce 10 million vehicles. Ola Electric hasn’t announced a launch date but it’s ambitiously opened bookings for a scooter that nobody has yet seen. In just 24 hours, it collected 100,000 bookings from potential buyers who each paid the modest sum of ₹499 but who had no idea what they might get for it.

Aggarwal’s move could be called a publicity stunt — but it’s a necessary one. Electric vehicles have been revving up for several years but haven’t advanced forward too far in the Indian market. There are over 50 companies, mostly aspiring start-ups, producing EVs. But the numbers of vehicles on the roads are still relatively small.

Consider the last six months. Some 29,288 electric two-wheelers were sold during the period when admittedly the pandemic tossed the entire automobile industry’s sales figures asunder. The number is up sharply from the 25,598 high-speed two-wheelers sold last year. But by way of cruel comparison, look at Hero Motors which during the April-June quarter alone sold 1.02 million scooters and motorcycles. Still, Aggarwal’s betting EV two-wheelers are the future and will blast the old IC-tech bikes off the road. Phase I of the Ola FutureFactory can produce two million vehicles and Ola Electric also aims to sell in sophisticated European markets. On the cards as well from Ola is a “Hypercharger Network” that will have 100,000 charging points over 400 cities.

Aggarwal isn’t the only one getting into high gear. Hero Motors-backed Ather Energy has been a trendsetter in the industry and it’s now in nine cities where it’s also installing charging points. Coming up in second place is Okinawa which made its market entry in 2017. Okinawa Founder and Managing Director Jeetender Sharma calls it “exciting time” for India’s EV firms. He sees zero-polluting EVs’ popularity growing, thanks to rising fuel bills and growing environmental “social conscience.”

It isn’t only hard-charging industry newcomers like Ola Electric and Ather Energy that are out to hog a bigger share of the road. Also in the EV race are existing auto giants like TVS, Hero Motors and Bajaj Auto. All now have EVs on the road and TVS has just announced a new vertical in which it will invest ₹1,000 crore to develop EVs.

TVS brought out the iQube last year and aims to release a high-performance vehicle based on the Creon concept vehicle it displayed at the 2018 Auto Expo. However, the industry giants are playing a careful game. They spent heavily on switching from BS4 to BS6 and don’t want to cut into their existing IC-engine vehicle sales.

Bajaj Auto already has its Chetak launched last year. Similarly, Hero MotoCorp aims to introduce a new vehicle in early 2022 with Taiwanese company Gogoro. Hero MotoCorp is looking at vehicles with fixed and swappable batteries. The world’s largest two-wheeler manufacturer also has a substantial stake in Ather Energy.

Now, let’s swerve away from two-wheelers. It was always understood EVs would only boom when the industry’s big players began barging onto the road. That’s happened in a big way in two-wheelers but it’s also happening in passenger vehicles. The Tatas are the market leader with the Nexon electric compact SUV and have sold 5,500 vehicles since last year’s launch, again not a huge number but a future pointer.

The Nexon is ahead of the MG ZS which sold 250 units in June. (Two other EVs, the Tata Tigor and the Hyundai Kona, are badly trailing.) Tata has also just made the first deliveries of another EV, the Xpres T, priced at just below ₹10 lakh targeting mainly fleet-owners. Another model, the Altroz, is expected this year. And the Tata’s announced ambitious plans to race ahead in the EV market with 10 new vehicles by 2025. At a different level, Jaguar LandRover also aims to be totally electric.

The Mahindra Group was one of the EV early-birds and it’s looking at different ways to get a firm market grip. This year, its hopes are mainly pinned on the eKUV100 expected later in 2021. The group’s looking at spending ₹3,000 crore on EVs in the coming years. Last but definitely not least in India’s EV market coming of age, Elon Musk-owned Tesla has registered in India and just began testing its entry-level Model 3 on domestic roads.

What’s the other factor likely to steer EVs into the fast lane? Quite simply, price. The biggest reason for EVs’ slow growth isn’t tough to figure: they cost more than IC-engine vehicles and that’s unlikely to change until battery prices start falling significantly.

But prices are about to reduce, aided by Central Government Fame II subsidies extended to 2024. State governments, too, are adding subsidies to make buying EVs more manageable price-wise. Ather Energy says the price of its cheaper model, the Ather 450 Plus, could plummet from ₹1.27 lakh to ₹1.13 lakh and it’s mulling a sub-₹1 lakh vehicle. Other companies already have scooters starting from ₹70,000 onwards.

State policy

Maharashtra, meanwhile, is hoping by 2025, EVs will comprise 10 per cent of new registered vehicles. The State aims to turn this goal into reality by establishing 2,300 charging stations in government offices, malls and petrol pumps. It’s also looking at building a Gigafactory to manufacture lithium-ion batteries.

Other States are moving in similar directions. Rajasthan’s new EV policy announced this week will remove State GST from EVs and also pay lump-sums to buyers, depending on battery capacity. Gujarat, which has just issued a new EV policy, will also offer a subsidy of ₹20,000 for two-wheelers and up to ₹150,000 for four-wheelers. Most other States have similar offerings.

Avendus Capital projects India’s EV market will likely be a ₹50,000 crore opportunity by 2025, with commercial and two-wheeler segments leading the way. So, are we on the brink of the electric dream turning into reality? Let’s just say the electric Promised Land is coming ever closer.

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