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Tata Motors all charged up with Nexon EV

Murali Gopalan | Updated on December 06, 2019 Published on December 05, 2019

Shailesh Chandra, President, Electric Mobility Business, believes the product has hit the sweet spot in pricing and range

With barely 10 days to go before the Nexon EV is unveiled, Shailesh Chandra has reasons to be excited.

“It is going to create a new segment and we have already announced a price bracket of ₹15-17 lakh,” says Chandra, President, Electric Mobility Business & Corporate Strategy, Tata Motors.

From his point of view, this is a competitive price tag considering that personal segment cars in this range are dearer. Things would be even better for Nexon EV, he adds, if it qualifies for the Centre’s FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicle) 2 scheme which clearly seeks a less than ₹15 lakh (ex-works) price.

As he explains, the company had targeted this price and has “gone though whatever FAME 2 has directed” it to do including localisation, which is aligned to the phased manufacturing plan. This despite the fact that it is a private segment offering which may not be part of FAME 2.

“Yet, we thought advocacy for the private segment should be a given — that here is someone who has hit the ₹15 lakh price point and meets the localisation norms. If it is not consumed in the fleet segment, why not open it up?” asks Chandra.

Additionally, the fact remains that 90 per cent of car purchases in India are typically done under ₹15 lakh, “which is the appetite of the market”. Hence, he continues, this is the only way a product will be part of the mainstream which, in any case, is the objective of FAME 2.

Tata Motors is hoping that the Nexon EV creates a huge splash in the private/personal space which takes up a lion’s share of the market. Right now, the penetration of electric vehicles “is not so great”, which is understandable given that it is the fleet segment which has the support of FAME 2. “The propensity to buy in the fleet is higher because of operating costs and total cost of ownership,” says Chandra. It makes sense to this extent, which justifies the Centre’s focus on sops to the fleet segment.

“Yet, private is equally attractive given that 10 per cent of a three million market is fleet and the balance is private,’ he reasons. Even in a low penetration space like private, it means a high penetration in fleet.

“When I have to build electrification as a transformative exercise in the industry, why categorise EV as a fleet offering? On the contrary, it should be something aspirational, and a very compelling case for a buyer,” observes Chandra.

From his point of view, the company has created a package for Nexon EV in terms of world class technology and Freedom 2.0, which means “breaking all barriers regarding range, price, charging, the whole anxiety of technology resale value etc”.

These are the parameters/philosophy around Ziptron, Tata Motors’ electric powertrain technology, where the idea is to bring a car which can enter the mass market and come under the mainstream consideration. “Otherwise, we would be only addressing 5 per cent of the market of over ₹15 lakh,” he says. Even in these pricier products, the focus is “too much” on addressing the anxiety of range even though actual city driving is barely 40-50 km daily. “Even if you deliver a 300 km range car, the user will have to charge the vehicle only once a week,’ adds Chandra.

Charging infra

He is reasonably confident that two years from now, charging infrastructure should improve. Additionally, as battery prices come down and prices of the internal combustion engine (ICE) increase with BS-VI emission norms, there will be more demand for electric options.

“The key is to hit the sweet spot: either you give a high range or price but there is a certain optimisation level that the customer wants and this is what we have tried to do with Nexon,” says Chandra.

In short, this is an ideal price point which becomes a lot more accessible to customers. It is also based on research Tata Motors had done with the help of AC Nielsen, where 80 per cent of respondents said they were considering an EV. This survey was carried out a year ago even, before the clamour on EVs began and it was evident that customers were open to the idea so long as it involved paying 25-30 per cent more than their ICE option…nothing more!

Chandra then points out to the Nexon automatic which retails at about ₹12.5 lakh. At 25 per cent higher, its EV sibling will be ₹16 lakh. “The customer will then have the appetite for an EV which has better performance, drivability etc,” he says.

Package proposition

Beyond this, there is a package and value proposition offered in the form of an eight year warranty which means that even if he/she would want to sell the Nexon EV in four years, it is not a big deal. According to Chandra, the vehicle is the first EV of its kind with “very high performance” that matches all the underlying strengths of a ₹25 lakh car at ₹15 lakh and in a segment which is growing very fast.

This also puts in context the reason to choose a model like Nexon in the electric space since a value proposition will also have to go hand in hand with easier acceptability in the market. Hence, the 25-30 per cent premium over ICE (as gleaned from the AC Nielsen study) would not have worked with a hatchback, at least for now.

“Maybe three years down the line, it could be conceived when battery prices fall and ICE prices increase with BS-VI/CAFE intervention. There will then be an opportunity to create value for the customer and business which should be sustainable eventually,” says Chandra.

It is also a no-brainer that if the country needs to build electrification, EVs should not be confined to the fleet segment and perceived merely as taxis. After all, this becomes easily synonymous with ‘cheap’ and could end up damaging the brand.

Hence, reiterates Chandra, there is more reason for the Centre to open up the FAME 2 incentives to the personal segment, too. “It will then take off. Just imagine what this would mean to offerings like the Nexon EV, which would then become a lot closer to the ICE alternative (in pricing),” he says.

Apart from this, there would be other pluses like good drivability, low maintenance and operating costs. Tata Motors does not intend to open up the Nexon EV to the fleet segment but would be okay with applications like the rental business where there is a private user.

Brand protection

“This is the way to protect the brand and we are proactively working here so that people can have the opportunity to experiment with it before choosing to buy the Nexon EV,’ says Chandra. Likewise, the company is also open to its use in hotel-airport transfers or for ferrying senior executives within a city.

From its point of view, no car from Ziptron will have a range of below 250 km and this was one of the underlying principles in addition to battery warranty, etc. “Today, I am doing 300 km but will be keen on something more in the next three years to stay competitive,” says Chandra.

Interestingly, suppliers were not so enthusiastic about electric till about a year ago, which was understandable given their investments on BS-VI coupled with anxieties about the slowdown. As Chandra recalls, they were “very defensive till last year” but the picture has changed over the last three or four months.

“Lots of sentiments change when there is a lot of noise and in electric this has not been lacking in recent times,” he adds good-naturedly. At a more serious level, though, with new launches and more debates on electric, suppliers are now aware that something is happening.

Chandra maintains that there is no need for them to worry in a car market which is slated to grow three-fold to nine million units by 2030. Of this, 30 per cent will be electric, which means three million units (the size of today’s market).

“Still, the balance six million units will be ICE, which means it will be twice today’s levels and hence where is the issue of job losses etc. This is an additional opportunity for every entrepreneur to work on with new skill requirements,” says Chandra. The big change will happen when electric gets into the zone of hatchbacks and its adoption starts increasing rapidly.

Published on December 05, 2019
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