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‘With economies of scale, e-bikes can be competitive’

Murali Gopalan | Updated on December 12, 2019

Torsten Bellon of Vitesco Technologies says the user base should be specific, too

Torsten Bellon is categorical that electric is not the sole solution to clean up two-wheeler emissions.

“We have to respect that there are rural areas and can electric two-wheelers be sold everywhere? Clearly not! It has to make some sense,” says Vitesco Technologies’ Vice-President of Non-Automotive Product Line. This entity was carved out of Continental’s powertrain business and focusses on two-wheeler solutions.

Bellon, recently here to inaugurate three new lines for integrated electronic control units in Pune and Bengaluru, says the Centre also needs to become selective about applying electric mobility in terms of where two-wheelers can be sold.

“Do you really need to have one for every farmer who is living in some remote area? I expect the Government to be wise and guide/lead the industry to come up with the right solutions,” he continues in this telephone interview.

Bellon makes no bones about the fact that the dislikes the idea of perceiving electric as a threat or competition. Doubtless, the internal combustion engine (ICE) was the dominant technology in the past though, from the environment perspective, it is important to do something now. “We also have people who depend on what we offer to the market be it the farmer or the student who have different needs. How can we position the technology for different users since it cannot be the only one to address everyone’s needs?” he asks.

Bellon then throws up the answer by stating that one technology will not work. In India, the advent of Bharat Stage VI emissions in April 2020 will “have a big impact” in terms of reducing vehicular emissions.

“To threaten this investment and say we will change everything by 2025 does not make sense. This is because it will limit future investments to make ICE still better,” explains Bellon.

The reference is to the recent controversy involving NITI Aayog, the Centre’s think-tank, which was keen that sub-150cc two-wheelers should go completely electric by 2025. The proposal has been shelved following protests from two-wheeler makers even while it is no secret that electric continues to be on top of the Centre’s priority list.

“I also don’t think the infrastructure is ready to go wholly electric by 2025 for sub-150cc bikes. Electric makes sense for short rides and industry and the Government will need to come up with specific solutions,” says Bellon. He believes it is important to refer to what China did for mega cities in use of electric two-wheelers even while its rural areas continued with ICE.

Yet, he concedes that the transition to electric is only inevitable in India and could even gather pace once volumes are in place to ensure economies of scale. “The difficulty with existing electric two-wheelers is that there are not enough volumes which means leveraging for a better price tag is limited,” says Bellon.

ICE will be more competitive right now but “once you get comparable economies of scale”, electrification in the sub 150cc space can be competitive, he adds.

Bellon is also confident that there will be some traction in the electric space since there is a market for it. This is based on his own experiences back in Germany where people are constantly telling him that they are open to buying an electric two-wheeler. This category has never felt the need for an ICE product perhaps because of “maintenance issues and fuel worries”.

According to Bellon, these potential customers would go in for the electric option if its is available at a reasonable price considering that they can charge it easily in their own homes. “Electric two-wheelers are perceived to be a new animal by some people and quite different from the conventional ICE option,” he says.

Bellon also believes it is unfair to compare China with India on this subject. “Here in India, people want something that is electrified but with a comparable performance as ICE be it acceleration, driveability and so on,” he says.

China’s government was pushing for electric since it was an entry level option for individual transportation and also extremely cheap. The country accounts for sales of 25 million electric two-wheelers every year but once batteries become obsolete, it could face challenges in their management, disposal etc.

“China is not ahead of India since the two are (inherently) different. The electric two-wheeler industry here will settle around the 100-150cc space and be based on expectations like higher performance, better braking, suspension etc,” says Bellon.

This, in his view, sums up the big difference in terms of expectations in India. China, he continues, was essentially about “the bicycle which got electrified and looked like a scooter/motorcycle rather than the motorcycle getting electrified”.

According to Bellon, his company has monitored the electric transition for sometime in India and is ready with its concept. “We know now what it takes to enter the market and have established the key characteristics for our product roadmap in electrification for India’s two-wheelers,” he says.

Development work will begin in a month and while there are no expectations about the market “to explode suddenly”, there certainly will be reason to hang in there and wait. “I think the pace will begin picking up. For mass commuters, you must come with a competitive solution because it is all about costs,” says Bellon.

After all, electric options will not come in cheap and this could be a tall order in a country where per capita income levels are still not so high. However, once the industry “demonstrates that it is getting competitive and the government is working on subsidies/tax breaks for customers”, products will become more competitively priced and the market will grow.

“When one OEM gets into the big numbers, you get into economies of scale and it becomes competitive. Right now, the 100cc is in the premium space and we expect the market to grow continuously,” says Bellon. Cost of batteries are also falling which is welcome.

By the end of the day, he adds, performance and range in battery become important too in addition to the OEM’s strategy. Is it to come up with a higher performing two-wheeler which means higher costs or is it in a lower range? This means lower battery capacity and it is about positioning the product to stay competitive.

Standards are also important and if the same battery pack can be used for one standard, it becomes easy for OEMs, customers, suppliers as also the people who are setting up the infrastructure base for the battery.

“Hence, it goes beyond the price of the battery; connectors are expensive as also tooling and if volumes are low, things could become tricky,” cautions Bellon. There are also a host of other issues like mechanical and electrical integration in the bike and infrastructure.

For now, though, the more immediate challenge is BS VI which is just not about the technology change from carburettor to electronic fuel injection but “a challenge for the entire industry”. According to him, there will be a change in service dynamics and dealers “all of a sudden” will not talk of a screwdriver to adjust the carburettor but have to work with service diagnostic parts, software and so on.

“It is not only for the OEMS but a challenge for the entire supply chain. To that extent, it is a huge transformation that comes with significant investments from every stakeholder of this ecosystem,” says Bellon.

Clearly, this is not going to come in cheap and he reasons that “getting cleaner and greener” comes with a price tag which is true not only for India but worldwide. The difference is that this is a price-sensitive market and customers will be naturally apprehensive.

“Industry knows this and it is our duty as shareholders in this ecosystem to provide the benefits coming along with this transition,” says Bellon. Sure, customers will have to pay more but they also need to understand that they are “getting improved technology which provides clean air”. The next few months will indicate if this is actually going to happen.

Published on December 12, 2019

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