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Electric plan ‘premature’ with ‘practical difficulties’: Yamaha

Murali Gopalan | Updated on July 04, 2019 Published on July 04, 2019

Proceed with caution Motofumi Shitara, Yamaha Motor India Group Chairman, has echoed the sentiments of his peers on the EV push

Japanese two-wheeler maker’s group chief says it is important to recover investments on BS VI first

Yamaha Motor India group chairman, Motofumi Shitara, has expressed his reservations on the Centre’s electric roadmap, which prescribes a deadline of 2025 for two-wheelers under 150 cc (and 2023 for three-wheelers).

“I agree with expanding the use of the electric vehicle in the future. But the government’s plan strikes us as being premature,” he told BusinessLine in an email response.

Shitara added that the electric plan also has “many practical difficulties” since such policies “force in technologies” which may not be mature enough. Other two-wheeler bosses like Rajiv Bajaj of Bajaj Auto, Venu Srinivasan of TVS Motor and Minoru Kato of Honda Motorcycle and Scooter India have already made known their concerns about the Centre’s electric roadmap.

BS VI upgrade

From Shitara’s point of view, Yamaha already has its hands full with the Bharat Stage VI emission norms that come into effect from April 2020. Clearly, the company will need time to settle down in gauging market requirements and feedback to the new products.

“We are currently making significant investments in the upgrade to BS VI emission norms. There is a lot of new investment which has gone into building up the capacity, changing the machinery that is not only from us, but also from the component suppliers,” said Shitara.

It is therefore only logical that Yamaha needs “adequate time” to recover these investments. Additionally, the export business could also be “indirectly affected” since balancing the electric requirements of the Indian market with the internal combustion engine (ICE) needs of other regions will not be an easy task.

“Moving to electric vehicles will require forward planning, developing of charging infrastructure, as well as a proper supply chain system,” said Shitara. Even while Yamaha has global experience in this space, India will still be a different ballgame given its larger landmass and the challenges of accessing power sources.

Similar reactions

Shitara’s reaction is in sync with his counterparts in the two-wheeler industry who have made no bones about the fact that the timetable for electric is unrealistic. They have also cautioned that contemplating a complete shift barely within five years of moving to BS VI would be catastrophic for the entire industry.

As they pointed out after their meeting with NITI Aayog, the government think-tank that is spearheading this proposal, the progressive ban by China on ICE vehicles made it possible for the Indian two- and three-wheeler industry to exploit large global markets.

Likewise, argued the company representatives, there was really no urgency to completely recast the script with electric, especially when Indian two-wheelers had set the benchmark globally for emissions and mileage. “Why ban an industry which is world-class? If we are employing one million people and exporting over three million vehicles, what are we talking about?” asked Rajiv Bajaj.

TVS ChairmanVenu Srinivasan warned that going from oil-dependence to being dependent on imported lithium cobalt and other rare element-based motors and batteries would not help the balance of payments situation. “In fact, we are replacing one problem with a bigger problem; going from the frying pan to the fire,” he said.

Honda and its erstwhile ally, Hero, had also cautioned the Centre against fast-tracking its electric mobility plan. With Yamaha now waving the red flag too, it remains to be seen if NITI Aayog will stick to its guns or see logic in the two-wheeler industry’s arguments.

Chinese product scare

The fear among a section of industry is that if the Centre continues to be obstinate and persists with the 2025 deadline on electric, there is every chance of the market being flooded with cheap Chinese products.

Obviously, they will be cheaper but it is not as if the customer will queue up to buy them especially when he/she has already experienced far superior options in the ICE space. Electric options from Indian startups are not going to be affordable either going by their present price tags unless the Centre chooses to subsidise them generously.

Clearly, this is not something that it can afford to do especially when it needs to contain its fiscal deficit. As a result, the danger in moving to electric by 2025 is that practically all customers would stick to their present BS IV options and make the objective of cleaner air a pointless exercise.

Would this really be worth anyone’s while? Clearly not, say observers who reiterate that the best way forward is for the Centre to listen a lot more carefully to the industry’s concerns rather than have NITI Aayog take unilateral decisions. It also makes sense to have other ministries like roads and highways, power and petroleum roped in while drawing up the electric roadmap.

Interestingly, Japan is seeing a consortium of bike-makers come together to draw up standards for e-mobility. These include big brands like Honda, Yamaha, Suzuki and Kawasaki where work on this is exercise is now underway. It is still too early to have something like this replicated in India where the dynamics are completely different from Japan.

Yet, it is quite obvious now that consolidation is the name of the game in e-mobility across the world. Top car-makers are teaming up to pool competencies and save on investments, which is equally true in the two-wheeler space.

Will Indian companies also team up at the back-end and pave the way for a robust infrastructure for electric in the coming years? It will be interesting to see if something like this actually happens but it is more than evident now that joining hands for a common cause is the better option to going solo.

For now, all eyes will be on the Budget and auto-makers will be hoping for some positive news. The industry is in the midst of its worst slowdown in recent times and it is increasingly evident that the biggest factor is the liquidity crunch arising from the NBFC crisis.

How Finance Minister Nirmala Sitharaman addresses this issue will be seen on Friday when she presents the Budget. Auto-makers are concerned that if the slowdown continues, there could be job losses as wage costs become difficult to justify. These are difficult times for the industry even while it prepares for the BS VI challenge.

Published on July 04, 2019
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