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| Edited By: Mansi Taneja |Source: DNA |Updated: Feb 12, 2018, 05:15 AM IST
With auto industry ready to shift gears to electric vehicles (EV), the focus has fallen on the infrastructure and the ecosystem surrounding it. Electric mobility's imprint could be seen around this year's Auto Expo at every pavilion but it will take a few years before we could see it hitting the roads on a big scale. Tata Motors, which showcased the maximum number of products at the ongoing event, has built its pavilion with a theme of smart mobility and smart cities. CEO and MD Guenter Butschek, who is quite upbeat about the new technology, says a single-minded focus is required. Also, Indian consumers are budget-oriented and there is a need to close the gap (in terms of pricing) between an EV and ICE (internal combustion engine) vehicle. In an interview with Mansi Taneja, he says that range (pricing) is the biggest roadblock for moving towards full electric mobility.
This is an important event for Tata Motors. We are different as compared to most of our competitors because we cover the full range of vehicles from PVs (passenger vehicles) to CVs (commercial vehicles). It is actually a theme pavilion depicting smart mobility and smart cities which we consider one of the mega trends in India, in line with government's mission for further development of the nation. Since we are also celebrating the 150th birth anniversary of the group, our primary objective is to support this development and being experts in mobility, we need to find this connect between smart mobility and smart cities. It's like walking a showroom in a pavilion. This is a theme park where we have thought our interpretation of connectivity and mobility into the theme of a smart city.
We have 25 displays according to the theme. This includes six mobility solutions in the EV space. One is a well-known one - the Tigor EV, which is the EESL (Energy Efficiency Services Ltd) tender-winning product. Now, it has a sister brand which has become Tiago EV. In the commercial vehicles space, since we believe that the lower end, in particular, is a predominant candidate to become all electric – we have Iris and Magic. On the higher end, we have a 12-metre electric bus. That very impressively demonstrates our capability to come up with advanced buses - fully electric, which we consider for mass people transport. And it is the most exciting, probably the fastest growing market segment in India as far as electrification is concerned. So we have a rich pipeline. We have also introduced two new architectures, one luxury SUV and another premium hatchback. Both will be launched in 2019. In the first stage, we are going to come with an ICE but we will have provisions on these vehicles to make them electric, which will be available for Indian consumers in the years to come.
As of when, it largely depends on the availability of the infrastructure. Today, private customers' main concern is range anxiety, customers would like to have a peace of mind, lots of customers are ready to go electric because of zero emissions and because of significantly lower operating cost. But the range anxiety is one of the roadblocks that need to be removed and that requires a very well orchestrated government policy, the private sector to invest in building the infrastructure and us providing the mobility solutions. We need to push for this move because just building electrification on the fleet business, buses and taxis, it certainly will bring volume. But the private sector also needs to be attracted to the electric versions in order to get closer to the government's mission to be all-electric by 2030.
It is an extremely challenging target, absolutely no doubt. It needs to be extremely well orchestrated between the government and the industry, including related industries. It is a much larger play than just a question of having an electric vehicle. It needs to be very holistically-approached in order to bring traction on road, as we say in our industry, the rubber hits the road.
Hybridisation is the evolution of ICE. We need hybridisation for certain displacement sizes of engines anyway because as of 2023, we have much more stringent CO2 norms, and in particular, we have to meet CAFE (corporate average fuel efficiency) norms. Hybrid is going to form part of the reality of our business. The cost for hybridisation will come down. The improved fuel efficiency is going to be an argument to make hybrid solutions significantly attractive to customers. There is no need to incentivise hybridisation, it will come anyway. What is not going to come anyway is electric. EVs will cost significantly higher than ICE vehicles and hybridised ICE vehicles. It is a much larger play, it will also be about infrastructure and ecosystem. Whatever kind of budgets are going to be made available by the government for incentives or tax benefits on the GST side or freebies should be purely focused on electrification to create a mass movement to leapfrog to this technology. India is a great place for leapfrogging, we have done it several times in the past. It is a unique opportunity to create scale and achieve economies which will create revenue streams here and become profitable there at a much earlier stage to make sure that everybody who can contribute gets focused on electrification to really turn the vision of the government into a reality.
I am not saying the vision is impossible. By 2025, 20-25% of all new registrations will be EVs. But this all is guesswork at this point of time because the movement is still a relatively fresh one. The government has really propelled the discussions with the EESL tender. Now that electrification is on the agenda, we need to align directions and we need to create a single-focused mindset on electrification in order to make sure this is going to happen. If you don't drive it by policy, by incentives, it is not going to happen because the problem is India is the seventh largest auto market in the world and by 2026, it will be third largest one. We did three million last year, by 2026, it will be 9 million PVs and all this will not be all electric. Still, we need to put in huge investments in ICE/hybrid version of ICEs. The more we invest in today's technologies, the longer it will take to become all-electric. That is why we need to have these discussions right now, we need to draft the policies today in order to get this movement towards electrification going, not missing the opportunities and give India the unique opportunity to leapfrog the development. We can do it.
Budget is a question of choice and particularly capex is a question of choice. We need to keep the pipeline of innovations going. On PV side, we have launched two new architectures... This requires investments. We need to build capacity in order to meet the higher demand. In parallel, we are running one big investment on BS-VI, which is a huge challenge for us and all indigenous players. On EVs, the discussions are ongoing, any kind of comment would be early today. We are in the midst of our Budget discussions where decisions will be made in the weeks to come.
An electric vehicle today would be more expensive than an ICE/hybrid because of the cost associated with batteries and other specific components. That is why EVs need to be incentivised to narrow the gap to an extent that customers make a conscious decision that I pay a bit more with zero emissions and significantly lower operating cost, which is a winning point here. We need to narrow the gap to make EVs an acceptable value proposition. Indian customers are budget-driven. As long as there is pricing discrepancy, we run the risk of a disconnect. We have to make pricing more attractive. We can't close the gap completely but we can narrow it.
