New Delhi: When Kenichi Ayukawa started his stint as managing director of Maruti Suzuki India Ltd in 2013, he had to initiate an overhaul of the company following a riot at its plant in Manesar, an industrial town in Haryana state, by militant workers.
Maruti’s market share in the passenger vehicle segment since recovered from 38% in 2012 to 51% in the first three quarters of the current financial year and that has propelled the company’s stock to an all time high—breaching the Rs10,000 mark—and made it the sixth most valuable company on BSE. Maruti Suzuki is going back to the drawing board again as the India automobile industry stands at the cusp of a shift to electric mobility. In an interview, Ayukawa suggests it will be a challenge for Maruti Suzuki to establish an ecosystem for electric vehicles (EVs)—just as it was a challenge in 1983 when it started to manufacture vehicles with internal combustion engines (ICE). Edited excerpts:
I get a sense that you are going back in time when you set up an ecosystem for ICE vehicles in India...
In a sense, we are trying to challenge ourselves as time has come to change the game. Hence, we have to review (our strategy) and start again from zero.
And the lithium ion battery plant in Gujarat is just one step in that direction in the current context.
Exactly! We set up the plant earlier for hybrids, but now we are considering it for EVs.
Do you think this move gives you an upper hand in the Indian market?
First come, first serve gets the benefit. But the point is that the time is moving but not quickly changing. Even if we provide EVs, the industry will not change into one that runs on electric completely. So, we have time and portion of EVs in the market will gradually increase.
We need time to gradually change but still some ICE engines will remain after 10 years or 15 years. I don’t know and how we are going to manage during that time.
With the advent of electric cars, will we get to see small cars as well?
That is a big challenge. We have to study that. It is not easy to find out solution for that. Cost difference is, of course, high. We also have some added cost in the case of implementing EVs. The battery cost of small cars is so much different...very expensive. Automatically, the cost is going up.
We are all talking about electrification, but India does not have lithium or cobalt reserves. Do you have strategy in place to address these challenges?
That is a big challenge for us. At this moment, it is not easy to prepare a road map for those kind of things.
Where will you source lithium from? The availability of lithium itself is a problem worldwide.
We need to decide if we want to buy from a (Latin) American country or some other country. We need to find a source for that.
At this moment, we have to find concern points and problems and then take counter-measures. At this point, we are just starting off. First, we are trying to study what kind of vehicles does a customer expect and what does the government expect? The idea is to look at some other countries and we can also learn a lot from those countries.
The initial momentum that was built in favour of EVs on the policy front seems to be fizzling out. The EV policy is not yet in place. Does that put the industry in a dilemma since most of the companies changed their strategies from hybrids to electric cars?
The point is (that a) sudden change at any time is not easy. A sudden game change is also not easy since we have 3-4 million people employed in the industry. If we make any change, we will have to transform those kind of people also. That is not easy. The government also knows that.
What is it that you would want from the government on this front?
Point is that they are also looking for a good solution and so are we. So, we have to collaborate and find out a good solution. But, I think, that is not an easy work and it takes time. Even if we set up some direction, we have to modify some points looking at realistic situation. We want to set up lithium ion battery plant, but which country will provide lithium? If we cannot get lithium, we cannot make such kind of a product. We have to check one by one if it is possible or not. How much is possible at how much cost? Those kinds of study we will have to start. And take counter measure on how we can reduce costs. It will be impossible for people to buy a Rs5 lakh car if that becomes a Rs20 lakh car. Nobody could buy that. Right?
Once you have your EV ready, which is in 2020, will you also set up your own charging stations?
We have to prepare those kinds of steps as well that even if we are using an EV we would need charging stations. Those kind of arrangements and simultaneous preparation need to happen gradually. It is very difficult to arrange those kind of things nationwide. We have to focus on some area or something like that. That could be a good step. As far as we are concerned, we have to prepare some charging stations, in some parts collaborating with dealers and business partners. We have to arrange something like that but not 100%. We have to collaborate with governments and other players would also have to do. Those kind of collaboration and cooperation could be necessary...
So, if I am sitting out of Patna with a Maruti EV, will you provide me with charging solutions?
As long as we sell the vehicle, we have to arrange something for the customer and that is a simple logic. It will be difficult to offer electric vehicles on the rural side, but city side it is possible to arrange charging stations at some points. We are just starting those kind of studies. At this moment, I have no idea.
How will Suzuki’s partnership with Toyota come into play?
Toyota, as you know, has a lot of technology...more than Suzuki. We, through the collaboration of this tie-up between Toyota and Suzuki, may get access to some of Toyota’s technology through Suzuki.
Will they have any role in manufacturing?
That is their decision and I don’t have any knowledge of it.
In India, we have a bigger business than Toyota, and that is why in India we requested them that from our side we want to lead the market. May be Toyota can help implement some technology into the Maruti Suzuki products.
At this point, we have no idea about whether Toyota will need those vehicles. Right now, we have our product and they have theirs. That is why it is not easy to collaborate. There is a lot of chance to those kind of things.