Mumbai: Mahindra & Mahindra Ltd (M&M) has sought board approval to invest about Rs800 crore to develop two new electric vehicle (EV) products and set up a research and development centre for such vehicles, managing director Pawan Goenka said.

M&M, which has so far invested Rs600 crore in its electric venture, plans to raise EV capacity to 1000 units a month by end-2018 from about 200 units now, and 5,000 by 2020. If everything goes as planned, M&M could be selling 60,000 EVs annually by 2020, and if that makes up a quarter of the market, that would mean a total EV market size of 2.5 lakh — a point when one could say electric vehicles have truly arrived, Goenka said in an interview.

M&M seems to have an advantage over lager rival Maruti Suzuki India Ltd, which is scrambling to put together an EV plan. Its first EV is expected only in 2020.

M&M will locally manufacture motor and power electronic through two separate joint ventures. With this, the only major item it will need to import are the cells, Goenka said. The company will invest Rs300 crore in an R&D centre, he added.

Edited excerpts from the interview:

Now, the big thing is electric vehicles, which is the talk of the town. You seem to have an advantage.

So, Mahindra still remains sort of in the pole position with three or four products in the market. But what is important is to kind of assess where we are, as a country, on electric vehicles. I call 2017 as the year of electric vehicle talk.

That’s all very positive but end of the day, we don’t have anything to show for it so far. The total volumes for electric vehicle didn’t go up much during 2017. Most of the volume came from lead acid e-rickshaws, which I don’t count as electric vehicle and lithium-ion autos have not really made much inroads yet and the buses are just starting…

Now the thing to see in 2018 is that does the talk translate to actual numbers.

You spoke about having a market of 250,000 electric vehicles by 2020, what will enable that?

That’s the important thing... Right now to say “all electric" when we are selling only 100 a month is a statement of intent but not much for us to say that this is why we think it will happen. The whole focus has to be on how do we get started as a nation in seeing electric vehicles come on the road. So, a very clear action plan (needs to be) drawn for buses, where about 400-500 buses will hopefully come on the road during 2018, which is a good start and that will give an impetus to buses going electric.

We need to see 30,000 cars on the road. For that, the infrastructure of charging has to come up very rapidly. Right now, there is a lot of resistance to buying electric vehicles for infrastructure. I don’t think we need any more incentives, what we have through lower GST rate and what we have through FAME (Faster Adoption and Manufacturing of Electric Vehicles in India) scheme is good enough and we need to work with that and not look for more… So I am not a proponent of saying that GST rates should go down further or something else would happen, I am saying just freeze it, don’t touch it for three years and let the industry slowly bring the prices down to make electric vehicles more affordable.

The fear that I have is that the FAME scheme is expiring on 31 March and I hope it continues without any major changes to the FAME scheme because with the GST and FAME, the equation is just about working... And the third thing is to remove all the restrictions that are there for electric vehicles today. There are many states that are still not able to register electric vehicles as taxis because there is nothing in their regulations that allows them to do that. There is still no clarity on how somebody would be able to sell electricity for… because charging is selling electricity.

So, from government of India, all I am looking for is that do not change what we have today in terms of subsidy--not looking for more, (but) do not change anything. Focus on charging infrastructure and very important is to focus on localizing… everything.

But, this changing landscape opens up the industry. Right? I mean on one side there would be new avenues for growth on the other there is a risk of diverting attention from the traditional auto industry that India has built with such efforts.

So one of the biggest risks the electric vehicles run, in my opinion... while it is all positive for the environment, all positive towards reducing our import, but the biggest risk that we run is that it should not lead to exporting jobs. And if we move faster than our ability to create the local ecosystem, then we will end up exporting jobs. Auto industry is today, I would say 95% local… If you go back 30 years ago, we used to basically do CKD (complete knocked down) assembly.

If we are not careful, then electric vehicles can take us back to that situation where everything will become imported. So, we need to be careful that we put thrust on local manufacturing of everything that goes into electric vehicle and the government of India has formed the policies for future. So somehow how do you incentivize localization is what the government of India has to look at.

I mean the network and strength that you have, especially the knowledge that you have in the electric vehicle segment, how do you plan to leverage that and kind of help build an infrastructure. Government will do its bit on its behalf, but what can you do.

So, many things. So first of all let me just give you a very small update on where we are… as of now… we have approximately 3,500 vehicles on the road, we have total cumulative kilometers of about 50 million… we have about 80 to 100 charging stations that Mahindra has set up because we started doing charging stations since there was nothing else, so this was done by us… with our technology, not by us, this is done by third party. We have a battery manufacturing plant, so all the batteries that we put in our vehicles are manufactured by us in India. By manufacturing I mean, cells we import and we make modules and batteries.

I personally feel that it will be a mistake to think that we should be 100% electric vehicle because there is… a need for diesel and petrol also. For example, for long distance travel if you want all-electric then it will be very expensive, it can be done but very expensive because you then have to set up charging infrastructure all over India, not just in metro cities and we are struggling to cross 100 charging stations right now.

So let’s first get to a point where our large cities are very well covered by charging infrastructure, all our large cities have good penetration of electric vehicles, say 30%, 40%, then we can talk about long-distance travel with electric vehicles. So I would suggest that we should do this in a phased manner and have a good road map because… there is also a danger of companies not investing in diesel and petrol technologies. If there is a fear that we will not be able to sell diesel, petrol by 2030 then there is no new investment that will happen and we will be left behind.

But, why is industry divided between electric and hybrid?

What will happen and this is the reason why everybody is working on it. What will happen is… the industry dynamics will change. The players that are necessarily the leaders… that are the leaders today... will not necessarily remain leaders after electric vehicle dust settles down and new players who are either non-existent or are small players today could become leaders after the dust settles.

Therefore, there are apprehensions... and I will not name any specific company but there are apprehensions in some companies that they have missed the electric vehicle bus. And many of these companies are opposing electric vehicles for that reason and saying electric vehicles for that reason and saying electric vehicles are not required for this problem and that problem.

And there are many companies that are betting completely on electric vehicles. And you can fill in the blanks, you know who is on which side. So many companies are betting heavily on this. Now from Mahindra’s viewpoint this is an opportunity for us to move up the ladder and since we started early…as of now have the lead. We have aggressive investment plans that we have made... we certainly hope that when the dust settles, we will be on the right side of the line in electric vehicles.

But what is the reason for this apprehension about electric vehicles?

Now… on electric, there are 2 or 3 things that people talk about as a reason that why electric vehicles should not be promoted as aggressively as they are being promoted. One is availability of lithium and concern whether we would have enough lithium to go around. And we had done a calculation... just like back of the envelope ones that if all vehicles became electric then we have 30 years worth of lithium supply available. If that is the case then I think that’s good enough because by that time technology will change and something else will come in. Our second concern that comes in is that... Are electric vehicles less polluting CO2 wise, when you look at total CO2 that is emitted.

Now again, we have done back of the envelope calculation that in the Indian situation despite the current level of CO2 level that comes out of power plants which are higher than what the global average would be, the electric vehicles still are on a par with the best of diesel or CNG. CNG I think is a little over than diesel and it will keep improving as our power becomes cleaner and cleaner.

So I think there is very little that one can point to as negative for electrical vehicles.

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