4 min read.Updated: 24 Mar 2017, 08:03 PM ISTAmrit Raj
MD Pawan Goenka says Mahindra is pursuing its electric cars dream on two frontsmass market and luxury under Pininfarina, largely modelled on the lines of Tesla
New Delhi: Mahindra and Mahindra Ltd won’t mind losing money on its electric vehicles (EVs) business till such time as the EV game picks up, Pawan Goenka, managing director of the firm, said. M&M is pursuing its electric dream on two fronts, he explained, with the first being mass market and the second, luxury under the Pininfarina brand, which will largely be modelled on the lines of Tesla Inc. Edited excerpts from an interview:
You have big plans for electric vehicles...
Yes. If you put bits and pieces of what we have been talking about together, we will be playing at two ends. One end, we hope, will become mass market once the floodgates open.
Do you think there will be more subsidies?
I don’t think so. Subsidy also becomes a drain on the exchequer. Subsidy has to be such that it makes the offering viable for consumers. Consumers will not buy just because it is an electric vehicle. They will buy because it makes sense to the wallet. Today, we are just short of that. Another Rs40,000-50,000 difference will get us there. If the pressure is on us to bridge that gap by working on reduction of costs and we are not making money otherwise, that pressure is much higher than if you start making money. So, it is okay for us to be under some pressure to reduce the price of electric vehicles but not to the extent that we give up. I am on the side that says let me work on filling the gap.
But what needs to be done first is push volumes. Without volumes, I cannot fill the gap. What the government needs to do is not (think) how do you incentivize the financial part of it, but how do you create a condition for more volumes. In places like Delhi, it is very easy where they can say that in peak time, you cannot ply small commercial vehicles, except if it is electric. I don’t need anything else. Then the volume will come.
And, what are your plans for the higher end?
Pininfarina started as a dream but we still have to worry about financial viability. Unlike many other electric car companies which are supported by investors who are looking to make it big in the future, we will have to ensure that it makes prudent business sense.
The company that has made electric vehicles respectable is Tesla. Before Tesla, electric cars were seen as something that got you from point A to point B uncomfortably. Tesla made them a matter of pride. So, that’s the difference that they have made, but at a cost. They are not making money. We would like electric vehicles to become a matter of pride not because they are electric but because they are great cars. That’s what Tesla has done. Pininfarina is the brand that we have and with Indian expertise in electric, it becomes a natural way for us.
It has not worked out in the manner that we wanted it to. But we have sort of completely changed the direction in the two-wheeler business. There are three businesses that were not making money for us—two-wheelers, trucks and electric vehicles. EVs are a long-term bet and we will continue to remain in the game till there is a game remaining. Frankly, it is one business where if we can make a difference, we don’t mind losing money. In CVs (commercial vehicles), we are over the hump. Next year becomes very important with BS IV coming in. Two-wheelers was the only area where we did not see a possibility of a quick turnaround.
Mahindra announced that it will create a manufacturing base outside India. Is that on?
What we said is that we need to be expanding outside India as every global company has significant manufacturing capabilities outside India, and we don’t. In the tractor business, we do, but in automotive we do not and, therefore, we are looking for a second home market, which will become an export base for us... We are in the process of deciding what that would be.
Are there any specific geographies that you are looking at?
We are looking at the Asean (Association of Southeast Asian Nations) region. Basically, there are four clusters of markets for our kind of vehicles—Latin America, African nations, Asean and China. Volume is in Asean. So, that’s what we are looking at.
Are you considering acquisitions?
If an opportunity comes up, we will do what makes more business sense. Today, in the auto industry, there is an abundance of capacity. Therefore, it is possible for us to find a brownfield plant where we can invest some money to do what we want to do. So, that would make more financial sense than to taking the greenfield route.
How do you plan to synergize your two-wheeler business with PMTC (Peugeot Motorcycles) and BSA?
There are a lot of back-end synergies in terms of sourcing from India. More or less, PMTC is a stand-alone business.
What is CLPL?
It is Classic Legend Pvt. Ltd. That is the name of the company that will make BSA and Jawa bikes. That is the company that we have set up.