“We strongly believe that the electrification of vehicles in India will start with two- and three-wheelers and that will co-exist with ICE, which will still remain dominant upto 2030. 80% of all vehicles sold (in India) will still be ICE and upto 20% could be electrification," said Soumitra Bhattacharya, managing director, Bosch Ltd in an online press conference on Friday.
Several auto industry executives Mint spoke to said that the pandemic has not only aggravated the extent of the economic slowdown for automotive manufacturing but may have also derailed the government’s plan of EV adoption by a few years.
Last fiscal, to encourage creation of supply chain for EVs, the government had allotted ₹10,000 crore as incentives under phase 2 of faster adoption and manufacturing of hybrid and electric vehicles or Fame 2 scheme for the FY2020–22 period.
Bhattacharya said FY20 was a major setback for the auto industry and the pandemic will create an even bigger challenge in FY2021.
“The auto volumes will further decline by 30% in FY21. It will take another 4-6 years to recover unless there are special interventions by the government on direct stimulus for the auto industry," he added.
Mint recently reported EV plans of several vehicle manufacturers have already taken a backseat as companies grapple to resume operations amid mounting fixed overheads and two months of no revenues. For example, two-wheeler manufacturer Bajaj Auto Ltd plans to go slow on its EV business wherein it produces and retails electric Chetak scooter.
Bosch, a key supplier of critical parts to the Bajaj Chetak, said electrification will begin from the two- and three-wheeler categories especially in the commercial applications such as fleet, taxi and last mile delivery requirements.
“Total cost of ownership is the most important part and it will work for the two- and three-wheelers. It may also work for the electric cars but for fleet applications. Electric cars for personal applications are some time away," said Bhattacharya.
Suraj Ghosh, principal analyst (powertrain forecast), IHS Markit said ICEs will continue to be the most dominant type of vehicle propulsion technology through 2030, constituting more than 90% of the light vehicles.
“Now that the auto industry is grappling with the impact of the pandemic, not only new investments on EVs look extremely unlikely but it also could affect the committed investments made during the pre-covid time. Any investments by the carmakers on powertrain technologies now would be aimed more at the regulatory compliances rather than on disruptive technologies," Ghosh said.
In its Q4 results on Friday, Bosch reported an 80% drop in its consolidated net profit to ₹81 crore and 18% decline in its consolidated revenue at ₹2,237 crore. The company reported 59% fall in its FY20 consolidated net profit to ₹650 crore on tough market and restructuring expenses.
“We have lot of focus on cash flow, we are looking at receivables and inventory, we are cutting back our capital expenditure on all areas that are not necessary," the senior company executive said adding that the capex for FY21 is slashed by 50%.
The company’s capex in FY20 stood at ₹399 crore.
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