Market and economic conditions making OEMs look at collaborations to share investments and get the much needed scale and achieve their respective goals.
11 Feb 2020 | 13069 Views | By Sumantra B Barooah
Going by the scale of investments made, and the time (2010) in which the first lot of investment was made, Mahindra & Mahindra (M&M) would qualify as the strongest proponent of electric mobility. But things haven't gone as projected as the electric vehicle (EV) market evolution didn't quite match expectations. ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Going by the scale of investments made, and the time (2010) in which the first lot of investment was made, Mahindra & Mahindra (M&M) would qualify as the strongest proponent of electric mobility. But things haven't gone as projected as the electric vehicle (EV) market evolution didn't quite match expectations. Market and economic conditions have changed much too. And that's making OEMs look at collaborations to share investments and get the much needed scale and achieve their respective goals.
"It's required that we collaborate in the back-end and compete on the frontend," Dr. Pawan Goenka tells Autocar Professional during a press meet. And he is offering that collaboration opportunity to any OEM who has an interest in electric mobility, in Mahindra Electric -- a Mahindra Group company which supplies electric powertrain, currently only to M&M.
"We need scale for electric vehicles, the cost to come down, and for EVs to become profitable. And if every OEM set up their own (setup like) Mahindra Electric then we will never be able to reach that scale," says Dr. Goenka. This is not the first time that Dr. Goenka has batted for collaboration between/among OEMs. And there are others who share the same sentiment. Leadership team members at Ashok Leyland, and Tata Motors too, also see collaboration as a good route for growth. Due to paucity of time Dr. Goenka didn't respond to a query on whether there are any discussions in this direction but it won't be surprising if there's any development in this regard. In a recent video message on social media Dr. Goenka expressed "delight" on Indian origin companies M&M and Tata Motors taking a lead in EVs, along with safety (with highest Global NCAP rated models) and shares his hope of the Indian OEMs leading the EV transition in India. It's also reported recently that Softbank may pick up a stake in Mahindra Electric.
2020: The inflection point year for EVs?
Auto Expo 2020 saw multiple Indian and foreign OEMs showcase EVs prominently. Almost one-third of Mahindra & Mahindra's pavilion was occupied by EVs and EV systems, a big contrast to the small corner for EVs in its pavilion at the 2012 Auto Expo. It was the first Auto Expo after M&M acquired a majority equity stake in Reva Electric Car Company in 2010. Ten years since then, it may be time for reaping the fruits of the investments. M&M has invested Rs 1700 crore in its EV business so far, and an additional Rs 500 crore is earmarked for an EV R&D centre. "The reason it (EV portfolio) has taken almost one-third of our pavilion space at the Auto Expo this time was because we think that finally, finally, we're in that point ,which I've been saying for the last five years, where it should be taking off," says Dr. Goenka. Industry show a growth trend for electric cars in India.
200 electric cars were sold in India during Q1, followed by 500 and 800 units in the subsequent quarters. Q4 is expected to clock higher numbers. This compared to sales of 2,000 units during 2018-19. New launches from MG Motor India (2800 bookings for its ZS), Tata Motors (couple of thousand bookings), and e-KUV (most affordable electric SUV at Rs. 8.25 lakh. Launch in Q1 of FY '21) are expected to drive up the numbers significantly. However, the rate of adoption will depend on the EV charging infrastructure network as well as consumer awareness of EV technology. And awareness building was a key objective for M&M at Auto Expo 2020. "Electric Vehicle is the thing where we want to get customers and users to become the familiar with, to see what is the technology, what is happening. So, it's not just about hype. It's about creating awareness of a technology that we have always believed in," says Dr. Goenka. It will be now up to the customers to decide whether the time for reaping investments benefits has finally come for M&M and other OEMs betting on electric mobility. And possibly time for M&M to get a new partner at Mahindra Electric.