Mahindra Electric, which has embarked on an all-out electric vehicle assault, aims to enter the commercial bus and three-wheeler market, while also launching new products in the passenger vehicle segment.
01 Jun 2018 | 13756 Views | By Sumantra B Barooah & Nilesh Wadhwa
During FY 2017-2018 Mahindra Electric, clocked sales of 4,026 units. This year it plans to grow that number, ten times. The company is banking on the growing number of bulk orders for existing models, and the planned launches to realise the target.
Mahindra is set for an all-out electric ...
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During FY 2017-2018 Mahindra Electric, clocked sales of 4,026 units. This year it plans to grow that number, ten times. The company is banking on the growing number of bulk orders for existing models, and the planned launches to realise the target.
Mahindra is set for an all-out electric vehicle assault. It eyes to enter the electric commercial bus, auto-rickshaw spaces, along with launching new products in the passenger vehicle segment. Speaking to Autocar Professional, Mahesh Babu, CEO, Mahindra Electric says, “We are going to launch the Treo (electric 3-wheeler) soon. With the e-Alpha mini, the Treo and then the other four products that we have now, there is a good chance that we will see 10x growth this year.”
The company is expected to launch the electric three-wheeler the ‘Treo’ (pictured above), showcased first at the 2018 Auto Expo, by November.
Impressive as the 40,000 units in a year by one player in the EV market which sold all of 56,000 units (of which 54,000 are 2-wheelers and 1,200 4-wheelers) last fiscal may sound, Mahindra & Mahindra (M&M) sees a much bigger scope of growth. "10X is still a very small base, that by itself is not enough. It needs to be 10x times 10x times into three times," Dr Pawan Goenka, MD, Mahindra & Mahindra tells Autocar Professional. A capex plan of Rs. 900 crore over the next two to three years have been lined up for the EV business. "Next year around this time we will launch another electric vehicle. And after a year from that time we will launch another," adds Dr Goenka.
Revised sales strategy
What is also helping Mahindra Electric gain traction is its shift of strategy about a year and a half ago. The EV maker changed its primary focus from personal segment buyers to fleet buyers. While fleet buyers seem to be appreciating the advantages an EV offers, not many personal segment buyers are warming up to the idea of buying an EV. "Zoomcar is a fleet-operator and they are ordering more and more cars. It must be working for them. So, I think in the commercial operations it is doing quite well, but in the personal usage it may take some time," says Dr Pawan Goenka.
“We changed the sales/marketing strategy one and half years back. If you look at the operation cost of the EV it is much lower, compared to a traditional ICE vehicle. Our EVs with Lithium, Ola, Bhagyarathi and other corporate companies, ply more than 150-200kms per day, where the breakeven comes much early. And in fact, we are seeing in the last two- to three-years, cars running close to 200,000km, our first batch of cars have already crossed 180,000kms with Lithium, and this usage in an electric car will give an operation cost of around 70 paise per km, or savings that is equal to buying another car,” says Babu.
The electric vehicle payback in a typical fleet operation that run for more than 200kms a day is around two- to three-years, “a very good breakeven period”, says Babu.
The company is now looking to ramp up its capacity to meet the demand from various fleet buyers. “We have already announced 10,000 LoIs (Letter of Intent/Interest), which includes 1,000 LoIs with Bhagirathi, Lithium is buying more cars, Zoomcars is now tying up for 400-500 cars, we already have commitment from Uber, Ola is already piloted this, and all this has set the mood slightly towards public and fleet mobility,” says Babu.
For meeting the demand the company has announced Rs 900 crore investment towards expanding its manufacturing capacity at the Chakan plant and Bangalore plant.
Being an early mover comes with its own set of advantages and challenges, according to Babu, “When any new technology comes, I think initially there is no competition, it is important for everyone to come together in the market. Once the market is matured enough, then you get competition. Now everyone has to put efforts to take electric mobility forward, we have been here for very long (years) for now.”
Demand and Supply
The demand for electric vehicles in India has been growing at a slow pace, in fact according to the Society of Manufacturers of Electric Vehicles (SMEV), in FY2016-17, a total of 13,957 electric vehicles were sold including 2Ws and PVs. A majority or 92 percent of the sales came from 2Ws. One of the key factors affecting adoption has been delay in ‘subsidies and lack of charging infrastructure.’
Initially, with low demand for EVs saw few supplier gearing up to invest towards electric vehicles. The lack of a robust supply chain meant that OEMs like Mahindra Electric a difficulty in meeting bulk demand. According to Babu, the tender from the state-run Energy Efficency Services Ltd (EESL) has given confidence to suppliers, who are now confident on the growth momentum.
"Initially, there were challenges from the supply chain, when we were moving from lets say 500 to 1,000 units. But since EESL announced the first tender, the supply chain which were earlier sitting on the fence are coming in. In fact with the government's tender to procure 10,000 EVs last year, the supply chain has geared up its confidence towards electric mobility. Now the supply chain has invested and are saying that they are ready to for EVs,” added Babu.
Also read: Mahindra signs MoU with Maharashtra government for electric mobility
Dr Pawan Goenka: 'We are looking at a 10X volume growth in Mahindra Electric this year.'