While hybrid vehicles are being emphasised in the current plan by the Government, there are a number of issues that need to be addressed in the electric vehicle segment. Express Drives interacted with Ayush Lohia, CEO, Lohia Auto Industries to know what are the current set of challenges that this segment faces and how right steps by the Government for this industry would help in its rapid growth.
Express Drives: Coming to the first aspect which is being witnessed right now, hybridisation of vehicles is being considered not just by the Government but non-profit organisations like National Green Tribunal, how does Lohia Auto’s product lineup have a positive impact for the end-user.
Ayush Lohia: As far as Lohia Auto is concerned, it is currently in two areas, one is electric and the other is gasoline (or petrol). We are not working on anything related to hybrid vehicles as of now. Why we see that this amalgamation cannot go long as either the gasoline vehicle will persist or electric vehicle will persist in the future. Apart from that, the amalgamation of hybrid vehicles is concerned, it will not prevail in the market for a long time. At the end of the day, the industry has to leapfrog to electric vehicles. Lohia Auto is present in the two and three wheeler segments with gasoline engines as well as electric vehicles. We will be expanding this portfolio very soon in order to have a larger market share. New aftersales outlets will also be a part of the complete strategy moving forward.
ED: Coming to the FAME scheme, does it have a positive impact on the current product line-up Lohia Auto has, particularly two-wheelers.
Ayush: As far as two-wheelers are concerned, we can say that there is a positive interest from a consumer’s point-of-view. People are positive looking at these kinds of vehicles as a prospective purchase. When the subsidy was withdrawn from the Central Government, we witnessed a free fall situation in terms of sales in electric vehicles, especially two-wheelers as that was the prominent area apart from four-wheelers, where the Mahindra Reva (now the Mahindra e2O Plus) is present. However, after the FAME scheme, the rise is not as high as it was expected, but we are growing consistently at 20 percent to 25 percent every year. We see this growth to be prevalent in the coming times, but, there are a number of factors due to which we are pulled down by a slight margin. However, there is growth and consumers are looking forward to such products and there is an increase in the interest in such vehicles.
The FAME scheme has reduced the burden on the consumer and has given a breather. However, apart from subsidies, what is more important is the standardisation of parts as well as infrastructure where a person can get rid of the stereotype of the limited range offered by an electric vehicle. These kinds of additions will change things in the electric vehicle segment drastically. They are rapidly changing in this segment as these vehicles are moving towards a digital platform. So, vehicles from companies like Tesla will evolve at a quick pace. The only challenge is how fast we can improve the battery quality, infrastructure for charging an electric vehicle and a clean disposal of the batteries.
ED: One of the factors is the initial cost which is equivalent to a conventional two-wheeler run on petrol. Do you see that trend changing?
Ayush: The shift is happening fast and people prefer an electric vehicle over a conventional means of transport. When you take a conventional vehicle, the cost of it is lower than the electric vehicle. It is in itself a challenge for the time being and we are facing the heat. Nonetheless, people are showing interest but at the end of the day, the decision has to be made by the consumer in a price-sensitive market like India. That is one of the biggest challenge that the electric vehicle industry is facing right now.
ED: Coming to another set of challenges with regard to better technology as right now the locally sourced batteries that are found are lead based ones, but, what about Lithium based ones which are right now being imported for select vehicles which incur a lot of taxes. Do you think localisation or reduction of duties would not only reduce the overall cost of the vehicle but be better in the long run for an electric vehicle owner?
Ayush: Lithium based batteries or any alternative better than the conventional lead acid battery is very important for this segment. Unlike a conventional vehicle, in an electric vehicle, the battery is working as fuel for the vehicle. There needs to be a consistency and a decent lifespan of the ‘fuel’ so that the person who is purchasing an electric vehicle can depend on it without any hassles. So, lithium-ion batteries are the most promising power source as far as fuelling of an electric vehicle is concerned. In addition, it is the only source that we can say can be used effectively in the industry to make sure that it can grow better. As far as cost is concerned, it is currently quite high compared to the lead acid battery, it is multi-fold. However, the graph of the lithium-ion batteries, cost-wise, is coming down. But it is still not ‘cost-effective’ and needs to come down to an affordable level as running cost of an electric vehicle is considerably lesser than any gasoline product.
ED: Coming back to hybrid vehicles, don’t you think it would better to move to mild-hybrid technology similar to the Maruti Suzuki’s SHVS technology and then move to fully electric vehicles?
Ayush: The process of developing a hybrid vehicle, particularly for two-wheelers, will be a cumbersome process. As a scooter or a motorcycle has limited space and adding an electric motor would not be easy. Also, a hybrid vehicle would be costlier and not very easy. Even companies like GM and Mitsubishi are moving rapidly towards electric vehicles in international markets. The only dominant player in this segment right now is Toyota who is also promoting hybrids. Moreover, a hybrid vehicle just reduces the pollution levels per kilometre, but the emission level leaving the tailpipe is still the same.
ED: What should be the way forward for the Central Government to implement so that the electric vehicle industry can prosper at a good pace.
Ayush: Infrastructure is a major area that should be taken care of. The second aspect which I have been emphasising on is a zero percent GST for fully electric vehicles once it is implemented. Price is a major challenge for this segment. It is rumoured that electric vehicles would go under 12 percent GST which would subdue the effectiveness of an electric vehicle when compared to its gasoline counterpart. We strongly feel that under GST, electric vehicles should be promoted more than conventional vehicles while making sure that other duties for the electric vehicle segment is also minimal. This would not only encourage more consumers to buy electric vehicles, but also improve the environment. In addition, once the demand rises, supply will also increase and cost of raw materials would also reduce.
The Crux of the Matter
The larger picture for companies like Lohia Auto is now the infrastructure and the Goods and Service tax as well as FAME scheme moving in favour of the industry. However, a number of things are still unanswered. In order for the electric vehicle segment would need a proper five-year plan by the Government for it to not just flourish but also get popular.
