The recent tender to procure 10,000 electric cars by state-run Energy Efficiency Services Limited (ESSL) saw top Indian auto-makers such as Tata Motors and Mahindra & Mahindra bidding for what is claimed to be the largest procurement of electric vehicles anywhere in the world. Tata Motors won the government contract worth Rs 1,120 crore on September 30th 2017, and will supply 10,000 units of electric Tata Tigor sub-4-meter sedan to the government in two phases. Not accepting defeat, Mahindra matched the bid made by Tata Motors on 9th October, and was rewarded 30% of the total order. In the first phase, Mahindra will supply 150 of the 500 EVs that have to be delivered by 30th November 2017. Government is yet to notify the time-frame for the second phase and will do so post the completion of phase 1 deliveries. The electric cars being brought by EESL will cost them Rs 11.2 lakh per unit and will highlight the government's ambitious plan for a mass shift to electrification of vehicles by 2032.
“Tata Motors quoted the lowest price of Rs 10.16 lakh exclusive of GST (goods and services tax) in the competitive bidding. The vehicle will be provided to EESL for Rs 11.2 lakh which will be inclusive of GST and comprehensive 5-year warranty, which is 25% below the current retail price of a similar e-car with 3-year warranty,” the government said in a statement.
These electric vehicles procured from Mahindra and Tata will replace the existing petrol and diesel cars currently being used by the central government and its agencies over a 3-4 year period. Government's move to electrify its car fleet shows how serious it is about electrification and slowly but steadily would also focus on developing infrastructure. Companies like Mahindra have been investing in electric cars for a long time now. In fact, currently Mahindra is the only auto maker to have electric cars in its product portfolio which are manufactured at Mahindra Electric’s plant in Bangalore. For Tata Motors, this is a fresh exposure and the aggressive bid on the tender will boost its confidence to go aggressive with its electric vehicle strategy. It's likely that Tata Motors will manufacture the electric Tata Tigor from its Sanand manufacturing plant and will be the first electric car for the company. Does this also mean other global players like Tesla, Nissan, Toyota etc are late to the electric car party? While we cannot confirm if these global auto makers had bid in this tender but every company has certainly started to consider bringing in electric cars to India.
The question is no longer about will Tesla come to India? It will. Elon Musk on multiple occasion has made that very clear and also he cannot miss out from world’s fastest and one of the top growing auto markets in the world. But it will still take some time. The company is still not clear on policies such as local sourcing of parts and components, setting up a manufacturing plant and more.
Japanese auto-maker Nissan has hinted on bringing in the Nissan Leaf electric car to India multiple times and might just launch its first electric car in 2018. However, in its current form Leaf will be an expensive product to sell in India and the company might be looking at an alternative electric product made and designed especially for the Indian market.
During his tenure as the President of Nissan India, Guillaume Sicard had said: “We will use Nissan Leaf to understand the market but I don’t think it’s the ultimate solution for India. We need to probably invent something in India for India that doesn’t exist to ensure we can give a proper solution to the Indian market.”
Ford has joined hands with Mahindra and among other things the two-companies will also be venturing into electric vehicles and we might see one rolling out in before 2020. Toyota on other hand has no plans to bring in electric cars in India, the company will wait for better infrastructure to develop before taking a call rolling out electric cars. While there is nothing from Maruti Suzuki yet we expect the India’s leading car maker to make some big announcement on the electric front. Its parent company Suzuki Motor Corp have invested Rs 1,150 crore to setup a new manufacturing plant in Gujarat to produce lithium ion batteries.
Indian auto-industry has always supported the government with all its demand. The industry absorbed the losses during the shift from BS-III to BS-IV, managed with rough sales during demonetization and even did not complain much during the additional cess in GST for larger vehicles and SUVS. However, the industry demands one road map with no frequent and major changes that will allow the companies to be in-line the vision of the government. The auto industry will be happy to adapt to electrification, provided there is a clear vision on developing infrastructure and availability of electricity.
Moreover, like we see in sectors like aviation or oil and natural gas having dedicated ministry to take things forward, we believe it is high time for the auto industry to get its own ministry. Currently, the auto-industry is in a fix between Ministry of Road Transport, Ministry of heavy industries and Finance Ministry to begin with and then other government run organizations like ARAI and when everything goes south they have no other option than agreeing to the court’s decision.
It is interesting that Indian auto-makers like Tata Motors and Mahindra have won this first ever bid on electric cars. There is a plenty of room for many automakers when it comes to auto-industry. India have 20 cars for over 1000 habitants and so India is a paradise for car makers, If the infrastructure can be managed efficiently, it can be a paradise for everybody.