Bajaj Auto looks to set up subsidiary for EV business

Bajaj is focusing on building R&D capability, distribution and after service as these are important to scale up and because the semiconductor shortage also impacts volumes in the EV segment.

By:Updated: Jul 23, 2021 8:47 AM

Bajaj Auto on Thursday said it plans to set up a wholly owned subsidiary to pursue its electric vehicle (EV) ambitions.

Rakesh Sharma, executive director, Bajaj Auto, said the company plans to be a major part of the EV market, from the Yulu range of entry level electric bikes to high performance motorcycles and everything in between. Efforts are under way with R&D, a collaboration with KTM, working vendors and building capability.

Soumen Rai, chief financial officer of Bajaj Auto, said the company is setting up a domestic subsidiary after a long time. The company is quickly adapting as the industry playbook is changing, Rai said.

Bajaj is focusing on building R&D capability, distribution and after service as these are important to scale up and because the semiconductor shortage also impacts volumes in the EV segment.

Rai said unlike other EV players, Bajaj Auto does not need money from external investors as it has surplus cash and cash equivalent stood at Rs 19,097 crore as on March 31, 2021.

Sharma said they view the EV space as an opportunity to tap into the five-million strong scooter market in India and the seven-million Step Thru and scooter market in southeast Asia. However, he does not expect the transition to EVs to happen suddenly. It could take three to five years for EVs to play a significant part in the two- and three-wheeler space in the country, he said.

Bajaj Auto commenced its EV journey in January 2020 with the launch of the Chetak electric scooter, which is available in Pune, Bengaluru and Nagpur. The scooter will be launched in Hyderabad, Aurangabad, Mysore and Mangalore soon, with a plan to reach 25 cities by the year-end. The company is looking at a run rate of 1,000 units of the Chetak a month. Bajaj Auto has a capacity to manufacture 60,000 units of Chetak per annum.

At an investor call, the company said the new venture could have authorised capital of Rs 100 crore and paid-up capital of Rs 5 crore, but the company is working on the details.

The EV segment currently sells around 1,000 vehicles a month, with Hero Electric, Okinawa, Ather, Bajaj Auto and TVS Motor among the leading players. Ola Electric is also set to launch its electric scooter. Ather is also expanding manufacturing capacity. TVS Motor plans to invest Rs 1,000 crore to manufacture EVs.

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