Even a year ago, Maruti Suzuki was not convinced electric vehicle (EV) technology had much of a future in India. Chairman RC Bhargava went on record to explain why he thought the market conditions were not conducive. About 75% the energy consumed, he said, was coming from coke-fired plants, which would make EV vehicles much less cleaner than desired. Bhargava also noted that India had limited reserves of lithium and cobalt needed for EV batteries and imports would be costly. At that point, Maruti felt compressed natural gas (CNG) was a more acceptable fuel for small cars and that the prospects of using hydrogen should also be explored.
In less than a year, however, the company made a U-turn, showcasing an EV at the auto show—a mid-size electric SUV, eVX, fitted with a 60kWh battery and having a range of 550km. The vehicle is to be rolled out in 2025, followed by six more launches by 2030. It was a clear change in strategy, possibly prompted by the speed at which rival Tata Motors was moving and also the realisation that EVs, while accounting for just 1.5% of the market today, are finding buyers in good numbers.
To be sure, the tipping point, when EVs will sell more than internal combustion engine (ICE) vehicles, is probably a good 10 years away. But the fact that Tata Motors was going full steam ahead must have jolted Maruti out of its complacence. Today, having sold 45,000 units in 2022-23, Tata Motors now commands 70% of the EV car market, having invested in new products and the value chain. As an early mover, it would also have garnered a fair bit of experience; the 600-million-odd kms that its EVs have clocked on Indian roads must have given it valuable insights. All of which means Maruti will need to work extra hard to build an EV portfolio and also put in place the supply chain and dealerships.
The Maruti management also conceded in January this year it had ceded market share in the passenger car market because it was late to roll out sports utility vehicles (SUV), now a popular segment. The company has tried to make up for lost time by rolling out the compact Brezza SUV and the mid-size Grand Vitara, both of which have done reasonably well. Maruti gained 370 basis points of market share in the SUV segment sequentially in Q4FY23. More recently, it launched Fronx and the Jimny, which haven’t exactly set the market on fire and analysts believe the Fronx could cannibalise sales of the Baleno.
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The short point is that the market today is very competitive and while Maruti could regain some market share and hit levels of 43% or so this year, up from 41.5% in FY23, crossing 45% would be difficult. For one, new models or variants are expected from the stables of Kia Motors, Hyundai Motors and Tata Motors. Next, the compact SUV segment is becoming crowded and Maruti will need to fight hard to add market share; it must come up with some top-class models. Finally, demand in the hatchment segment, over which Maruti holds sway, is weakening. But Maruti’s cars, even if not the best-looking, are priced competitively and that’s why consumers like them. The company may have misread the market for both SUVs and Evs, but it can make a fight of it.