Electric vehicle sector needs initial seeding to take off: Naveen Munjal
“Battery technology is very expensive and if we wait for the battery cost to come down, we will miss the bus. The sector needs government’s push to a certain level and not for life long,” says Naveen Munjal, Chief Executive Officer, Hero Electric.
With high cost of batteries, complete transition from internal combustion engine to electric vehicle is a huge concern for India.”Battery technology is very expensive and if we wait for the battery cost to come down, we will miss the bus. The sector needs government’s push to a certain level and not for life long,” says Naveen Munjal, Chief Executive Officer, Hero Electric.
What is your view on the current state of affairs in the Indian electric two-wheeler market and the EV market in general? What are the current challenges being faced by companies?
Major issues in the Indian two-wheeler market are lack of awareness and high cost of batteries. There has to be a certain mandate which is required for this industry to take-off. The market for two-wheelers for us is divided into two segments – the regular consumers in the B2C business using our vehicles for daily commute and the B2B business which includes people running vehicles for delivery of goods like food, eCommerce etc. Where there is a commercial angle, having electric vehicles makes a lot of sense. If you are covering a certain distance, let us say 30-50 km, the economy for running an electric vehicle is far better than an Internal Combustion engine. The B2B opportunity is very large. There are around 120,000 vehicles in India delivering eCommerce goods. We also have vehicles for food delivery. So, the estimation runs into millions of units per year.
According to a view, the adoption of EVs is far below the industry expectations. What is the need of the hour for the EV industry to take off?
There has to be a carrot-and-stick motivation approach. To start with, we need to ensure that a few cities should not have IC engine vehicles. Subsidy should be given to boost EV adoption the way government subsidised petrol to support the logistics sector. A majority of the market in India comprises lead-acid batteries. With the switch from lead-acid to lithium-ion we are already buying the top-end technology and so we should support it.
We also have to lower the cost of the battery to the extent that it makes economic sense for a consumer. Also, the market needs a push towards the adoption of EVs. People should be encouraged to convert their vehicles into electric. It should be done in the way three-wheelers in Delhi got converted to CNG. But people do not accept change easily. It happens when you push the change through. Basic awareness about long-term benefit is also required. The government has to play a crucial role whether it is on R&D spend or on marketing. Industry players alone cannot do much as we are a commercial organisation and at the end of the day profit-making is our end objective.
Do you think the pace of adoption of battery swapping is satisfactory?
Around 75 per cent of the vehicles on the road are two-wheelers. We think battery charging will exist along with battery swapping in two-wheelers. For B2B businesses, battery swapping is more logical. For deliveries or e-taxis battery swapping is a good concept. For a taxi, charging the vehicle for four hours leads to revenue loss.
What kind of batteries are used in your vehicles and where is the company investing when it comes to the EV segment?
Our batteries are removable from the vehicle. In one charge, it gives 60-80 kilometres depending on the kind of battery used. That is more than enough to take the customer to the day’s usage. If we have very dense charging infrastructure our battery size will automatically come down. And if the battery size comes down, our vehicles can become cheaper. We are investing heavily in technology for the vehicle itself. We are expanding our network. We are helping create a lot of awareness through marketing. We are creating new plants as we are already running out of capacity on the existing ones. We are doubling our production for EVs year-on-year.
What is the state of play when it comes to domestic manufacturing for the EV industry?
There is no supply of critical components in India. We have to create the infrastructure for manufacturing in India which does not exist currently. With the current volumes in India, which are around 100,000 units a year, to create that level of full infrastructure is extremely expensive. Companies have to rely on import of components.
As an investor, what is your sense of the competition developing in the market?
At the end of the day, we have to compete in the market and we are competing against the IC engine. We have certain volumes for electric two-wheelers but for companies with up to 10,000 units in a year, getting investments is very tough as there are multiple-models involved. We have to focus on Make in India but that needs a lot of transition. If the volumes are not there then the competent companies will not invest. Which battery company will actually set up a plant if there is no offtake? The offtake will not happen until the price comes down. It is a full vicious cycle. We are doing our bit in terms of introduction of products and marketing but we need component suppliers, battery suppliers at reasonable prices.
Do you think implementing strict norms could help in increasing the offtake of EVs in India? If not, what could be the other approach?
If we cannot use the stick approach, we need to give the carrot. We need government interventions. Battery technology is very expensive and if we wait for the battery cost to come down, we will miss the bus. In China, the government has seeded the market for the past so many years. Their subsidy has gone away now. The sector needs government’s push to a certain level and not for life long. We want the volumes to reach up to at least 2 million which is one-tenth of the population of IC engines and then the market will take over. The electric vehicle sector needs initial seeding. Measures like putting a penalty on IC engine which are polluting vehicles will also help the EV market.
Source: energy.economictimes.indiatimes
