Incentive for EV makers - Will really charge the India EV market?

The New and Renewable Ministry, of Indian Govt announced an incentive scheme for EV manufacturers in India amounting to INR4000, 5000 and 100,000 for low speed 2 wheeler, high speed 2 wheeler and EV car respectively. This could amount to 20-25% of prevailing ex-factory prices. The incentive comes with a tag of filling 30% of supply chain through locally developed parts. 

SMEV (Society for Manufacturers of Electrical Vehicle) a consortium of EV, technology and aggregators announced, through the incentive they receive the EV makers might plan to pass on this further to the buyer that could fuel the sales of EV market in India.

However the optimism of officials at SMEV that this move could even double sales of EV in next year seems far fetched considering the ground realities in India that could support this growth.

The incentive program in itself may not serve much purpose without a proper roadmap since India does not have any policy framework related to EV growth yet. The incentive program itself is a halfhearted attempt that came so late compared to its global peers and

here are some fallacies why the Electrical Vehicles may not gain momentum in India.

1. A major benefit of EV is to Reduce dependency on Petroleum products – However India is fast becoming dumping ground for all OEMs in the world for the ICE based vehicles with companies churning their capacities like there is no Tomorrow.  According to some statistics, around 100,000 electric vehicles exist in India, majority of them are two wheelers compared to car maker Maruti suzuki selling over 100,000 car per month. Emission taxes are predominantly imposed in Western countries now to curb the driving of cars where as in India the Petrol and Diesel are subsidized. The recent outburst from Environment Minister Jairam Ramesh to ban SUVs that are heavy on fuel consumption or asking them to sell the Diesel at un-subsidized price is the first vocal protest heard on this issue.

2. Need for Power - The basic challenge for India to promote EVs at this point is not the infrastructure or demand but the availability of Power itself. According to Expert committee at planning commission, for its target of 8-10% GDP growth until 2030 to eradicate poverty, Indian power growth has to be at least 6% on annual basis. So the primary focus for India now is to meet its power requirement. Govt of India setup this expert committee to draft a comprehensive energy policy to meet the challenge through Planning commission that sets plans for India covering 5 years span (presently India is in 11^th five year plan). All the energy demand recorded in the policy are for the Industrial, house hold, agriculture, rural electrification etc., and not for transportation need like charging EVs.

3. Another basic benefit of EV is for the Green cause to control emission – This makes it even trickier for India since around 70% of Power is generated using thermal power plant where coal is the primary source of energy. Since India has large Coal reserves, coal would continue to be the primary source till 2031-32 according to the energy report. So it may not make much sense to promote EVs on greener cause where they are charged by electricity that is generated by burning coal. Govt is putting enough thrust on investing in technology to reduce the carbonization due to burning coal.

There are some incentives offered by the Govt. like for 2 wheelers there is no registration required from the road transport authority, there by avoiding road tax. But from common person’s perspective EV is not fully ready to lure the customers due to its own challenges of cost/reliability and infrastructure like anywhere else in the world.

The present EV market scenario in India where there are around 15 players in 2 wheeler segment, however most of the parts sourced from the Chinese imports and assembled and sold in India. There are some isolated battery operated 3 wheelers (Auto rickshaws) which use Liquid batteries that are under the radar from environmentalists. The erstwhile Reva is now a Mahindra group company. But Reva was never a successful EV company with around 600 cars sold last year, about 300 in India despite of its 10 years of existence. But its capital is the IP that Mahindra would be interested to use for its small LCVs (sub ton category) mainly for export market. GM India had partnered with Reva for technology collaboration for Chevy Spark, but since the Mahindra took the control of Reva, the relationship ended. The Auto Major TATA has good amount of thrust on EVs with some of its models like Indica EV is scheduled to hit UK/Scandinavian market by 2011.

So the EVs to gain grounds on Indian Road seems quite far, may be as far as 2030, however one trend could be seen in near term is that, with some localized promotion by private industries/institutes who are investing in RE sources could use the vehicles for their organizational use within their premises. Even local Municipalities could take initiatives to tie up with private players to own some fleet..

Mercedes finally decides to enter in city bus segment

Mercedes Benz, the number one CV maker in the world has finally decided to enter in to City bus segment. Volvo bus is the market leader with its bus being used in the Rapid transit systems at Bangalore and Delhi successfully since it first started its bus running on Bangalore roads in 2006. Presently the low floor, City buses from Volvo run in 10 cities but 80% of the total vehicles being in Delhi and Bangalore.

Mercedes that has the 2 and 3 axle tourist buses in India for some reason decided so late to look in to this segment especially the Indian Metro cities are getting make over for their infrastructure and has strong blessing from Government with funds for urban development. The market is expected to grow at around 15-20% and events like the commonwealth Games would trigger the spike in demands.

Never the less this would trigger some competition to Volvo that has around 30% premium in pricing than its Indian competitors, TATA and Ashok Leyland due to its better quality, life and maintenance terms is expected to get to compete with Mercedes on the same lines.

Sales momentum continues in May’10

The automotive sales momentum continued during the month of May in spite of increased prices.

Maruti hit records with per month sales of crossing 100,000 cars first in the history. Ford and GM continued their growth rate of over 150% with their Figo and Beat respectively.
Toyota has introduced a special edition of Innova for its 5th year since its most successful model in India.

The luxury segment also has seen a great momentum with Mercedes and Audi clocking over 100% growth.

Honda is the only company that again seen a negative growth.

TATA motor’s Sanand plant in Gujrat started rolling out the NANO which it hopes to cover the backlogs.

Hyundai motors caught in to an ugly row with labor dispute taking in to effect of closing the production for 2 successive days in June.

In June the Petrol and Diesel prices are rumored to be hiked by Rs3 could impact the sales. However the upbeat Indian services sector has over shadowed the inflation as people are upbeat in their spending.

	May-10	May-09
Hundai Motors
growth	7.00%
sales	46808	43624
domestic	27151	23503
export	19657	20121
Maruti suzuki
growth	29.70%
sales	102175	79872
domestic	90041	70785
export	12134	9087
GM
growth	61%
sales	8225	5109
TATA motors
growth	41%
sales	56799	40196
cars	39.00%
sales	21326	16563
exports	3978	1804
lcv	17615	13740
M&HCV	13860	5405
cvs	31475	23004
M&M
growth	69.00%
sales	28486	16866
three wheeler
	6641	2703
utility vehicles	19.00%
	18940	12620
logan	450	427
cv growth	17.00%
cv sales	1005	831
exports	1068	285
Ashok Leyland
growth	97%
sales	6502	1977
domestic	5973	1697
export	529	280
Honda
growth	-0.15%
sales	4067	4073
Mercedes
growth	112%
sales	410	193
Audi
sales	200	121
Toyota
growth	77%
cars, SUV	6050	3924
Ford
growth	300.00%
sales	8080	2168
Eicher
growth	44.00%
sales	2801	1233
domestic	2488	1128
exports	313	105

Mahindra in final league to bid for Ssangyong Motors

Mahindra & Mahindra is selected for final level bidding for the troubled Korean automaker Saangyong Motors. Mahindra is one of the last 6 companies in the race that includes a fellow Indian company Dunlop; a tyre manufacturing company, Nissan with its JV partner Samsung Korea, Seoul Invest a south Korean PE company, Daewoo Bus and an undisclosed Korean investment arm.

Toyota’s plan to gear up to meet demand in India

Toyota Kirloskar Motors in India indicated its plan to enter in to engine manufacturing and R&D facility in India soon. The much anticipated Etios that is modeled to suit to Indian conditions is expected to hit the roads in Early 2011. When it was displayed at Delhi Auto expo early this year it was announced to be launched by end of this year. It is Toyota attempt to capture the popular segment which is dominated by Maruti Swift and Hundai i10, i20 with price range of 4.5 lakh to 6 lakh. The Etios would have both hatchback and sedan versions in 1.2 and 1.5 ltr Petrol version.

Presently Toyota has Corolla Altis, Camry, Fortuner and its most popular MPV Innova models in India. A special edition of Innova was launched last week to commemorate the launch of Innova 5 years ago. Innova has over 30% market share in MPV segment and market leader.

GM India lays roadmap for LCV launch

GM India, through its JV with SAIC in China has finalized the time frame to roll out the 1 tonne capacity LCVs on Indian road by end of 2011. Presently GM has presence on car market in India. Last couple of years has been tough on GM but end of 2009 and 2010 has been cheerful with the launch of its new Beat.

The JV has been news for quite some time now by inducting senior executives of SAIC on to GM Indian board. After it’s successful stint in China, GM seems to be trying to exploit its relationship with SAIC to expand its offerings beyond car market in India.

GM India now makes its own plan for Electric cars

On the brink of Mahindra buying the stake in REVA electric vehicle company, GM India announced its own plan to work on Electric cars from US. Last year GM India had come to an agreement to work with REVA for technology alliance for its Spark version.

The new move came as a set back for GM India as Mahindra a leading auto maker in India.

Mahindra enters in to Electric space with a stake in REVA

Indian leading utility vehicle maker Mahindra is in news again, this time by acquiring 55.2% stake. The new entity would be called Mahindra Reva Electric vehicle Company.

Mahindra, clearly the a great success story in Indian automotive scenario in recent times had been putting all the right foundations towards reaching the global markets. Mahindra is the leading utility and tractor market in India has a partnership with Navistar for M&HCV sector, has recently put maxximo, a sub ton category utility vehicle. Mahindra’s attempt to enter in to passenger car segment was not so successful with its divorce with Renault with a failed model Logan. The pickup version of Scorpio is all set to be launched in US market by the end of 2010.

Having stake in Reva, puts Mahindra in to the league of Indian auto markers

attempt to enter the attractive global electric vehicle market. TATA motors the Indian auto giant has made its preparation by acquiring the Norwegian electric car marker. It is planning to launch the EV Indica in UK and Scandinavia by the end of this year and the EV Nano in US by next year.

Mahindra’s proposition is to use the REVA technology, especially it’s drive-train technology. The Maxximo might soon be coming in EV version as REVA it self not a very successful in selling its cars in spite of its presence since 1994 as Electric ca company. REVA also has been in news since last year after it came with an agreement with GM India to help GM with EV technology for GM India’s plan for spark electric version. By then it was quite evident that REVA started looking for different options to position it self in the market, either as a technology company or ready to be acquired. The present stake sale has put the agreement with GM India in to side ways. However Mr Anand Mahindra has expressed that Mahndra is ready honor the agreement to offer the technology.

Sale of REVA also marks the end of an era for REVA that started its initiative in EV domain in 1994 and was one of the early movers in this area to bring in cars on road. Presently REVA mentions it has presence in 24 countries and around 3000 cars on Road.

It clearly mentions that REVA was never a successful car company (in growth) however the persistence to continue in the field over this period in it self is an achievement and its Name being taken amongst very few EV companies in the world can’t be denied.

Mahindra Pickup to be launched in USA by Dec 2010

The much awaited launch of Pickup model in US finally seems to be happening. According to company announcement the Pickup truck that is built on its most popular Scorpio model would be launched by end of this year. When the Mahindra Pickup runs on US roads, that would make the model to be the first Indian vehicle on US roads.

The launch has marred with delays due to the compliance issues for US safety and emission standards. According to the company news, the vehicle would be made available as TR20 (2 door) and TR40 (4 door) version with Mahindra it self as the name of the vehicle. The vehicles would be exclusively distributed by Global Vehicle USA (http://www.gv-usa.com/)

Picture Courtesy- Mahindra

Volkswagen ramping up to beat the competition

VW India is planning to enter in to A3 segment with its new model Vento by 3rd quarter of this year. This segment is dominated by Honda City and has very less competition. The new car is going to be built on the same platform as that of its small car Polo. The significant strategy is to bring a Diesel version in this segment that is lacking.

VW also is planning to ramp up the production of Polo to meet the over bookings. Presently Polo has about 3 months waiting time. VW has state of the art plant at Chakan close to Pune with an annual capacity of 110000 cars. The skoda “Fabia’ is also rolled of the same plant.

Bulk selling; the new trend - 115 Mercedes cars sold in one day

The bulk booking seems to be a buzz now in India that started in residential properties where like minded people joined together and negotiated with builders. Now an Whooping 115 Mercedes cars were booked in one go by what is known as Aurngabad group through a dealer in Pune. However the negotiations are believed to be done with the OEM directly due to the size of the deal.

In the month of April Mercedes sold 321 units across Inda, not sure this includes the sale of this bulk order.

Aurangabad is historically an industrial city with companies like Videocon having base there. The group is said to have consisted of industrialist, lawyers, Doctors, developers.

Momentum continues - April 2010 Automative sales figures

The April month carried a good momentum in sales form YoY basis however, the sales numbers are lower from Month on Month. Rising raw material cost and gas prices are being passed to the customer, however it appears to be the market has some more room to take this cost.

The highlight of the sales is for Ford and GM with their new aggressively priced models Figo, Beat. Both Companies are now ramping up production to meet the demand by adding second shifts. The higher sales in these models have also eaten away the share of Hundai Motors from i10, i20 space.

Honda has recorded a decline in sales consecutively since March 2010.

	Apr-10	Apr-09
Hundai Motors
growth	28.10%
sales	52020	44370
domestic	28501	22247
export	22123	23519
Maruti suzuki
growth	29.70%
sales	93058	71748
domestic	80034	64857
export	13024	6891
GM
growth	200%
sales	10601	4823
TATA motors
growth	52%
sales	57202	37518
cars	72.27%
sales	23102	13410
exports	3137	1261
lcv	17806	14245
M&HCV	13157	4869
cvs	30963	22847
M&M
growth	13.21%
sales	26043	23004
three wheeler
	5876	2972
utility vehicles	-2.43%
	17998	18447
logan	303	550
cv growth	32.72%
cv sales	860	648
exports	856	387
Honda
growth	-19.54%
sales	5928	7368
Toyota
growth	77%
cars, SUV	6001	3386
Ford
growth	270.00%
sales	7509	2034
Mercedes
growth	200%
sales	321	178