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India’s automakers compete for electric future’s top spot

India’s automakers compete for electric future’s top spot
India’s automakers compete for electric future’s top spot 1

India’s automakers compete for electric future’s top spot
Tata saw an overwhelming response to a price discount campaign for its new Tiago EV. (TATA pic)

MUMBAI: Major automakers in India are making a big push toward electric vehicles, hoping to grab the lion’s share of the country’s nascent market.

Tata Motors has introduced electrics that are 30% to 50% cheaper than conventional models, showing a willingness to sacrifice profitability for market share. Other manufacturers are increasing investments as the government offers financial incentives for production and purchases. But an inadequate nationwide charging network and other issues threaten to slow the shift to EVs.

Tata Motors, which ranks third in the domestic passenger car market, began taking reservations in October for its new hatchback EV, the Tiago. The steeply discounted price of 849,000 rupees (US$10,400) is down from over 1 million rupees initially. The company originally intended to limit this discount to 10,000 vehicles but said reservations exceeded that number on the first day alone.

After Tata announced plans to expand the discount campaign, reservations topped 20,000 units by late November. Deliveries are to start in January.

Less than 15,000 electrics were sold in India during 2021, British researcher LMC Automotive reports, with Tata accounting for about 80%. Demand for its new EV already has surpassed 2021 sales of electrics for all manufacturers combined.

The discount strategy illustrates Tata’s desire to seize the initiative in the newly emerging EV market.

Tata previously experienced sluggish sales for its ultralow-priced Nano, a gasoline car that started at around US$1,500. The Nano launched in 2009 with much fanfare but was forced out of the market after failing to meet consumer needs for quality.

After ensuring the Tiago would meet certain performance standards including the driving range, Tata will try the low-price gambit again, with the appropriate price to be determined based on sales of the discounted vehicles.

Mahindra & Mahindra, which ranks fourth in domestic passenger car sales, is expected to debut its first electric multi-purpose sport utility vehicle in early 2023. The company plans to expand its lineup to five models in a few years, targeting a diverse range of customers.

The automaker is also collaborating with Reliance Industries, a major Indian conglomerate. Mahindra signed a memorandum of understanding in 2021 with Jio-bp Mobility, a joint venture between Reliance and British oil giant BP, to develop new EV-related businesses.

In October, Jio-bp said it would work to develop a charging network for Mahindra’s electric vehicle. Cooperating with Mahindra also lets Reliance, which has operated mainly in the petrochemical field, explore the EV market for its own needs.

Maruti Suzuki, which has a sizable lead in India’s passenger car market, does not sell EVs yet. It intends to begin EV production through a group company in 2025 in Gujarat, the home state of Indian prime minister Narendra Modi.

India’s car market has been sluggish due to strict lockdowns enforced in 2020 to prevent the spread of the coronavirus. Virus mutations and a global semiconductor shortage further hurt the market in 2021. But semiconductor supplies have stabilised, and the market is recovering.

Passenger car sales nationwide totalled 1.02 million units in the July-September period, up nearly 40% on the year, the Society of Indian Automobile Manufacturers (SIAM) reports. Automakers’ earnings also are on the mend.

Tata Motors reported a net loss of 9.4 billion rupees for July-September, in part from continuing troubles at UK subsidiary Jaguar Land Rover. But Tata slashed by about 80% its net loss of 44.4 billion rupees in the year-ago period.

Maruti Suzuki posted a net profit of 21.1 billion rupees for July-September, more than quadrupling its profit year-on-year. Mahindra reported net profit of 27.7 billion rupees, up 44%.

These profits will help the companies invest in their shift toward EVs. The Indian government also is aiding this push.

“Electric vehicles are bringing a silent revolution in India. Today, India doesn’t consider EVs extra vehicles, but a necessary step,” Modi said in August at a ceremony marking the 40th anniversary of Suzuki’s business in India.

India faces a pair of plagues: a trade deficit resulting from imports of high-priced crude oil, and severe air pollution caused mainly by autos. The spread of EVs could help solve both. New Delhi aims to increase the EV penetration rate to 30% by 2030, promoting the industry through purchase subsidies and production incentives.

But some are sceptical as to whether the EV shift will proceed as companies and the government expect. Domestic sales of passenger cars in the year ending March 2022 totalled 3.06 million units, according to SIAM, but EVs accounted for less than 1%.

Low-income earners in rural areas make up the majority of India’s population. The pool of potential passenger car purchasers is limited, and there is a clear shortage of charging facilities. Soaring raw material costs are another challenge.


India’s automakers compete for electric future’s top spot 1
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