Automakers test the EV market
Many firms bought into the hype created by govt’s push and media coverage but are keeping investments low.
There are at least 50 companies, largely two-wheeler makers that have either established or are in the process of setting up manufacturing or assembling operations for EVs in the country. This is a jump from 12 in 2015, when the government announced the FAME-India (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India) scheme.
However, only about half of these companies are selling their EVs commercially, like Ather Energy, Hero Electric, and Ampere to name a few. Many have simply showcased prototypes with no clear visibility on marketing their products. Case in point, 22 Motors, which showcased its production-ready electric scooters at the 2018 Auto Expo, is yet to launch its products in the market. The company has now tied-up with Kymco, a Taiwanese two-wheeler maker, and is gunning for a commercial launch by April 2020.
Experts say that EVs are a new business opportunity that companies do not want to miss out on. Many new entrants bought into the hype around EVs created by the government’s push and media reports.
So, companies often ready a technology demonstrator to get their foot in the door and gauge customer reaction. To keep investments low, many even come up with products developed in collaboration with Chinese companies.
“Even if they are not meeting the government norms to receive subsidies, they are not bothered because they are not here right now for making big business. They just want to test the market,” said Sohinder Gill, director general of Society of Manufacturers of Electric Vehicles (SMEV), an industry body. What also works for EV companies is that these vehicles are not as complex as the vehicles with combustion engines. They have fewer parts and require a less elaborate manufacturing setup.
“A lot of these people have ventured into this space because it has more to do with technology and less to do with manufacturing because there are fewer parts. A lot of the engineering input would have come from Chinese companies,” said Avik Chattopadhyay, co-founder of brand strategy firm Expereal. The trend is clearly observable in electric scooters and three-wheelers, he said.
Not just new players, traditional combustion-engine vehicle makers too have speeded up their EV programs though only some, like Tata Motors and Mahindra and Mahindra, are selling these products in the market and that too only to fleet segments. “The government had at one point of time almost threatened that everything will become electric in twowheelers by 2025. If the government keeps giving these jitters, any big player would not like to be caught on the wrong foot,” said Gill, who is also the chief executive of Hero Electric.
EV makers in the country could be divided into three categories – startups that developed their vehicles in-house, companies that borrowed technology from overseas EV makers, and manufacturers of conventional vehicles who are readying EV technology. Chattopadhyay tags them as ‘Disruptors’, ‘Piggybackers’ and ‘Traditionals’, respectively.
Along with EV makers, component makers of batteries and charging stations have also increased. As per data from SMEV, the number of member companies with the organisation has gone up from seven to 96 since the announcement of FAME-India scheme in April 2015.
On the demand side, the market for personal electric vehicles in India is still nascent. In FY19, about 126,000 electric two-wheelers and 500,000 electric three-wheelers were sold in the country, data from SMEV and other industry sources showed. Sale of electric cars was negligible. In fact, the only segment where EV adoption is taking off is in threewheelers as these become a popular last-mile connectivity option in the NCR region.