interview | warren harris Business

‘India has key role in achieving price point in EVs’

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Country’s technology capability will make it a source of supply for global OEMs: Tata Technologies MD

As the automotive industry shifts to alternative propulsion systems, specifically electric vehicles, Tata Technologies Ltd., a subsidiary of Tata Motors, having expertise in providing end-to-end solutions, is playing a pioneering role in helping auto companies adapt to changes. In an interview with The Hindu, the company’s CEO and MD, Warren Harris, says India has the potential to lead the EV revolution globally due to its strengths in frugal engineering. Edited excerpts:

What is the future of the automotive industry in India?

If you look at the changes globally, the industry is disrupted in three directions:

The move to electrification, the move to connected services, ride sharing-cost sharing and the move to autonomous driving.

The reason I am bullish is the price point at which those solutions have been developed today is acceptable not just for India, but for the global automotive market. I think India has a great role to play in helping achieve a price point that will enable those technologies to be delivered to the mass market. It has a great role to play in the IP to be developed for this. The technology capability that is here and the capacity that India has in software and the likes of megatronics will again make India a source of supply for the world’s OEMs and engineering services firms will play a pioneering role.

What needs to be done?

As fas as the market is concerned, a lot will depend upon government legislations. In the past, the organisations that developed the best products had won.

But going forward, the ability to develop the best product is going to require the ability to develop partnerships across the technology stack. India has to make a decision as to whether it wants to accelerate that change or whether it wants to wait for the rest of the world to make that change and then to follow it.

I trust and hope that India takes a leading role in it. This is a tough market. The Indian market is a very hard one. In the passenger vehicles space there are 20 companies that compete and two companies have 67% of the market. You have 18 companies competing for the rest. So it is a really tough market to invest in. If nothing is done to ensure that they invest in the market, you will see other companies exit the market like GM and Ford have. That is the real danger.

What is your view about the EV revolution that is supposedly gripping India?

The projection for the global EV market has extended from 3 million units in 2017 to 30 million units in 2020. Some ambitious analysts suggest that it will grow to 130 million units by 2030. So, there is a lot of hype. And I think some of that hype is getting desiccated now.

I think the Indian government is doing the right things and signalling what is right. But public-private partnership is critical. The alignment is there. If you look at the automotive industry, there have been a lot of dialogue mainly in the last three months between the Finance Minister and the OEMs.

But we have not seen that translate yet into legislation and to a regulatory framework that will provide the incentives, the safety net to the OEMs to really invest. India is a price-sensitive market and that is somewhat of an inhibitor to EVs, but it’s also an opportunity. For example, today, an autonomous vehicle is priced at about $300,000 but that has to come down to $50,000 to $60,000 if it is going to be successful.

That is going to require a lot of frugal innovation. The government has to take a proactive stance in providing an environment in which people can invest.

Despite all the hype, India sold less than 3,000 EVs last year...

When you take a traditional IEC platform and convert that to an electric propulsion system, then you are really not optimising the product in the way you have the opportunity.

When you don’t have an engine and you have got a battery pack that sits underneath the vehicle, the opportunity to optimise the cabin space [and] the ability to improve the passenger experience is lost.

When you are worried about the price and you cannot afford to make those investments or you are concerned about your ability to sell them, it compromises your ability to innovate and invest and I think the government has a role to play in this to help.

The Indian automotive industry is witnessing contraction. What is the global scenario?

Since the financial crisis, the automotive industry has been going in the upward direction. Last year, 92 million units were sold globally. That will come down to about 86 million units this year.

Ten years ago, we used to go through this cycle every five years. This is a cyclical industry. But the emergence of countries like India and China have sustained the growth for a period in which the industry should have gone down.

So, what we are now seeing globally is the re-establishment of the cycle that we had seen before 2008-2009. This has been compounded by trade wars [and] macroeconomic issues but the drop in other territories is likely to be much shallower than it is here in India.

The first headwind that the Indian market is faced with is the liquidity crisis. The transition from BS-IV to BS-VI is a big jump and that impacts short-term demand. The speculation that GST would be reduced did not help in demand creation.

Globally, there is a slowdown. The unique issue in India is that there is a real need for the government to do something in the short term to stimulate demand. If they don’t, you will find OEMs cutting cost, which will then compromise their ability to be competitive in two to three years’ time.

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Printable version | Dec 14, 2019 10:17:46 PM | https://www.thehindu.com/business/india-has-key-role-in-achieving-price-point-in-evs/article30126030.ece

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