Suzuki’s entry into the EV market could be a game changer

The Electric Vehicle (EV) industry in India is at a nascent stage with only 25,000 units sold in 2016-17. Of this, nearly 92% were two-wheelers. Electric cars and four-wheelers accounted for less than 8% of the total sales, according to the Society of Manufacturers of Electric Vehicles. The EV market, however, is expected to grow at double-digit rates till 2020. The good news is that the green sector seems to be finally shifting gear: A recent news report says the Suzuki Motor Corp, the parent of India’s largest carmaker, plans to produce as many as 35,000 electric cars annually in India, starting 2020-21.

The entry of Suzuki Motor Corp into the EV market at this stage is a positive development not just because it adds to the list of existing firms in the space such as Mahindra and Mahindra Ltd and Tata Motors Ltd but because, it is the market leader in passenger vehicles in the country and also the company that changed the auto ecosystem in the country in the 1980s and the 1990s. If it can build an EV ecosystem, it will provide the missing link that discourages people from buying green vehicles.

Unlike its competitors in this sector, who depend on imported components, Suzuki plans to set up a lithium-ion battery plant and even establish charging stations in some areas in collaboration with dealers and business partners. For the company, the decision to invest in the ecosystem has proved to be successful earlier: it not only rolled out affordable cars onto Indian roads, but also created a robust dealer network and sparked an ancillary industry boom. As for charging stations, one cannot expect an overnight explosion but it will happen once more and more people buy EVs and the State starts investing in green mobility.

Mahindra’s plans are equally ambitious. It plans to produce 60,000 electric vehicles annually starting 2020 as it seeks to benefit from its first-mover advantage. And in a presentation to investors on Tuesday Tata Motors informed that it is working on close to a dozen electric and hybrid vehicle solutions in the commercial vehicle space even as it is moving towards a dedicated electric vehicle platform.

Globally, the number of EVs on the roads has been growing quickly. According to statista.com, the number tripled from 2013 to 2015, and then doubled from 2015 to 2017. In addition to the introduction of plug-in hybrids, which gives consumers more flexibility, manufacturers such as Tesla are making EVs that are easier on the eye and with as much range as normal cars. Global experience shows that outsiders to the traditional automotive industry have led the charge in the EV sector, securing higher valuations than their much well entrenched traditional rivals. So for traditional automakers such as Suzuki, Mahindra and Tata, it makes immense sense to join the revolution to ensure that they stay relevant in the market. It helps that most global EV firms are still unclear on their India plans.