The estimate of 4 to 5 years may be very hard for a country like India. If the estimate is changed to 10 to 20 years, valuation of EV may not have too much impact for the next 4 years.
In my honest opinion, EV will not be more than 5% of PV sales even by 2025.
Maruti will come out flying from this whole slowdown saga. Valuations will go down in the near term to reflect the realities. Consumer slowdown is a global phenomenon. China car sales are down too except EV sales which have also slow down from last year due to cut in subsidies.
EV is a reality and all automakers must re-align their supply chain in order to get access to battery raw materials, ev auto components, batteries.
Govt on the consumer side should have offered cash subsidies on top of interest offset on ev loan. Charging infrastructure will be set up by Power companies (Tata power), OMC companies.
Hard to predict the bottom here as this is a structural change rather than a cyclic consumer demand/supply paradigm. Even if consumer demand picks up navigation through this structural change is key. but given Maruti history and Suzuki Technical Collaboration, they should be able to navigate pretty well. When is another question!
CNG came in 1998 but the pump stations donât even cover 20% of the country (source Outlook Business - July 19).In my opinion getting EV charging infrastructure right is the key to EV adoption in India.Government can not afford to lose the cess/tax revenues on petrol/diesel for foreseeable future.
EV charging infrastructure requires access to arterial roads and prime locations in cities which is costly.
Land is a state government subject which is controlled by local politicians, howmuch ever emphasis that central government puts on EV coversion, control will be with state government. I am not saying that EV adoption will not happen but 4-5 years is too short time for this to take place and my take is that it will take 15-20 years.
Tata power has done joint ventures with OMCs to use their existing infrastructure means either existing petrol pump will be converted in charging station or available land will be utilised
In my opinion rather then treating EV as reality it should be focused as disruption. If its a slow down in Auto mobile segment, Maruti can very well withstand it. I am ready to invest in Maruti at this level if I believe that EV will not be a disruption in next 5 to 10 years. In to days fast moving world 10 years is big time period and those who are not prepared for the change should be ready to get wiped out. A world class company is not the one who can withstand disruption but the one who can bring disruption. Maruti along with Suzuki should work in developing EV cars rather than defending themselves from EV .
Disclosure : Not invested but tracking the segment.
You are mistaking few things.
â CNG needs to be transported but electricity can be charged in your own parking lot using 15A socket. Just check Kona electric specs. This is one reason CNG is taking so long as you need hard infra and reliable transportation but electricity has already reached almost all the villages. This is a distributed infra for EV and would be quicker to come up.
â Only limiting factor is cost of electric battery and replacement costs. I think I read it somewhere that battery costs have fallen to 175$/kwh and if it reaches ~100-125/unit, it would ready for mass adoption. It is matter of time not if that we would be adopting it by the end of this decade.
â It is another matter that I do not consider EV so much environment friendly over its full life. I also believe that India like China would phase out subsidy for EVs sooner than expected. I am still not so bullish on Maruti for different reasons though.
Do anyone remember - âKitna deti hai?â ad of Maruti Suzuki?
This was one of the most popular advertisements of Maruti targeting the fuel-economy specific mindset of our countrymen. I strongly believe that in the EV era - rules of the game will be re-written and Maruti will lose its edge of fuel-economy (and it may or may not remain market leader of EV-era). It is not necessary that only Maruti will have the best batteries; It can be any established Chinese player or some other brand.
Hundai has launched KONA, and Maruti and Mahindra and Bajaj are still in the denial mode.
Maruti has no cars on the 25 lakh price bracket. Sales of Kona wonât pass even 100 units a month at launch and may fall to below double digits.
Mahindra has EV for a long time. Maruti will have one soon although sales may be low.
The best and efficient engines are made by Fiat and Honda. The 1.3 MJD doing duty on Maruti is from Fiat. The Vtec from Honda makes it miles ahead of Maruti. In spite of all these, Maruti dominates sales. So the engine and fuel efficiency is just one part of the equation. Similarly for a battery, the AH rating and charge characteristics will only be part of the equation. It is too early to discount Suzuki when EV replaces ICE. If you have owned a Tesla or know someone who does, you would know the problems it has. It too needs a service network. People are unhappy that Tesla gives free towing for a short distance while the service network is so weak. So a wider distribution network will be good for EV too as they have to be serviced when something fails.
A non car maker will have tough time selling an EV car. If battery is to EV, engines are to ICE. Indians donât buy the best or fuel efficient engines. They look for a package.
Building an EV is not as simple as being stated by the media. The Chinese cars had battery cooling issues and we know what happened when battery started to die prematurely. We saw how a minor accident of Wagon R EV caused a coolant leak. Engineering an EV is not easy even for a car manufacturer like Suzuki.
EV will take time, and become very real since it has a strong value proposition, and it is stronger than CNG. Plus electric is more readily available than the CNG solution and hence it is becoming very popular in the US also, esp. for cars that just plug into an extension cord (Nissan Leaf and Chevy Volt). The key is the price of the car, the amount of maintenance required (once a year) and also the cost of the car.
So, EV is a question of âWHENâ and no question about âIFâ. In India, also, and around the world also.
Petrol, CNG and Diesel will be used for other purposes that it will find, and for sure, planes are not going to become EV soon! Sure Drone-Taxi might be, but it will just be a âtaxiâ and not fly you over the ocean as yet!!!
KKP
EV may not see much success as it is not the perfect thing YET. EV cars has many issues like less mileage (https://www.businesstoday.in/sectors/auto/tata-motors-electric-cars-mileage-tigor-ev/story/279730.html) (so recharging stations are needed in more frequent intervals), poorer ability to recycle/dispose batteries. Unless the recycling process (also culture) improves we may end up reducing greenhouse gas emission but pollute the planet in other grave ways.
The perfect fuel (Hydrogen Fuel) has many issues in direct implementation, but in-situ generation capabilities are building in a great pace with world-wide funding. Rockets run on direct Hydrogen fuel since 1970s.
The target is to reduce carbon footprint to zero by 2050 to avoid adverse environmental impact. Greenshouse gases have caused much damage to the Ozone layer and the repairing takes time (even if you reduce greenhouse gases) because of the slow diffusion of Stratosphere. But even if we canât reach that deadline and move to CNG (less Greenhouse gas emission) completely ASAP, then we would be much better off. In-situ Hydrogen fuel implementation shouldnât take much longer than a decade or two to reach practical use. IMHO complete EV implementation isnât practical in its present state.
Nevertheless, Disruption is real, be it EV or Hydrogen fuel implementation.
One possibility that we havenât discussed is what if Maruti partners with a foreign EV manufacturer (non-traditional Auto OEM) and jointly launches their EV with customization for Indian market? Along the lines of how the collaboration with Suzuki may have started at the very beginning?
They have already done that with Toshiba Denso.
Thanks Vijay, but thatâs for batteries. What I meant was that developing a EV from scratch is not the only alternative for Maruti to compete and dominate market in this space.
The partnership with Toyota is for the purpose of getting the technology to plug them directly to any of the Suzuki platforms.
Massive benefit for Maruti Suzuki as Toyota has finally agreed to move to EV instead of Hydrogen.
The shift in body shape will be the key for PV makers. Maruti launching more in these segments will be vital for success.
Maruti UV/SUV
Ertiga
Ertiga 6 seater Nexa
Future S based S-Presso
Brezza
Vitara Nexa
So much talk on EV leads me to brief history of vehicles
As we are on Maruti thread, I will start from maruti, which is hardly 40 years old in India. Coming to fuel which drives engines⌠petrol was only option for passenger cars & it was quite stable. New inventions started & cars with diesel engines were seen as threat to petrol versions primarily due to huge difference in prices of both fuels. The diesel cars were priced a little bit higher for a while but reduced subsidies on diesel ensured that now we donât see that huge difference. Even when this dust was settling down, LPG/CNG made headwinds & in a span of few years, we know the fate of that. As we are moving towards EV, batteries are going to be largest barrier / hurdle / challenge. New inventions have shown that it can be a threat & attempt to replace other fuel operated vehicles. I see it as a passing wind as batteries require material/ chemicals for manufacturing & they need replacement at specific period.
We have limited crude oil & hence are exploring options to reduce our dependency on them but moving to LPG / CNG & now to batteries may not be a long term solution. We will move towards other sources e.g. solar / hydrogen & may be certain unknown options.
Coming back to impact on equities & passenger car makers, I do see it as a threat which can be handled smoothly by established entities although few may have impact on topline / bottom line for few years but at the end all these sources will survive having their own share in total no of vehicles.
This is why I am getting more bearish on Maruti and other Indian Automakers on their pivot towards EV. With Govt fiscal situation constraint, govt can only offer legislative support in terms of uplifting EVs and also further adding caps on ICE vehicles.
But without Cash Subsidies or manufacturers cost incentives support, Manufacturers would struggle to make a profit. This will be time when foreign EV players try to gain market share away from Maruti and other Indian established players due to their well-defined battery supply chain. You see that playing out in CV space with BYD Buses.
Supply Chain is key here right from mining metals, processing chemicals, battery Giga factories to Technical tie-up with right EV partners. Battery prices(avg) to drop below $100/kWh by 2023. This is when you will see wide use of batteries in EV and Energy storage.
Whatever has played out in China is more than likely to be happening in India. Most of EV companies in China are running at loss.
On Technical charts, Maruti looks bearish and we cannot rule out 4800 kind of range in near term.
