'Manufacturers cannot depend upon ad-hoc policy, need consistency and long-term roadmap': Merc India MD

Merc India MD Santosh Iyer

Mercedes-Benz India took the wraps off its latest EV offering – the EQA. Expected to be priced around Rs 70 lakh, this is Merc’s sixth EV offering in the country, and also its least expensive. In a sit down interview with Moneycontrol, Mercedes-Benz India MD Santosh Iyer discussed his roadmap for Merc’s electric offerings. In a first from a manufacturer, luxury or otherwise, Mercedes-Benz India is offering a guaranteed buyback value of 67 per cent at the end of the year, if the customer is upgrading to a new Mercedes-Benz. Breaking down the TCO, Iyer stated that Merc’s EV customer stands to save Rs 2.4 lakh across a four-year ownership period, when compared to its ICE counterpart.

Set to launch at a time when India’s mass market EVs are witnessing a record slowdown, Iyer remains gung-ho about the prospects of top-end EVs (TEVs) or luxury EVs but remains skeptical about long-term growth and market penetration in the absence of equally long-term policy consistency. Despite higher purchasing costs and the absence of a proper public charging ecosystem, Iyer maintains that the overall benefits of EVs are worth the premium given the tax bracket and lower running and maintenance costs.

“What does a luxury EV provide at its price point? It provides the performance of a sports car, the total cost of ownership of a mass market car thanks to fuel and running cost savings. So it (EV consumer demand) should work. But the space is still struggling because of the lack of long-term policies.

On the need for subsidies and FAME II extension

Although the luxury EV segment is immune from the lack of subsidies, Iyer is clear that the mass market EV segment needs subsidies for better acceptance and transition. “More subsidies will definitely help with the transition to EVs for both two-wheelers and mass market cars” says Iyer while adding that “There has to be a roadmap. The government is to say that this will continue for 10 years. And with that the OEMs can make deep investments because if policy is to change every year OEMs will not be sure where to put in their money. Demand is factored on pricing.

“Take Nepal for instance. Their EV infrastructure is just as good or bad as ours but EV penetration was at 75%. But the only reason penetration is so high is because EVs are cheaper than ICE.” says Iyer, insisting that with 80% of charging requirements being met at home, public charging infrastructure is a secondary concern. If we are looking at it from a purely economical sense and we need to reduce the oil import bill, then FAME extension is needed. Manufacturing and investments cannot depend on adhoc-ism. It needs consistency”

On the democratisation of public charging and the issue domestic charging 

Even the extensive range of Mercedes-Benz’s EVs cannot counter the issue of a patchwork public charging network, which can see further delays in expansion with an EV sales slowdown. “Certainly. And a lot has to happen on that end. Also, when I look at Charge Point Operators (CPOs), I think they are all trying to guard their ecosystem. Some are open to aggregation. So we have a free app that we are able to aggregate some of them, but not all, because they feel like they will lose their customer data and wish to limit the customers to their own ecosystem.” says Iyer drawing a parallel to the mobile phone industry. “When they came to India, every operator wanted their own towers and then at some point they felt that it is better to consolidate” In India we are so digitally advanced, we have payment gateways and yet we don’t have a single supercharger app. But CPOs are realising this because they are only running at 20% utilisation of these chargers. Democratisation of public EV charging is something manufacturers and the government need to invest in together.

On the myths surrounding residual value of EVs

With EV sales slowing down globally partly due to high purchasing costs and partly due to poor residual value, Iyer aims to address the issue in India, where the luxury EV segment appears to be growing. “Having seen it with iPads and mobile phones, the customer feels, from memory, that the life of the battery will go down and lower the resale value of the car”. “Nobody thinks that the state of an ICE engine will stop working. It’s the same with EVs which have a much longer warranty period. The state of charge should remain more than 90% even after 10 years. So the life of a battery is beyond 15 years. And even after that, if I were to take it to a scrap dealer, the battery can be recycled to up to 96%, whereas an ICE car will be sold for parts at that point.

Will there be more confidence in EV resale once the first batch of passenger EVs reach the end of their life-cycle? 

Yes and no. No, because some first-gen EVs were not engineered in terms of software or battery quality, in which case customers are experiencing issues. This has also caused a lot of negativity towards EVs. Today’s crop of EVs, at least on the luxury front, can boast of a range of 500 plus kilometres. The batteries are of much better quality.

On top-end EV market penetration being higher than mass market EVs by 2030

If it was only between us and the customer deciding, we could see a lot higher market penetration. But there is another stakeholder, which is the government. If the GST changed to 18 per cent tomorrow, we are back to 2 per cent market penetration. If there is a change in state EV policy and they apply road tax for EVs in big markets like Mumbai, Delhi, Bengaluru and Hyderabad, the market penetration stops right there. Without a long-term policy outlook no one can predict the penetration of EVs or any other specific data point. That lever is held by the government.

On learnings from the lacklustre success of its first locally assembled EV

Despite being the first luxury car manufacturer to offer a locally-assembled EV, the EQS failed to meet its expectations, having been pipped by BMW to the top spot in EV sales. Having recently surpassed the brand in the EV segment as well, the long-standing leader in the luxury segment has made a few changes to its EVs that appears to be making all the difference. Iyer states that the likes of the BMW i7 worked because it looked similar to the existing 7-Series. “Had the EQS been an electrified version of the S-Class, it would have been a very different story. But keeping regen and aerodynamics in mind, we launched a design that was perhaps ahead of its time” In contrast the EQA, despite being built on a pure EV platform, looks nearly identical to the GLA, because Merc has learnt that when it comes to making the switch to EVs, consumers are looking for similarities on the visual if not the technological front.