Echoing India's G20 Sherpa Amitabh Kant’s views that new-age entrepreneurs will disrupt India’s automotive industry ecosystem, a senior official of Bajaj Auto Limited (BAL) stated that electric vehicle (EV) startups are actually playing an instrumental role in generating demand in the domestic electric two-wheeler industry (E2W). He also said that such private-equity-backed firms helps traditional players like Bajaj Auto reinvent themselves.
“It is actually fantastic that there are so many startups in the country in automotive and other industries. Had there not been so many startups backed by big money of private equity (firms), the penetration of electric two-wheelers may not have gone off to a good start. Startups’ entrepreneurial energy combined with the risk-taking ability of private equity players (form the ideal) combination. Yes, a bubble is happening in the EV industry,” Rakesh Sharma, executive director, Bajaj Auto, told reporters on the sidelines while opening an exclusive Chetak showroom.
Chetak, the iconic Bajaj Auto brand when it was primarily a company that made conventional (internal combustion engine or ICE) scooters before abandoning the segment and shifting its focus to motorcycles has been reincarnated as the E2W flagbearer for the company.
He drew parallels with the African two-wheeler market, which was flooded with cheap Chinese ICE products, saying that when that continent banned Chinese vehicles, Bajaj Auto made a strategic entry and is now a well-established player there with Chetak E2Ws.
Sharma added, “It is a new category of the industry and players need to present it in a responsible manner. There were quite a few thermal incidents (where vehicles have caught fire) which have a demoralising effect on consumers. If the challenges are overcome and standards are maintained, a responsible startup is very good for companies like us. This is because it keeps us on our toes, brings in a lot of energy and creativity.”
When asked to put a timeline for attaining market leadership in the E2W space, Sharma, while drawing an analogy to a Formula 1 season, said the company is in for the long haul and doesn’t believe in winning one or two races.
In his view, “We don’t want to be number one or two on the stand and be exhausted in the races that determine the winner. “We are not volumetrically-led and are not position-led. The time for that will come and you will not find us wanting. This is the time we have to learn, build R&D and manufacturing capabilities, create a robust supply chain and set up an exclusive network (for Chetak). Once we create all the building blocks, we will be among the top 3 not just in India but among the world,” he said.
Bajaj Auto said it has entered the 'scale-up' phase in its EV journey as it aims to produce 10,000 Chetaks a month by June. The Pune-based company stated that it is was facing glitches in its supply chain and hadn’t been able to ramp up production and was slow in expanding its network.
Eric Vas, president of Bajaj Auto’s Urbanite business unit, which houses its E2Ws, told PTI that the company had suffered “production constraints” due to the transition to the new battery norm AIS 156B, which came into effect from April 1 for enhanced safety. However, he stressed that the constraints have been resolved to a large extent.
"We are trying to reach a monthly output of 10,000 units by June. It is a supply chain issue," Sharma told reporters. He also stated that the company is churning out 5,000 units in the current month and will aim to get to 7,000 units by May. He revealed that the company had been facing problems earlier due to “over-reliance on certain vendors” who could not supply certain parts. "That we sorted out by the first quarter and it is giving us some confidence," he said.
BAL plans to establish around 150 exclusive outlets for the Chetak electric scooter by September, and is taking a calibrated approach to expansion keeping in mind the uncertainty over the extension of FAME II scheme, the subsidy offered by the government for promotion of electric vehicles, beyond this fiscal.
When asked about Chetak’s overseas plans, Sharma said, “We have earmarked certain countries in Asia, Latin America and Africa and are about to take a call. Having said that, the domestic market offers a lot of opportunity and take precedence for the foreseeable future.”
When asked about the outlook for 2023-24, Sharma said that if the supply chain holds out and demand keeps picking up, along with the network expansion, Bajaj Auto could touch a total of 1 lakh E2Ws between Chetak and what it supplies to electric mobility platform Yulu.
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