No delay expected in Maruti Suzuki's 2025 EV entry due to low penetration: Chairman RC Bhargava

Officials in states continue to function like licence raj days, says Maruti Suzuki chairman RC Bhargava

Maruti Suzuki India Limited (MSIL), which is gearing up to roll out six electric Vehicle (EVs) by the turn of the decade, believes that it is not a late entrant in foraying into battery-run vehicles. MSIL Chairman RC Bhargava believes that it has ample amount of time as the penetration of EVs is less than two percent of the overall Passenger Vehicle (PV) market.

“It is not as if somebody has gone and taken a huge market share and we have been left behind. It will be two percent next year and then we will be in the (EV) market. What is it that we are slow with,” stated Bhargava said on September 26 during a fireside chat session titled ‘Reinventing Maruti: Continuity with Change’ at an event organised by All India Management Association (AIMA).

Bhargava also revealed that it was one of the first automakers which started focussing on EVs by developing the electric variant of WagonR hatchback. However, it didn’t commercially roll out the e-WagonR because the company didn’t find it a “viable proposition”. Eventually, it started working on a bigger sized model called ‘eVX’, which is a ground-up EV and will be rolled out by 2025.

“I think by the time we come into the market with electric cars, there would be the possibility of a reasonable volume being sold,” added Bhargava. He had earlier revealed that its maiden electric car will not be priced below Rs 10 lakh.

When queried on the reason behind coming up with six models, Bhargava maintained, “By 2030, the sale of cars in the domestic market itself will be somewhere close to six and a half to 7 million cars (per annum). If were to keep 45 to 50 percent (share) of the market, we can’t do it by having one or two models. We need to have a large number of models to get the kind of volume that you want to have. And six models, we feel are the minimum required. Even with six models, we think that by 2030, only about 15 to 20 percent of our sales will be electric vehicles.”

Meanwhile, MSIL is aiming for complete indigenisation of its entire lineup. While the passenger vehicle (PV) market leader still depends on imports for certain critical components, especially semiconductor chips, Bhargava believes that once domestic electronics manufacturing catches up, the country can reduce its dependence on overseas markets.

“Today, virtually all electronics that go into the cars are being imported. There is no real electronics (manufacturing) industry in India. So to get the supply chain to become more reliant and stable for India, I think what the government is doing -- getting electronic manufacturers, especially semiconductor makers into the country -- is one of the very essential requirements,” revealed Bhargava.

Bhargava also outlined how Maruti set new standards and processes and showed new ways of building supply chains.

“We have a strong supply chain, (but) the weakness we have is that there are a few new technologies- internal components of assemblies- which are not being manufactured in India and we need people (companies) to come and manufacture here. The biggest area (to look into) is semiconductors,” he observed.

Over the last few years, MSIL has been sharpening its focus on high-margin premium offerings such as Baleno, XL6, Grand Vitara, Jimny, Ciaz, Invicto and Fronx, which are retailed across its Nexa chain of outlets. Unlike its low-cost product lines, all the aforementioned models are equipped with connected car features and other technologies that are underpinned by multiple semiconductor chips.

“Every car manufacturer has to get more component manufacturers into India. So that India not only becomes self-reliant in its supply chain but also becomes an integral part of the global supply chain for many other countries which are looking for something other than China," Bhargava noted.

Even while Prime Minister Narendra Modi is aiming for a self-reliant nation when it comes to building products in the country, it may be a long road ahead for the automobile industry to align with that vision. The automobile sector, which contributes 7.1 percent to the overall GDP and 49 percent to the manufacturing GDP, is still dependent on countries like China and Taiwan for sourcing certain critical inputs like semiconductors and battery cells.

Talking about capabilities from the domestic supply chain, the MSIL chairman stated, “One of the essence of the Indian car industry is the way the component industry has grown over the years. The component industry is not merely supplying to India but exporting to worldwide markets. I think exports have gone up, about $20 billion of components are exported out of India.”

He further maintained that the semiconductor availability is improving, and there will be negligible impact on its production.

“At the moment, there is no real constraint on the semiconductor front. In the second half of this year, beginning from October, I don't think our production will be affected because of any shortage of semiconductors. So I think you can be rest assured that if you're planning to buy a car, it will not get delayed because of semiconductors," asserted Bhargava.