The EV two-wheeler is still long away from being profitable at unit level even with the Production Linked Incentive Scheme (PLI), said Dinesh Thapar, Chief Financial Officer of Bajaj Auto.
“Will PLI, in the case of electric two-wheeler, lead to unit level profitability? The answer is no. We are still some distance away,” Thapar said in the conference call after the company posted its Q4 results.
Thapar said with cost rationalization and alternate sourcing, the company is bridging the gap. But added that they haven’t completely filled the gap, even for EV three wheeler.
“There will be leverage benefits that will help the unit economics as volumes grow up. But the most fundamental piece is the price” said Thapar.
The company explains that pricing has played a role in the unit economics not being profitable. The price reduction to make the EV more affordable is outrunning the cost reduction.
Thapar pointed out that pricing has come off over last four quarters and it is essentially front running the cost reduction, which will play out over a period of time.
He said the unit profitability will get better assuming the price point stays where it is and when cost reduction benefits play over time.
In its Q4 results, Bajaj Auto reported an 18 percent jump in its net profit to Rs 2,011.43 crore. The pune based auto maker’s revenue went up to Rs 11,249.8 crore for the January-March quarter this year, up by 30 percent from Rs 8,660 crore during the same period last year.
The company also announced a dividend of Rs 80 per share (800 percent) of face value of Rs 10 each on equity share.
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