As battery costs remain high and India continues to depend upon China for battery cells, Bajaj Auto has decided to travel slow on its electric vehicle plans for the nonce.
Bajaj Auto became India’s first large two-wheeler maker to enter the electric vehicle space with the launch of the battery-powered Chetak, which was introduced within the half-moon of FY20.
The launch, however, has been restricted to only two cities (Pune and Bengaluru) thus far, while the corporate is functioning to honour delivery commitments for bookings made by customers a couple of months ago.
“While we believe that there’s a robust case for electric vehicles (for the Indian market) it’s mainly at the merchandise level because obviously EVs are very convenient and environmentally friendly. But at this stage, their commercial proposition is extremely weak. The high battery costs limit the event of the category,” said Rakesh Sharma, executive, Bajaj Auto, at the 13th Bajaj Auto annual general meeting.
In addition to the two-wheelers, Bajaj Auto, the market leader in three-wheelers, is additionally performing on electric solutions for the three-wheeler segment and also for quadricycles. In fact, its electric three-wheeler was scheduled to enter the market in 2017 itself, years before the sooner target of 2020.
Prices still high
Though global battery prices have fallen by 85 per cent since 2010, from quite $1,000 per kWh to $150 per kWh in 2020, consistent with a search report released by Avendus Capital, they continue to be discouragingly high for mass adoption.
“It is sort of probable that cost will reduce through technical innovation, and therefore the category, in due course, is going to be widely prevalent. But the timing of this occurring is very uncertain and hence our approach is to undertake a limited development of the electrical portfolio both in 2-wheelers and subsequently in 3-wheelers in order that we build our capabilities and move up the training curve and be prepared for the future”, added Sharma.
China dominates battery supply
The Avendus Capital report has predicted an extra fall of 27 per cent within the prices of batteries to $110 with by 2025. China controls nearly three-fourths of the worldwide lithium cell manufacturing capacity, according to a BloombergNEF report.
Further, given the uneasy geopolitical situation between India and China, unhindered supplies of battery cells from China aren’t guaranteed. this is often whilst a couple of automotive companies have started work on installing battery cell manufacturing plants in India.
India had instituted heightened scrutiny on shipments originating from China, Hong Kong and Macao stumped ports resulting in severe congestion and delays of multiple days. Bajaj’s Chetak also depends on components from Wuhan in China and is predicted to face delays getting them.
Bajaj’s rival TVS Motor Company, which launched a Chetak rival within the half-moon of FY20, has also lined up an electrical three-wheeler model. additionally, Italian automaker Piaggio became India’s first car company to launch an electrical three-wheeler.