NITI Aayog, two-wheeler makers to brainstorm electric roadmap today

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NITI Aayog, two-wheeler makers to brainstorm electric roadmap today

Meeting will hopefully chart out a realistic timetable for e-mobility

Friday’s meeting between NITI Aayog and the two-wheeler industry will be critical to draw up a pragmatic electric mobility roadmap for India. The Centre’s policy think-tank has called for this session with the top management of two and three-wheeler manufacturers.

The last few weeks have seen some of the big guns from Bajaj Auto, TVS Motor, Hero MotoCorp and Honda articulate their concerns on the deadlines proposed for electrification in three-wheelers and sub-150cc bikes/scooters. The Centre, through NITI Aayog, has indicated that it is looking at 2023 and 2025 for a complete conversion to electric for these two product categories.

The industry, in turn, is upset with this ad hoc announcement since stakeholders already have their hands full in meeting the Bharat Stage VI emissions deadline that comes into effect from April 2020. From their point of view, it is an important step to clean up the air and there is really no need to hasten the electric programme. Quite rightly, manufacturers have also said that this would lead to disruptions in the supporting ecosystem of dealers, suppliers and the overall workforce if the internal combustion engine is shown the door overnight. The Society of Indian Automobile Manufacturers (SIAM) has also cautioned that it makes sense to take one thing at a time when it comes to e-mobility.

It is in this backdrop that the meeting between NITI Aayog and the two-wheeler companies assumes tremendous significance. In all likelihood, both sides will try and work out a deal where there is some give-and-take. Perhaps, NITI Aayog may extend the deadline or mandate electric only for select metros whose residents are literally suffocating in foul air.

Two-wheeler manufacturers have already made it known that they are all for e-mobility so long as it is a logical, phased programme that will not hurt any of the stakeholders involved. Startups that are into their own electric scooters have reiterated that they have no problems embracing electric with immediate effect. This is easier for them since they do not have the scale of their traditional counterparts that make millions of motorcycles and scooters every year.

Yet, there are some serious concerns that need to be addressed first. While the Centre is keen on showcasing India’s clean air drive to the rest of the world, this should first be preceded by implementing a scrappage policy for all categories of vehicles first, right from two-wheelers and cars to trucks and buses.

Necessary steps

Any product that is over 15 years old should be removed from the roads and it is up to the think-tank in New Delhi to come up with an incentive/compensation package for such a move. After all, it makes little sense to think of electric and the like when there are other polluting vehicles on the roads. It would just become an enormous exercise in futility.

Two, going electric is fine but what happens to two-wheeler manufacturers like Bajaj Auto, which are heavily into exports? Over 40 per cent of the company’s production is shipped overseas, which is truly a testimony to ‘Make in India’. But this will become irrelevant if electric is made mandatory. For any exporting entity, be it Bajaj, TVS or Hero, balancing between electric and the internal combustion engines (ICE) for the domestic and overseas markets will become a tall order.

Three, suppliers who make ICE parts will find themselves marooned in an era of electric. They will have to sack redundant employees who cannot cope with the new regime and even close down operations if they are pushed to the brink. This will be an extremely costly price to pay that also has the potential to wreak havoc in an already fragile ecosystem where unemployment is on the rise.

The crisis could also extend to dealers who may face new challenges in retailing e-bikes. Sale of parts in the aftermarket, which forms an important revenue stream, will take a nosedive as the rules of the game change. These are real issues that cannot be wished away even though it is becoming crystal clear that the Centre is not going to give up on its drive to go electric.

Unrealistic targets

It was not too long ago when policy-makers drew up a grandiose vision of striving for 100 per cent electric in the automotive ecosystem by 2030. Clearly, this was an impossible task given that precious little had been done at the ground level in terms of providing for charging infrastructure or fiscal sops to get the momentum going. One of the more serious players in this space, Mahindra & Mahindra, has been facing headwinds precisely because of these reasons.

Since then, this unrealistic forecast has been reduced to 40 per cent and thereabouts even though speculation is rife that the Centre is keen on changing the goalpost all over again. The auto industry, which is already facing slowdown challenges, will be in no mood to oblige as was apparent in the recent spate of reactions to the electric roadmap for two-wheeler companies.

From manufacturers’ point of view, there is really no point putting the cart before the horse when it comes to serious issues like e-mobility. It is increasingly clear, however, that the present political regime subscribes to disruption as a tool to ensure that the industry is constantly ahead of the curve and does not slip into a somnambulistic mode. There is a feeling within policy-maker circles that not all manufacturers are proactive when it comes to change and would rather have the status quo continue.

 

This perhaps explains why legal intervention has been necessary from time to time, as in the case of CNG being made mandatory for Delhi nearly two decades ago or the more recent case of the move from BS III to BS IV.

When this happened in March 2017, most manufacturers were left befuddled since they barely had four days to clean up old stocks at dealerships and replace them with BS IV vehicles. There has been no ambiguity on the BS VI deadline with the directive loud and clear that as of April 1, 2020, manufacturers will not produce any BS IV vehicles. As in other parts of the world, especially in Europe, where clean emissions have almost become an obsession, India is equally keen to make a statement that it is committed to this objective.

Sound policy needed

This is clearly the reason for the mega electric drive except that it needs a sound policy on the lines of what China has formulated and successfully executed over the years. The key for India is to take one step at a time where cities can be covered in phases first before endeavouring to have the entire landscape virtually electrified.

This is not going to be a walk in the park for sure and the industry is perfectly justified in being apprehensive about any radical shift to electric. After all, it is an all-new domain where building expertise will take time. However, where the Centre could be right is that it is equally imperative to start taking serious steps first.

There is also every possibility of paving the way for cheap Chinese electric parts that can literally flood the market and pose a threat to Indian manufacturing. The following decade will be a huge challenge for auto-makers as they look for a host of solutions to tackle vehicular emissions in the subcontinent.

Electric is inevitable but there is no point giving a shock to the entire ecosystem at one go.

https://www.thehindubusinessline.com/specials/auto-focus/niti-aayog-to-meet-with-two-wheeler-manufacturers-to-discuss-electric-vehicles/article28088751.ece

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