Why Maruti Suzuki is not betting on EVs in India just yet

The world is slowly but steadily shifting towards electric vehicles (EVs), with plans to phase out fossil-fuel-based vehicles. New innovations and interests are the driving factors along with the fact that people are keen on exploring alternatives for sustainable mobility. The recent successful launch of the Ola S series scooters proves that fully electric vehicles can be a viable option. The central government along with various state governments have also encouraged this shift with subsidies and incentives for EVs.

But the country’s largest automobile manufacturer, Maruti Suzuki, remains lukewarm towards EVs. The company’s reasoning is simple -- the conditions are not right yet. R.C. Bhargava, Chairman of Maruti Suzuki India, reiterated the point, saying the company has no plans to enter the fully electric segment at any point in the near future. Bhargava told shareholders of the company that the current infrastructure and the economic conditions in the country did not make it feasible to put out EVs at the moment.

“Maruti Suzuki is the leader in the passenger vehicle industry, and it fully intends to have leadership in EVs. But it is important to understand EV penetration will only happen in India when conditions become such that consumers can buy it," he said.

Though Maruti Suzuki has not fully focused on EVs, it is still moving to less carbon-emission intense cars with CNG and hybrid vehicles. The company has focused on these two segments to drive growth in the alternative fuel niche of the auto market. Though competitors like Tata Motors and Hyundai have already put out a significant portfolio of EVs, Bhargava said sales volumes were too low to justify the losses that would result from shifting focus to EV production.

Bhargava also highlighted the potential of hydrogen-based fuel as an alternative to EVs. As the scale of EV production increases in India, the scale of lithium imports also increases as it is a key component in EV batteries. The major source of lithium imports in India is neighbouring China.

The cost of EVs also run high for customers even after factoring in the government’s incentives and subsidies. The cost of lithium is often passed down to customers, resulting in EVs that usually cost upwards of $20,000 (Rs 14.8 lakh), which are often out of the budget of most consumers. India’s low per capita income of just $2,000 makes it hard for most consumers to justify the purchase of EVs, notwithstanding the potential savings over a period of time.

"We need to recognise that our strategy for moving towards net-zero emission has to be consistent with the economic and infrastructure conditions prevailing in the country. The use of hydrogen is also an interesting alternative," Bhargava added.

The lack of charging infrastructure across the length and breadth of the country add to the non-viability of EVs in India. For the moment, electric vehicles have to make do with constraints, which means being confined to some large urban areas with developed charging infrastructure.