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Too early to be excited: Commercial vehicle majors give EV plans a reality check

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Too early to be excited: Commercial vehicle majors give EV plans a reality check


Top manufacturers such as Tata Motors and Ashok Leyland don’t see financial viability for the electric vehicle user at present.

It isn’t just two-wheeler manufacturers who are not sold on the government’s idea of a complete switch to electric vehicles in the coming years. Commercial vehicle majors — even those who already make electric vehicles — have begun raising concerns over the financial viability of the move.

Ashok Leyland, for instance, began gearing up to deliver 50 electric buses to Ahmedabad’s Bus Rapid Transit System or BRTS. However, the company has admitted spending most of its investment towards product development, and not so much on building capacity. This has meant that Leyland hasn’t quite seen potential, to make money from electric vehicles. At least not yet.
“It is a little too early for us to quantify and be too excited about the EV business at this stage,” Gopal Mahdevan, Chief Financial Officer, Ashok Leyland, told CNBC-TV18. “This is a development that will happen, but it will take three to five years before we see it get into solid touch and feel.”
These observations from the company come even as Ashok Leyland is currently evaluating business opportunities for its electric vehicle range. “What we are doing is evaluating opportunities, customers and application,” said Mahadevan, “Where does it (commercial vehicles) fit us? Where does it fit the customer? These are questions we are asking ourselves.”
Ashok Leyland isn’t the only commercial vehicle OEM who is choosing to be circumspect about India’s much-hyped EV migration. Tata Motors is another. For a company that has already delivered 160 electric buses to various public transit networks in five cities, Tata Motors by its own admission, does not see the financial viability for the electric vehicle user, as on date.
“Since a commercial vehicle is always bought for business purposes, it should make economic sense. And therefore, the cost-per-ton-kilometre that an internal combustion engine is delivering today — the same economics should be delivered by an electric vehicle,” said Girish Wagh, President (Commercial Vehicles), Tata Motors. “As things stand today, there is still a gap that needs to be bridged.”
Curiously, even companies like Mahindra Electric, who have taken the lead in rolling out commercial vehicles in experimental townships like Auroville, in Tamil Nadu, are being circumspect in their approach. For instance, the company’s much-hyped EV pilot project in Auroville hasn’t exactly made progress on the ground. But that hasn’t stopped the company from doubling down on its EV sales.
Mahindra Electric’s reported sales crossed the 10,000-unit mark in FY19, growing 2.5 times from the previous fiscal. While the company sold 4,026 electric vehicles in FY 18, it registered 10,276 units in sales in FY19. What’s more? Its EV plant in Bengaluru is set to touch 25,000 units in production capacity, later this year. However, unless financial viability is a given, forcing the switch to electric vehicles, may not exactly be a wise idea.
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