After reports emerged that the centre was considering a proposal to ban the sale of internal combustion engine (ICE) three-wheelers by 2023 and less than 150 cc two-wheelers by 2025, Chennai-based TVS Motor Company wants the government to extend the deadline on electric vehicle switchover.
Venu Srinivasan, chairman and managing director at TVS Motor is an engineer with a Master of Science Degree in Management from Purdue University in the USA.
Also read: TVS Motor Company launches India's first ethanol-powered bike Apache RTR 200 4V
To improve the performance of the company, Srinivasan implemented total quality management in TVS, which won the Deming Prize, considered the Nobel Prize in quality, in 2002.
Here are edited excerpts from the interview:
Q: First of all tell us about the kind of investment you are making into these ethanol motorcycles?
A: More than investment, it has taken a year of engineering effort as all the rubber parts had to be made resistant to ethanol and it is a completely different combination or blend or chemistry from rubber parts made for petrol bikes.
Secondly, the cold start with ethanol is more difficult so fuel injection had to be tuned specifically for ethanol. Now that has been done, it will work, but it took a year of engineering effort.
Q: Is this only aimed at certain sugar producing states in the country in the first phase?
A: It starts with Maharashtra, then hopefully Uttar Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu. If there are pumps near to sugar mills, they will be served 100 percent dry ethanol.
Q: How are you ensuring fuel availability as this would be a question on everyone's mind?
A: Fuel availability is being driven by the minister and he has assured us that the fuel will become available based on which we have developed.
Q: Are you trying to launch it in a particular city or in a particular state?
A: Nagpur to begin with as that would be a place where he is going to get the first ethanol pump setup.
Q: How soon can one expect that?
A: You have to ask the government.
Q: What about the price point? We were told that this would not be significantly more expensive than the conventional Apache?
A: It will almost the same prices as the conventional Apache around Rs 1,20,000.
Q: You have plans for the domestic market, but what about the exports?
A: Exports would be a significant possibility in Brazil. The G85 fuel is a standard fuel so that is the first market we would look at for exports.
Q: Are you looking more at exports at a greater export market or more at a domestic market?
A: Well, it is only Brazil and India right now and Thailand I am told is possible. We have to explore that as we are not very big in Thailand right now.
Q: From your own surveys where do you see the maximum demands for these motorcycles coming from? Do you think there is a demand for ethanol driven motorcycles?
A: It will be cheaper to run and therefore the demand will come as it is cheaper to run.
Q: Are you betting on this for the long run? Are there other products also in the offing including a three-wheeler?
A: Three-wheeler will come for sure and then there will have to be a commuter bike at some point in time.
Q: This is not just a pilot project so there is a definite plan in place?
A: Hopefully, there will be at least be two bikes and a three-wheeler.
Q: This is a time when the government is focusing a lot on electric vehicles (EV). Do you feel that when you have a technology like ethanol it is better to support different technologies including the ethanol technology till we reach that transition phase or that maturity in the market to transition to an electric vehicle?
A: Our opinion is very clear, you should not resort to bans, you should allow markets to develop, you should encourage products in the direction you want to go. There are three objectives of this. The first is you can reduce pollution. But given that most of the energy produced is 88 percent from thermal coal from pithead to the wheel, it is actually more polluting than electric.
The second problem is electric bikes will depend on batteries which is a major cost and that lithium is controlled by China, so geopolitically, strategically we have to consider that.
The third thing that we have to consider is localised pollution in 14 cities which are very polluted. But there if you use the same money for taking out BS-II and BS-III bikes and replacing them with BS-IV and BS-V, you will have a sharp reduction in pollution. Given all that, we have to see what we want to achieve and it is not clear to me that this banning will achieve exactly what the government wants.
Q: As there is a large eco-system, millions of jobs which are at stake because of the internal combustion engine (ICE) ecosystem?
A: More than one million jobs are at stake. So, you have to have a natural progression. However, more than that what do you want to achieve for society as a whole, leaving aside the issue of motorbikes and motorbike manufacturing companies and their employees and the service employees. I think we need to consider pollution, we need to consider greenhouse or carbon dioxide emission, we have to look at strategic dependence on scarce rare metals. So, I think those three will be primary.
Q: So, rather than focusing on banning ICE engines by 2023 and 2025, going for just electric vehicles by a certain date. Would you suggest that we should go ahead to promote all technologies?
A: I think it will take a longer time, I think 2025. We have promised to come back with a study and it will be a longer horizon but I cannot say when. I think you can use the Corporate Average Fuel Economy (CAFE) in those areas where you have high pollution. Higher CAFE norms will automatically make sure greater percentage is coming from electric, I think that is the right way to go. The pollution load coming out from two-wheelers is exaggerated. According to the studies we have done, prima-facie two-wheelers play a much smaller role. Total automotive pollution in these cities is about 20 percent. Out of the 20 percent, a very small percentage is two-wheelers. So, I think we would like to do the full maths on that and after the math is done, lets us sit and talk.
Q: Lot is at stake here for the industry?
A: A lot at stake and I think it is a very important industry, in scale, in employment and in exports. This is the only business that exports as much - large mass manufacturing industry that exports are motorcycles.
Q: We are looking at a 12 percent drop in overall sales in the automobile industry year-on-year. If we talk about the two-wheeler specifically, it is down 11.6 percent. We had Pawan Goenka on CNBC-TV18 the other day and he said, this is the worst slowdown since 2001. SIAM also feels that this kind of slowdown is unprecedented and if this degrowth continues, we could suffer job losses and original equipment manufacturers (OEMs) will have to resort to emergency measures, do you share that view?
A: It is a very serious concern to everyone in the automotive industry. I have not seen a slowdown like this. In 2008 by pumping in money and reviving demand, we adopted lose money policy and very quickly the market came back. I hope this government will do something very quickly to make money available for purchases otherwise there will be dire distress in employment and in small and medium companies which are the foundation of industry in our country.
Q: As a veteran as somebody who has seen TVS Motors and the automobile industry over the last four decades, do you feel that the industry, the OEMs are putting their growth, investment plans, further recruitment on hold currently?
A: I think definitely further investments, all of us have got idle capacity now, so investing further now is out of the question till we see some light at the end of the tunnel.
Q: What would your recommendation, your wish be at this stage in a year when the industry is going through a lot of volatility?
A: I think first is smaller non-banking financial companies (NBFCs) that operate in small towns which lend money to appliances, two-wheelers particularly low-ticket items relatively, I think they do not have access to bank finance after the IL&FS, NBFC crisis. So, they have to be supported. Lending only to AA does not help the small NBFCs in small towns. Our concern is that they should get money to lend.
Q: Would you also bat for a GST reduction?
A: GST, particularly on two-wheelers, is at the highest rate. It is something I cannot understand as why should motorcycles and bikes which are really a common man's product suffer the highest level of GST. We were hoping for an 18 percent GST but that has not come through.
A: We were hoping for 18 percent Goods and Services Tax (GST) and that did not happen.
Q: Were you shocked that there were incentives for electric vehicles but an industry which is going through a volatile phase did not get a stimulus in the budget?