TVS takes slow and steady route for its newly created subsidiary for EVs

In April 2008, TVS Motor Com­p­any came out with Scooty Teenz Electric, the electric version of its Scooty model, targeting young women and college-going teenagers.

The company initially targeted sales of around 40,000 units a year. Though Scooty Teenz appeared to be a smartly positioned and prescient product, it failed to attract buyers, forcing TVS Motor to stop production in May 2009. Plans to launch TVS King, an electric three-wheeler, were also shelved. The executive heading marketing at the time had reportedly said the company had decided to “concentrate on selling regular motorcycles and scooters as the market was not good enough” for electric two-wheelers then.

Now, more than a decade later, the flagship company of the $8.5-billion TVS Group has been making slow but steady moves into the electric vehicle segment, but much of it is under the radar. At present, TVS has only one product in the category, iQube, which was launched in Jan­uary 2020. But as Ola Electric’s ann­ouncement of mega-plans on e-two-wheelers stole the show, TVS Motor made two announcements in the last two months that point to a long-term and fairly ambitious strategy for its EV business.

TVS iQube

In September, the Chennai-based two-wheeler major bought 80 per cent in EGO Movement, a Swiss e-bike company, for $17.9 million to ex­pand its presence in developed markets, including Europe. The com­p­any aims to generate $100-150 million in the next three to five years via EGO. This was immediately followed in October by the announcement of a strategic partnership with Tata Power to build electric vehicle charging infrastructure (EVCI) acr­oss the country, adding to a similar tie-up with state-run Convergence Energy Services (CESL) signed in June 2021.

Last week, TVS’ board also clear­ed a proposal to establish a separate subsidiary for the electric vehicle business (the name is yet to be announced). “The subsidiary will give us freedom, better focus and flexibility to create scale in the EV business globally,” said K N Radha­kris­hnan, director and chief executive officer, TVS Motor Company, in a conference call. TVS is also looking to invest Rs 1,000 crore in EV expansion. According to the plan lined up by Radhakrishnan, TVS is geared to create a capacity of 10,000 EVs per month by the end of this fiscal.

Impressed by this long-term road map, brokerage firm Nirmal Bang said TVS’ EV plans were “in the right direction that may lead to further value unlocking and capitalisation on the electrification shift”. Given the speed with which new players such as Ola and existing competitors such as Hero and Bajaj are moving, will TVS’ relatively slow-moving strategy work? More so, when the market is far from stable and faces many nascent challenges?

For instance, when TVS put the brakes on EV production in India in 2008-09, the electric two-wheeler market in the country was around 110,000 units (according to data from the Society of Manufacturers of Electric Vehicles). It fell to as low as 23,000 units in 2016-17 and bounced back to around 143,000 units in 2020-21. Much of this revival in demand has come on the back of heavy incentives that state and central governments have extended to consumers. But the ownership issues — a paucity of charging infrastructure, availability of parts and raw materials and poor resale value — remain.

There is no doubt, however, that the electric two-wheeler market is at an important inflexion point. India’s biggest electric-scooter maker, Hero Electric, has already called for the stoppage of gasoline-powered two-wheelers by 2027. India is going slow on switching to clean vehicles compared to competitors like China. Similarly, newcomer Ola has set ambitious production plans — 10 lakh a year initially, scaling up to 20 lakh depending on market demand.

“The interest from con­sumers is at an all-time high but the issue with players like TVS is low production, less ava­i­lability and reach. When Ola is talking ab­out producing 100,000 EVs per month within six months, why are traditional players such as TVS, Bajaj or even Hero unable to produce 10,000 vehicles despite being cash-rich, instead producing not even a quarter of that? That means they are still conservative in their approach towards EVs,” said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations (FADA).

Another major factor that Gulati highlights is the lack of focus by major players, pointing out that making the products available only in se­lect cities is a big drawback for players like TVS. Even after 20 months since iQube’s launch, TVS is availa­ble only in 33 cities and able to showcase its EV products in only a handful of showrooms out of its dealer network of over 4,000.

“iQube is a very good product but as long as customers are unable to see the product in the showroom, they will not opt for it. Players like TVS are unable to fully utilise their existing dea­ler and marketing network. The day when one single EV can be showcased at all these showrooms, I will say that India’s EV market is maturing,” Gulati added.

The company declined to reply to queries from Business Standard.

Clearly, TVS will have to leverage its existing network, accelerate the setting up of charging stations, add thrust to the launch of new models, and gear up for rolling out its marketing strategy and logistics network at a faster pace. It’s making all these moves, of course, but the next few years will reveal whether, in EVs, slow and steady can win the race.