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The automobile maker has become the first to launch a four-seater, zero-emission vehicle in the country. But will the car's advantages translate into sales?
Electric vehicles have largely failed to cut ice with consumers globally, but that has not stopped homegrown automobile company Mahindra & Mahindra from dreaming big for its first four-seater electric car, the e20, launched earlier last month.
"If anybody can succeed in promoting the use of electric vehicles in India, it is going to be us," says Chairman Anand Mahindra. The company has set a target to sell 500 units every month.
For electric cars, that's a huge target, but it's easy to understand why Mahindra is betting on the car. With an operating cost of Rs 0.50 per km-nearly one-tenth of that of petrol cars and one-fifth of diesel cars -and a price tag substantially lower than its counterparts globally at Rs 5.96 lakh, the e20 has several advantages. It does not require regular servicing, it is low on maintenance and being fully automatic, it is easy to manoeuvre in traffic.
However, despite the apparent positives, industry experts say electric vehicles are still not ready for primetime in India. The most fundamental problem facing the car is its inability to support long drives. The e20's lithium-ion batteries can only go for 100 kms per charge. While the car can be recharged using any 15 amp socket - just as laptops and mobile phones - lack of charging points along highways makes it unsuitable for weekend getaways.
For now, the company has only set up 253 charging stations in eight cities where the e2o will be launched. Of these, 95 charging stations have been put in Delhi and 102 points in Bangalore.
V G Ramakrishnan, senior director (automotive practice), Frost & Sullivan says, "While awareness about green energy has increased and operating costs of electric vehicles are low, it is one leap too far for Indian consumers at this point. Globally, too, electric vehicles have not taken off due to limitations of range and speed which makes them suitable only for city commutes."
Sales figures for Reva, the country's sole electric car until now, underscores Ramakrishnan's point. Fewer than 5,000 units of the car have been sold in the 10 years that Reva has been in the market. Nearly half of that has been due to exports to European markets such as the UK and Norway.
Clearly, it is the high cost of cars that is holding consumers globally from taking to electric vehicles. Many feel the cost of an electric car does not match its capabilities. "Prices of electric vehicles globally are prohibitive," says Abdul Majeed, partner and leader (automotive practice), Price Waterhousecoopers. The Nissan Leaf comes for around Rs 23 lakh, while the Renault Zoe and Mitsubishi i-MiEV are priced at Rs 17 lakh and Rs 25 lakh, respectively.
Mahindra & Mahindra has been able to keep costs low at Rs 5.96 lakh (on-road, Delhi), but that economic advantage largely disappears in the face of expensive batteries. Replacing the imported Lithium-ion battery, which comes with a warranty of three years or 60,000 km, could set you back by as much as Rs 150,000.
In the absence of cheaper batteries, the company is banking on the car's cost advantages to drive sales. "We have to count on the desires of the consumer to own a vehicle like this and to spend a bit on that. There is no doubt, it is the most cost-efficient car to own in India. The operating cost of the e2o is 50 paise per km as compared to running costs of Rs 5-6 per km for a petrol car. On driving an average of 1200 km every month, a customer would be able to realise savings in fuel cost of about Rs 70,000 every year," says Pawan Goenka, chairman, Mahindra Reva Electric Vehicles.
At present, the price of the e2o varies from state to state depending on the subsidy provided by the government there. However, the prices could come down by Rs 1-1.5 lakh if the Central government also decides to offer subsidies under the National Electric Mobility Mission Plan.
In the meantime, the company is reaping the benefits of low research and manufacturing costs in India vis-a-vis other countries. "India has more of a chance in this arena of mobility than the Western nations. The cost of innovation is lower in countries like India and China. We spent Rs 100 crore on developing the product and in setting up the factory in Bangalore. This has allowed us to price our product competitively," says Mahindra.
The company's facility in Bangalore is among the largest in the world for electric cars. It has an annual capacity of 30,000 vehicles. However, it does not have a paint shop, press shop or a body shop. The body panels of the e2o are made of polymers and glued on to the frame by hand. The technology is not meant for mass production as it takes 12-13 minutes to roll out a car as compared to one to two minutes for manufacturing a regular (internal combustion engine) vehicle.
However, not everyone believes the prospects are bright for electric vehicles in India. "The e2o is an interesting product and is priced competitively. But electricity grids in India do not have the capacity to charge households, how can it be expected to power a population of electric vehicles? India needs to work on power generation and transmission before talking about electric vehicles," says Deepesh Rathore, managing director, IHS Automotive India.
The car's dependence on India's coal-fired power plants also raises questions about its actual environmental costs. "Electric vehicles are only as 'green' as the energy sources used to charge them. Charging electric vehicles in India remains a challenge as 60 per cent of electricity is generated from coal-fired power plants," says a YES Bank report in association with Teri BCSD.
Mahindra & Mahindra counters such charges by citing reduced CO2 emissions. "Even if the e2o is charged from the grid, the carbon dioxide emissions are at least 30 per cent lower as compared to a fossil fuel-powered vehicle," says Goenka. In addition, the car is also equipped to harness the energy of the Sun to charge itself.
Goenka says,"It would have given sales a push if the government had announced incentives and implemented infrastructural development programmes under the National Electric Mobility Mission Plan. But one should not make subsidies a pre-condition for success of this car. We expect to make it viable, and ride the cost curve downwards with more innovations. With or without subsidy, we will make a dent."
