Maruti Suzuki Ltd
If not Tesla, this could be our Maruti Moment.
Is this Bharat’s Maruti moment?
Have been writing this for ages now, finally this seems to make sense but this one’s long and has many references so please take out some extra time before you start! Lot of numbers out here too, in case you spot some errors do write back. Now over to EV
EV is now the word of honour even in India where the noise is beyond words, public transport buses plying with enamoured green numeric plates and E-rickshaws a common sight in many metros. But in the world of EV evaluation are we jumping the gun on incumbents and rushing for pebbles in garb of early start to the electric pandemonium. Now I have seen umpteen eulogies for industry leaders and seen fascinating trumpets for companies managing to sell 10k scooters! Hold your beer folks , the EV mania in our massive but stagnated PV market in India is not yet rolled on and the cavalcade that it might be, will be led by our top companies.
Taking a step back to understand what the hell is EV mania all about beyond the thrusted smoke of ICEs, so this is one of the most important chart which will change the paradigm or rather is changing every single day ‘Slowly but Suddenly’ this will be a large part of the whole automobile ammunition.
In addition to this, it is also important to note that BEV is just one of the categories, all categories of EV combined form 12% odd and in the light vehicles category EV would be 50%+ in next 4-5 years. Various forms of EV such as MHEV,HEV, PHEV, BEV can be understood here –
By now all of us do know that Battery is the key to EV as this is where the power of motion and disruption is coming from. But, it is also important to know that Lithium Ion the widely used form of EV battery has its inception in the early 1900s with usage progress in 1980 and popularity only post 1990. The history in brief:
https://www.hidenanalytical.com/blog/lithium-ion-battery-development/ and in case there is a scientific urge, the podcast out here talks in depth of the history and chemistry around them:
Tesla – Not an overnight success :
Tesla started business in 2003, and it’s most successful Model S was launched in 2017 five years after its IPO in 2012. Reason people needed the infra in place + affordability and at $35k it was probably within the reach of many but not all –
Is EV a rage in USA-
Yes it is but still a very small portion of the entire PV market, nonetheless growing relentlessly.
‘Pure electric cars are making all the headlines, but their gasoline-electric hybrid rivals quietly achieved record sales in the United States last year, industry data showed.
While the likes of Tesla and Ford Motor pushed for electric vehicle sales, Asian automakers boosted hybrid vehicle line-ups, as many customers still shun EVs due to higher prices, limited driving range or lack of charging stations.
US sales of hybrid vehicle sales jumped 76 percent to 801,550 vehicles last year, accounting for 5 percent of US light vehicle sales, according to data from analytics firm Wards Intelligence.
Sales of EVs also jumped 83 percent to 434,879, but represented a meager 3 percent of the market.’
Coming back to India-
So now that we have some background around EV, we move to some discussion on India’s PV segment -
Usually I avoid writing too much on large known companies as most of the opinions wrong or right are out in the open. In the past 6 months I have seen a lot of eulogies being written on Maruti which is the only pureplay PV company (cars) listed in India. There are lot of apprehensions around adopting to new technologies, old school and comparison to the west where new companies have quickly annihilated the legacy car makers atleast in market cap terms.
Before jumping on to micro numbers, there is merit in doing the India vs USA car market comparison given the whole aping the west narrative in stock and industry selection-
90%+ households in the USA have access to atleast one vehicle (specifically a car) and there are 290 million cars out there in the USA.
Only approx 2% of Indians own cars, extrapolate this to households there would not be a big jump on this number, let us assume this is 7.5% households best case? Although 1 in 3 households do have a 2W. There are 30 million cars out there in India. (Lot of stats all across but maybe a believable number for cars given annual 3 mn odd sales)
USA annual sales peaked at 17mn odd pre pandemic years, in 2020 and 2021 was around 15mn. For India this was 2.4 mn and 3 mn for 2020 and 2021 respectively peaking at 3.4 mn in the past.
EV sales in the PV category forms 0.5% of overall sales in India and it is 3% of the total Electric vehicles sold in all categories, 2w+3w form 48% sales each (https://evreporter.com/ev-sales-trend-in-india-in-2021/)
China is onto a different orbit of 20 mn+ annual sales, sells more EVs than the total cars we sell. (https://fortune.com/2022/01/07/china-electric-car-ev-sales-2021-growth-tesla-byd-li-auto-xpeng-nio/)
Indian Car Charging Infra-
For now India has 1k+ public EV charging points and with home charging or small shop keepers offering charging infra but for larger adoption, this is a fairly miniscule infra setup. USA too is battling with EV infra with only 43k+ public charging stations.
Lithium-Ion the Indian Context-
As we saw earlier Lithium Ion has been there since some time and the commercial viability across gadgets, vehicles has been slow moving owing to the complexities involved. Reduction in price of the battery is key to any large scale inflection point especially in the 4w space-
Also bulk of the work in Lithium Ion globally is not for batteries in the tropical zone, which makes local manufacturing and testing imperative for large scale manufacturing given the climate and varied intensity of usage-
Why are the best ones not planning for the battery puzzle then? They are but there is no way to short circuit the process other than import the battery cells and just lay local Battery Management Systems, but for cars somehow this swift approach would not work due to various complexities of range, affordability, infra etc
The ongoing work for Lithium Ion in India-
Suzuki is not oblivious to the EV rush, just that it wants to meditate enough and most likely BEV might not even be the right option to start from, they have announced starting with HEV which could make the electric fervor a bit more affordable for all of us –
Avendus Report on Lithium Ion is a must read and it also elaborates various points on its alternatives which I would park for discussion for another post-
Who is leading the way in EV car sales in India so far?
Tata is ruling the transition for now with 10k+ EV cars sold in 9MFY22 and 82% market share! Talk about being an early mover but both variants are in the 10 lakh + category. By 2023 it aims to sell 125-150k EVs. Although the relentless growth of EV is also aiding Tata Motors Numbers, the percent share as part of overall car sales for EVs will be low single digit even by FY23.
But Tatas have been rather clandestine about the battery technology used although they do mention it is developed alongwith Tata Chemicals but still not sure if this is something developed in-house or co developed-
Tata continue to be aggressive in their launches of EV vehicles and also in acquiring battery assets –
CNG before EV maze for Maruti-
Other narrative which keeps coming around is of how Nokia, Kodak etc (Yawn) collapsed and this is what Maruti will go through. It very well can but just that it is not under any delusion like the examples that we see. 17% of Maruti sales are from CNG with waiting across all its models! Maruti’s delay in launching EVs is the most logical step given how it is a mass brand first and launching EV now is akin to placing the cart before the horse given the EV infra and costs.
Maruti Still has 40%+ market share in the PV Vehicle segment.
Maruti – Not the fanciest but the most formidable
History if it interests you -
Maruti’s genesis in India has been its affordability, widespread service presence and it being one of the easiest to understand for the masses. It failed miserably trying to enter the luxury market but inspite of the disruption brought in by models launched by peers, it has been able to somehow stand its ground with market share fluctuations. EV in India is not a branch of luxury, people will jump on it only if it is cheaper and durable which Maruti understands well. The slow moving aptitude might make it a bit late in launching models but once it does it’s anyone’s guess who is going to lead the EV show like it is doing now with CNG. No one is perturbed by Maruti’s safety ratings or would EV makers thrive to educate people that electricity might still be generated by coal. India could definitely embrace Tesla or a global giant but ‘Bharat’ is waiting for its Maruti moment in EV. Having a $5bn cash net might just help 😊. Could we have a INR 10 trillion company here, lets wait for some eclectic seeds by Maruti to reckon that.