The company is looking to expand the Chetak portfolio
02 May 2022 | 4301 Views | By Sricharan R
Rakesh Sharma, Executive Director of Bajaj Auto, is upbeat about the plans for electric where the Chetak has already set the ball rolling.
Bajaj Auto is gearing up to expand its offerings in the electric vehicle space. By June, the company is expected to roll out its electric-powered Chetak from the ...
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Rakesh Sharma, Executive Director of Bajaj Auto, is upbeat about the plans for electric where the Chetak has already set the ball rolling.
Bajaj Auto is gearing up to expand its offerings in the electric vehicle space. By June, the company is expected to roll out its electric-powered Chetak from the Akurdi plant, the home of the original Bajaj Chetak.
At Autocar Professional’s EV two-wheeler conclave, Sharma, said, “We are looking to expand the Chetak portfolio. Along with Yulu, we will add new products in the low and mid-speed segments. In the three-wheeler place, we are going to begin the certification process very soon. Here too, we will take it slow and reach a few cities first with strong service support.”
He said that Bajaj’s electric business arm for two-wheelers, Chetak Technology will spearhead its EV foray. “We want to give a sharp and specific focus to the EVs,” he said. So far, the response for Chetak has been ‘outstanding’ and the company has a huge order book, according to Sharma. The product has been widely accepted and its availability in the cities has been a cause to cheer about., he added. “Our dilemma is, how fast to expand. We want to expand to a hundred cities from 18 cities at present, and the response has been great. We are listening and finding that the product is good from our customers. However, the supply chain is not permitting the expansion,” he stated.
“It is a tricky balance of sorts we are trying to manage. Gone are those days where people wait for a longer period to get their hands on their vehicle. We are working on supply chain issues. And, all now depends on building the capacity and R&D strengths. With this, we are confident of winning the market over the period of 20-25 years,” he added.
Supply chain dilemma
The Russia-Ukraine war, lockdown in China amid the Covid wave and supply chain issues are some of the factors that are challenging EV makers, Sharma said adding that given the current scenario, it might take ‘around 12-18 months for the volatility to settle down’.
“The only way is for the supply side to be improved. Demand is seeing an uptick and new capacities have to come on stream. Technological developments that have to be factored in. We were watching all these before making our plans,” he said. These developments will have a bearing on the customer and also the ICE-EV transition process, he added.
In his remarks, Sharma pointed out that because of the semiconductor issue and the war, prices of cells are in the reversal mode. “It has gone to 2019 price levels,” he stated. The prices which should have been much lower than has been the case a year. “The cell cost is not looking good because of the supply-demand situation,” he said.
“The supply has shrunk because of all these. On the other hand, demand has increased not just from two-wheeler but also four-wheelers and there is a huge boom towards the li-ion cells. This imbalance has disrupted the pricing,” Sharma explained.
EVs, Yulu and ICE
The TCO is the single most factor that is driving the transformation of ICE to EV. However, factors like the war, Covid and the semiconductor issues have affected the industry. “The operating cost is driven by the battery prices and the initial ownership cost is high because of the battery cost. The cell price and the TCO will go up. It remains to be seen how customers respond to it and accordingly calibrate our actions," Sharma said.
Sharma said that if the battery prices come down, the penetration level might be at 15 percent or so in the next 3-5 years. This means, the EV penetration might be at 30-40 percent in the next 5-7 years. This leaves 60-70 percent of the two-wheelers as ICE. “You have to manage that very well,” he said.
Bajaj Auto has its presence in over 70 countries and around 50 percent of the business comes from there. There will be various levels of penetration of EVs in these countries and we have to be supportive of them too, Sharma emphasised.
"We will have a large ICE business which provides a lot of muscle in terms of people and ability to do things. It is a fantastic position to be in and gives us an opportunity. As a company, we are putting in efforts to obtain new capabilities which will enable us to take up this opportunity,” he stated.
With regard to the company’s investment in the low-speed electric bike Yulu, Sharma said the alliance had given then insights and information into a segment which is very alien to them. “Low speed, delivery, rental, shared mobility and more are segments opening up in India. It is helping us shape our product portfolio in both B2B and B2C in two-wheelers and be a full-spectrum player,” he added.
EV fires: a setback?
With regard to recent fires that engulfed some e-scooters, Sharma said, “It is unfortunate at a personal level for those who were affected.”. From an industry point of view, these incidents do not serve well for a ‘nascent emerging industry’, he said.
“There are some powerful forces that are driving the transition of ICE to EV. The conservation of foreign exchange which would have otherwise gone into oil exports, less dependency for oil or a cleaner environment are few things that are driving government regulation. This is a positive step,” he added.
Given the rise in petrol prices, the TCO in electric terms is a powerful force. Almost 70-75 percent of two-wheeler buyers’ monthly income is Rs 40,000. "The resale value is important and this too is an uncertainty. Now on top of that, the other anxiety is about stability and vehicle quality which in extreme cases can be life threatening. It just retards the change from ICE to EV,” he said.
According to him, there are things like convenience, better experience of riding, and owning an EV two-wheeler. etc. that are positive forces. There are also constraining forces around range, charging ecosystem, end of life battery or the resale value of the vehicle. “When retardation takes place, it compromises the plans even for large players,” he stated.
“When players are making large bets on this transition by putting in a lot of capital, building a workforce, talent pool, management efforts, building a larger ecosystem of vendor stakeholder in India and overseas and trying to establish a preeminent position, accidents though they are unfortunate, have the implication in terms of de-accelerating the transition,” Sharma averred. Issues like these will make the consumers think twice and wait longer to see how things pan out. They would likely postpone their decisions to transition from ICE to EV. “This flattens the change curve,” he adds.
He pointed out that Bajaj Auto was aware of such issues and had incorporated the approach of safety first in their design, quality standards and the rest. “Largely, it is a fantastic transition if managed well. And, if the cost comes down with few technical breakthroughs, it would be a wonderful transition which will take the whole world forward. Yes, there will be issues here and there, but it is important to be a responsible player and ensure the quality standards are better,” he concluded.
The feature was published in Autocar Professional's May 1, 2022 issue.