During his recent address at the 50th National Management Convention organized by the All India Management Association (AIMA), R.C. Bhargava, the Chairman of Maruti Suzuki, presented a thought-provoking argument against electric vehicles (EVs) in India. Bhargava’s key point was that EVs may not truly be environmentally friendly until a significant portion, at least 50%, of India’s electricity is generated from renewable sources.
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In place of a swift transition to EVs, he advocated for a shift towards hybrid fuels like compressed natural gas (CNG) and eco-friendly fuels such as ethanol and hydrogen. Bhargava raised concerns about the carbon footprint associated with electric cars in India, emphasizing that a substantial 75% of the country’s electricity is produced from coal, which significantly diminishes the environmental benefits of EVs. According to his perspective, until India makes a more substantial move towards cleaner energy sources, hybrid vehicles remain a more practical and environmentally conscious choice. Even the transition to CNG vehicles, with their cleaner combustion compared to petrol, would be a more sustainable option.
While Maruti Suzuki has been slightly delayed in entering the electric vehicle market, Bhargava disclosed that the company had developed an electric version of the Wagon R. However, the high production costs deterred its market viability. Maruti’s new strategy is to introduce larger electric models that could offer more cost-effective solutions. Despite having six electric models in the pipeline, Bhargava estimated that electric cars would only comprise 15% to 20% of Maruti’s total sales. Currently, electric vehicles hold a meager 2% share in India’s car market.
Bhargava also acknowledged the shift in consumer preferences from small hatchbacks to SUVs, a trend that has influenced the growth of the Indian car market. While the market isn’t completely shifting, the stagnation in the small car segment has limited the overall growth rate to approximately 5%, as opposed to the previous 8%. Addressing challenges in the automotive supply chain, Bhargava highlighted that there are presently no production constraints due to semiconductor shortages. However, he expressed concerns about the fact that all electronics for Indian cars are imported, underscoring the need for domestic component manufacturing to fortify the automotive supply chain.
Despite the various challenges discussed, Bhargava maintained confidence in the future of India’s car market. He stressed that India offers unparalleled growth potential compared to saturated markets like the US, Japan, and China. Additionally, he pointed out the escalating competition in the Indian car market as global carmakers recognize opportunities arising from evolving technology and regulations.