NEW DELHI : Maruti Suzuki India Ltd is committed to introducing its first locally made electric vehicle in the country by 2025, but it won’t be an affordable electric small car.
Small cars are the mainstay of the Suzuki Motor Corp. unit, but Hisashi Takeuchi, the new chief executive and managing director of India’s top carmaker, said a truly affordable small electric car is a distant prospect for the company, one that will extend beyond 2025, due to issues such as battery costs and charging infrastructure.
In an interview, Takeuchi spoke about Maruti’s EV strategy and how it plans to regain its 50% market share with new SUV launches. Edited excerpts:
What’s on your agenda as you step into your new role? What are the key challenges?
The most important business agenda, at present, is to secure the necessary electrical components to make our cars. So this is the single biggest challenge right now for Maruti Suzuki because we have a back order of more than 270,000 cars, which is the equivalent of almost 2.5 months’ supply to the domestic market. Without selling cars at all, we have 2.5 months of sales almost guaranteed, so it is a huge task for us to produce our monthly volumes and also cater to these back orders. We are working together with Suzuki Motor Corp.’s (SMC) head office for chip procurement. We usually only talk to our tier-I suppliers, which are our component suppliers, but now with SMC, we are opening up a direct connection to semi-conductor factories and trying to communicate what is our required volume for a much longer period of time, not just three or six months. We are asking them to take the necessary steps to increase their capacity to supply the required volume.
How much longer do you expect the semiconductor challenge to persist?
Towards the end of last year, the situation was getting better. But from this financial year, I don’t see any drastic improvement. So the situation is still somehow difficult.
Suzuki has invested over 150 billion yen in an EV factory in Gujarat. How do you plan to build the EV side of your business?
The Suzuki group’s investment to set up manufacturing of EVs and also battery localization clearly indicates we’re going to get into EVs and we are going to manufacture in India, which would also enable us to bring the cost of production down. Battery costs are still very expensive, and without making an effort to reduce the battery cost, EVs will still be very expensive for India. Technological improvement will bring battery costs down but for those things to happen takes a certain amount of time. Industry specialists expect 8-10% of all passenger cars sales will come from EVs by 2030, and if that is happening, then we need to introduce some models, but still, it will only be 8% to 10% of the total market; the demand is to some extent limited. We should match the speed of the market growth for the EV industry, and I think we are taking the right steps to match the competition’s speed. As far as organizational structure is concerned, one of our board members has a team working directly under him on alternative fuels like CNG, biogas and ethanol. Apart from this, we have set our target to introduce EVs into the Indian market, and to make it successful, we also need to take steps for charging stations, how we can utilize our dealer and service network and also ensure home charging solutions are ready by the time we introduce EVs. We have not created one single new vertical for this, but in the marketing and sales team, in the service vertical, etc., there are teams to prepare and work for the introduction of the EV.
Are you concerned that your launch plans for EVs—in 2025—may be a bit late, considering that for some of your competitors, there has already been a significant conversion of sales to EVs, and it is growing fast?
If we don’t launch a product right now, it doesn’t mean we are not doing anything in the EV space—we have been doing comprehensive testing of EVs in the Indian environment because this is a very tough market for EVs. Additionally, setting up greenfield projects like our EV and battery factory in Gujarat takes nearly two to three years at least because we will build a factory from scratch. Some OEMs have introduced EVs in India already, and though the market is growing fast, it is not as big that everyone has to introduce EVs right now. There are only a limited number of EVs available, and it’s an experimental situation. We are going to introduce our EV by 2025, and I think that will be a good timing...to introduce it. We will be in time for the big growth of this EV space in India.
Given that Maruti Suzuki’s expertise is in tapping the pulse of the mass market, will your first EV launch be in the affordable small car segment so that it gets widespread adoption?
From now till 2025, the EV market will be limited to certain segments. To make it very affordable and less expensive, I think, it will need more time. From now to 2025, there’s only a limited time. Technology will be improved, but it will not be as good as that level that we can introduce a really affordable EV as a small car. That will take more time beyond 2025. It takes a lot of time to really develop good technology for affordable small electric cars. Secondly, charging infrastructure must also be developed enough to make affordable cars, as the number or size of batteries we put in a small car will have to be small; if we put bigger batteries, the cost will become high. To make this viable, more charging points must be available all over.
You’ve seen a market share loss of over 4% in the last year. Do you think you can claw back to your leadership with a 50% market share? When will you introduce new SUV products to fill gaps in your portfolio?
In order to achieve a 50% market share, we have to be present in every single segment of the automotive industry. Our presence in small cars and MPVs (multi-purpose vehicles) is very strong. The SUV segment is where we are behind in terms of new product introduction, and we know this. We have a plan to introduce multiple models into the SUV space in a year or two and will be making a strong comeback into this segment.
