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Economy

Maruti Suzuki to start selling electric cars in India by 2020

Making the vehicles affordable for the masses is key, chairman says

A Maruti Suzuki dealership in Bangalore, India. (Photo by Ken Kobayashi)

NEW DELHI -- With the government here aiming for an all-electric vehicle fleet by 2030, Maruti Suzuki India, the country's largest passenger carmaker, said Thursday it plans to roll out its first such car by 2020.

Suzuki Motor, which owns a majority stake in Maruti Suzuki, and Japanese peer Toyota Motor signed a memorandum of understanding on cooperating in environment-related technology last month.

"The first electric [will be launched] by 2020," Maruti Suzuki Chairman R. C. Bhargava told reporters. "We at Maruti don't have technology on electric vehicles. Suzuki has technology but Toyota has even more technology."

The electric vehicles will be made, sold and serviced in India, with Suzuki and Toyota sharing the technology with Maruti Suzuki, the chairman said. The Indian auto leader will also set up charging stations for its electric-vehicle customers.

The Suzuki-Toyota agreement covers such areas as hybrids, electric vehicles and future fuel cell technology.

A quick rollout

"[Since] the government's emphasis here is on a quick introduction of electric cars and because many countries in the world are [also] going with electric cars, these two companies have ... decided to go ahead with [the electric-vehicle cooperation]," Bhargava said. "It has become an urgent matter."

One of the main challenges will be how to make the cars affordable, according to the chairman. Manufacturing small electric vehicles is one way to keep costs down, he said, stressing the differences between large electric cars and small ones.  

"A car which can become affordable in the U.S. and Europe ... [may not] be affordable in India," Bhargava said. "What kind of [government] policies and incentives are required have to be worked out in detail."

The same thing applies to infrastructure. "I don't think anybody knows today what kind of infrastructure will come up to support EVs," he said.

At present, Mahindra & Mahindra is the only domestic company selling electric cars. Its e20 hatchback carries a price of around 750,000 rupees ($11,700). In comparison, Maruti Suzuki's popular Alto small car -- which is not an electric vehicle -- starts at around 250,000 rupees.

Tata Motors this month rolled out its Tigor electric car -- priced at above 1.1 million rupees -- for the government-run company Energy Efficiency Services. The vehicle is not yet available on the open market.

Nationwide survey

Maruti Suzuki, meanwhile, will conduct a countrywide market survey within two to three weeks to find out more about the reality on the ground, such as what people might look for in an electric vehicle and how many would be able to access charging infrastructure. The findings will be released by the end of February.

"Ultimately India is going for EVs on a very large scale," Bhargava said. "It is very important to know [what] the consumer [wants]," he said.

While the government is eyeing 100% electric vehicles by 2030, the Society of Indian Automobile Manufacturers has recommended selling vehicles that are 40% electric by that time, with 2047, the centennial anniversary of India's independence from British rule, a better target for 100% electric cars.      

India imports around 80% of its crude oil, so the government's move toward electric vehicles would not only reduce this cost but also help control pollution.

Bhargava, meanwhile, said that conventional cars will continue to sell. "From now till 2030, the total number of cars which will be sold in India, assuming 8% yearly growth, will be 71 million," he said. "Out of this 71 million, 14.4 million will be electric and 56.6 million will be conventional [internal combustion engine] cars."  

The country's passenger car market will grow from annual sales of 3.3 million units now to roughly 10 million by 2030, he said. "The best scenario is that 40% of that will be EV. If 60% is non-EV, that [will be] 6 million cars... So new investment will be required even for conventional cars."

Bhargava, however, maintained that the 40% target for electric vehicles cannot be reached unless the cars are made small and affordable.

In the year ended March 2016, 22,000 electric vehicles were sold in India, according to the Society of Manufacturers of Electric Vehicles here. Of those, only 2,000 were four-wheelers -- a tiny fraction of the over 3 million passenger cars sold.

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