MAHLE bets on India's e-mobility drive, hikes stake to 90% in its JV

MAHLE Group hikes stake in MAHLE Letrika Roots India to 90 percent, plans manufacture of AC/DC electric motors and control units for electric two- and three-wheelers.
With an aim to benefit from India’s drive towards electric mobility, Germany headquartered MAHLE Group has increased its equity stake in its Coimbatore-based joint venture (JV), Mahle Letrika Roots India  to 90 percent from 50 percent earlier.
Furthering up its ante in the EV segment, the company last month signed a Memorandum of Understanding with the Tamil Nadu government with a reported investment of Rs 50 crore in the initial phase for the project. The planned Coimbatore-based unit — MAHLE Electric Drives India — will initially focus on the development and production of AC/DC electric motors and control units for electric two- and three-wheelers.
Industry insiders expect electrification to get adopted first in the two- and three-wheeler segments in India. The first components are expected to leave the production line as early as April 2020. Activities in this area are to be extended to other vehicle segments in the future, the executives said.

Dr Jorg Stratmann, chairman, MAHLE Group: "As the recovery happens, the company aims to grow at a rate which is better than its contemporaries."

Speaking to Autocar Professional recently in Pune, Dr Jorg Stratmann, Chairman of Management Board and CEO of MAHLE Group, said: “This activity, from our point of view, is very important in particular for electrification of two- and three- wheelers”.
According to the top executives at MAHLE Group, the company’s recent focus on mechatronics systems stems from the fact that it is increasingly playing a crucial role in enhancing the efficiency of powertrains and advancing e-mobility. With its electric drives, actuators and auxiliaries and control, and power electronics products, MAHLE already offers the relevant solutions in this area, the executives added.
According to MAHLE Group’s 2018  annual report, the mechatronics division's sales grew by 11.4 percent to 453 million euros in 2018. This figure takes into account the acquisitions of MAHLE Electronics in 2017 and of ebikemotion in 2018. Overall, organic growth amounted to just over 6 percent. As a result of increased demand from the markets for agricultural and construction machinery, sales rose sharply, primarily in starter motors and alternators. In addition, the company substantially intensified its engineering activities in high-voltage traction motors and power electronics products.

Supplier to leading Indian OEMs
The MAHLE Group, which started its operations in India in 1958, currently has 14 manufacturing plants, employing around 4,400 people. The company deals in engine components, pistons, filtration products, engine cooling, air-conditioning system among others. The MAHLE Group consists of four business units in India — engine systems and components, filtration and engine peripherals, thermal management, and aftermarket. In addition, Group has a Mechatronics division and five profit centres, which serve specific market and customer segments.
In February this year, the Group announced setting up of its engineering, IT  and sales ‘shared services centre’ at Pune to provide solutions to its global business in tandem with two other centres — Mexico (US) and  Poland (Europe) — for conventional or electrified powertrains.  The 55,000 square feet facility employs over 450 engineers and technicians.

Raj Kalra, president, MAHLE Holdings (India): "The India business generated 278 million euros (Rs 2,174 crore) as of December 2018." 

MAHLE, which supplies components to at least one in every two vehicles globally, counts leading Indian OEMs among its clients including Tata Motors, Maruti Suzuki , Mahindra, Volkswagen, Ashok Leyland, Volvo Eicher, Cummins, Royal Enfield, Suzuki, Yamaha and some electric two-wheeler companies too.

Impact of slowdown
According to Dr Stratmann, the industry slowdown has impacted the Group's businesses in India though it has been trying to adjust by prioritising its activities including those involving production. Refusing to reveal MAHLE's capex plans for India, Dr Stratmann stressed that the company’s investment continues wherever required, including in the R&D division where it expects to spend 6 percent of total annual sales.
However, Dr Stratmann is quick to add business growth will depend upon the market, which is very challenging at the moment. "As the recovery happens, the company is aiming to grow at a rate which is better than its contemporaries," he added. Dr Strattman believes the slowdown in India has probably more to do with its domestic issues than an impact of global dynamics.

E-fuel-ready
The MAHLE Group in September stated that alternative fuels from regenerative sources offer substantial potential for reducing transportation-related CO2 emissions. The company is, therefore, said to be concertedly investigating the compatibility of its engine components and filters with the use of various e-fuels. The company claims that it is examining the resistance of components and materials when using fuel blends with e-fuels that can be admixed under current fuel standards as well as alternatives such as oxymethylene ether (OME) for heavy-duty commercial vehicles, dimethyl carbonate (DMC) for passenger cars, or methane (CH4) as a gaseous alternative.  “The admixture of e-fuels can immediately produce great savings potential. If allowed, this could mean a decisive step toward achieving the 37.5 percent CO2 savings mandated at EU level relative to 2021,” explains Dr Otmar Scharrer, Head of Research and Advanced Engineering at MAHLE.

Drive towards EVs
MAHLE claims that its traction motors are suitable for all applications — mild, full hybrid, pure battery powered, fuel cell vehicles — and come in voltages ranging from 48 to 800 volts. They cover a performance range of up to 250 kilowatts.
According to the company, the replacement of 12-volt electrical system by a 48-volt system is already underway for passenger cars. Further, the 48-volt drive motors are now not only suitable for urban mobility applications, but also for heavy vehicles. It will thus be possible to use 48-volt drives in high-performance or heavy vehicles — as a mild hybrid — in the future. The major advantage is that the 48-volt drives remain below the voltage limit of 60 volts, eliminating the need for various safety precautions and complicated connector plugs. The costs for the motor and power electronics can also be reduced by about 25 percent in comparison with a high-voltage solution.  The company claims that its acquisition of ebikemotion, has helped it  to grow in areas relating to compact and lightweight rear wheel hub motors, batteries, electronic control units, and other pedelec components that can be integrated unobtrusively into a bicycle.

Banking on India for future growth
According to Raj Kalra, president, MAHLE Holdings (India), the company has a strong presence in India, generating 278 million euros (Rs 2,174 crore) as of December 2018). At the global level, the MAHLE Group recorded sales of over 12.6 billion euros (Rs 98,569 crore) in 2018 compared to 12.8 billion euros in 2017.
In the Group’s last annual report in 2018, the company management was optimistic about India’s automobile market, especially the commercial vehicle segment, which may help in offsetting cyclic slowdown in China. The Group had anticipated a sizeable increase in CV sales due to pre-buying ahead of new BS VI emission norms kicking in from April 1, 2020. However, since the past 11 months, the Indian automobile market has seen sales plummet month after month. Now, with just five months remaining for the BS VI emission deadline and pre-buying of vehicles yet to begin in a marked manner, the MAHLE Group — and the rest of the industry — is keeping its fingers firmly crossed.

(This article was first featured in the November 1, 2019 issue of Autocar Professional)