Mahindra Electric's Mahesh Babu: ‘EV industry most eligible to survive Covid-19 crisis’

by Mayank Dhingra 06 Jun 2020

As the Coronavirus pandemic puts businesses and investments on the backburner, companies are going back to the drawing board to reassess their strategies and growth plans for the future. With 2.2 million units of sales globally last year, the electric mobility ecosystem is just at its starting phase, when the ongoing crisis couldn’t have better demonstrated the impact of lockdowns on the environment to the people.

So, while it has been disrupting the mobility ecosystem in bits and pieces, EV technology stands a chance to see an accelerated adoption with a clearer desire towards cleaner mobility after the pandemic. 

In an Autocar Professional webinar on the occasion of World Environment Day on June 5, Mahesh Babu, MD and CEO of Mahindra Electric shared his assessment of the current scenario and how EVs have the potential to bounce back stronger for a sustainable future. 

The stellar panel of five key EV industry stakeholders included
- Anil Srivastava, Adviser (Transport) and DG, DMEO, NITI Aayog
- Mahesh Babu, MD and CEO, Mahindra Electric and Chairman, Electric Mobility Group, SIAM
- Sulajja Firodia Motwani, founder and CEO of Kinetic Green
- Sohinder Singh Gill, DG, SMEV and CEO of Hero Electric
- Nishant Arya, Eexecutive Director, JBM Group

While the phenomenon of CASE – connected, autonomous, shared and electric mobility – has been disrupting the automotive industry in the recent times, Babu acknowledged the fact that the ongoing health crisis has posed unprecedented challenge for all industries and businesses. 

However, he mentioned that e-mobility is still a sub-segment that seems to be relatively immune to the force majeure and is the most eligible sectors to survive the economic implications of the pandemic.

 “What we are seeing right now is an unprecedented disruption in humanity which has brought immense pain to every business and industry. There is a new challenge of almost rebuilding what we have been doing so far. 

“But, at the same time, it gives us an opportunity to rebuild a new world which is sustainable, for which sustainable mobility solutions have great potential,” he added.

Post-Covid transformation
From a usage perspective, he said that while there may not be a dramatic drop in the demand for last-mile and first-mile connectivity modes such as electric three-wheelers, “we need to look at how to innovate according to the new scenario and bring new products and experiences to the consumer. All of us need to co-create this new ecosystem that brings value to the country and industry as a whole.”

“The initial pain in the EV industry will have multiplier effects and will translate into a large gain for the country. Covid-19 has cleared all doubts among people whether electric mobility will really improve the environment. It has been very clearly demonstrated now that if we have zero tailpipe emission vehicles operating within cities, the environment will be much cleaner. There have been reports of as much as 25 percent reduction in pollution,” said Babu.

“EVs as an industry is flexible, agile and nimble and to change with the scenario faster, we will work with the government to look at some of the Make-in-India concepts such as the Phased Manufacturing Programme (PMP), and promote local manufacturing of many EV components including battery cells,” he added.

EVs to bounce back
With the global automotive industry currently being in the shambles as an implication of the widespread Covid-induced lock-downs, the EV segment stands a fair chance to show quick recovery. According to Babu, “In the short-term, it is necessary for companies to sustain themselves over the next three-to-six months’ timeframe; the mid-term can again be considered to bring back growth.

Babu referred to a recent Bloomberg NEF report, which suggests that while EV sales this year might not be huge compared to fossil-fuelled vehicles, they will quickly bounce back stronger next year and may go beyond last year’s global sales figures of 2.2 million units.

“The most disruptive industry in the last decade has been the automotive industry and having seen a lot of tail winds in the recent past. Having said that, we are also the most eligible ones to survive this crisis as the EV players are the ones who have been the disruptors in the first place,” pointed out Babu.

He mentioned that India is a unique market with deeper penetration of three- and- two-wheelers and wherever EVs make economic viability, those low-hanging segments must be tapped by the industry to bring consumers back.

“I am looking at Make-in-India. This is an important opportunity and the industry must act upon it.”

He also urged the government of India to relook at the FAME subsidy for a post-Covid scenario, “Today, there are a lot of inverse import duty as well as taxation structures on EV components. We find that when we locally make EV components such as motor controllers, some imported child parts attract more duty than the final cost of the product after local assembly itself.”

Babu explained that, “there are these structures that need to be relooked and the industry, government and the entire ecosystem will need to work together to get that benefit to the country. If the EV industry has to flourish in India, we have to look at how we make the environment more conducive and encouraging.”

In terms of incentives and the need for more direct fiscal benefits from the government to push EV sales, Babu said, “I don’t think that the government needs to do anything more than what it has already done on the fiscal side including reducing GST on EVs to 5 percent, FAME subsidy and establishing local manufacturing through the PMP, what is needed at this point is non-fiscal measures for instance a vehicle Scrappage Policy which will give an impetus to EVs.”

Mahindra Electric targets 2023 for spurt in personal EV sales