In this episode of Electric Car Watch, we will talk about India’s big 3 car makers - Tata Motors, Mahindra, and Maruti, and what they will need to do to ensure they don't lose market share by 2030.
The BIG 3 Indian car companies dominate the passenger car segment in India. Here are some numbers for November 2021- Maruti leads the passenger vehicle sector with sales of 109,726 units - of course Maruti has 0 electric cars in their portfolio, so all of those are pollution cars. Tata Motors sold around 29,778 cars, out of which 1,751 units were electric cars, and Mahindra sold 19,458 cars. We don’t have data of eVerito’s sold by Mahindra. The numbers must be in the few hundreds. The MNCs - Hyundai, Toyota, Honda, Nissan, MG, Skoda - all sold 62,778 units. The interesting thing here is that the MNCs and Maruti fared worse compared to Nov 2020.
Tata Motors is the biggest gainer. That could be because of Tata's focus on safety and a solid electric car vision that is drawing many new-generation car buyers towards them. Electric car sales in India really are pitiful. I really get pissed off when auto magazines and mainstream media look at EV sales and then say electric cars are the problem. The real reason EV sales are so low is the game is skewed towards ICE cars. Have every car company have 2-3 EV models in their portfolio and compel dealerships to actually showcase those cars through knowledgeable, enthusiastic salespersons and then watch EV numbers climb up. Did you know when I went to buy my e2o 6 years ago, the dealership tried to sell me on the soon to be launched KUV instead? The salesperson genuinely believed the KUV was better than the e2o, which, according to him, was only suitable for quote housewives. These are the kinds of negative forces we're dealing with.
Tata Motors is the only company showing some real vision and intent to make and sell electric cars. It’s encouraging to see the Nexon EV numbers inch closer and closer to the sales of the Nexon ICE variant, although it still has a long way to go.
As you can see, the Indian BIG 3 have the largest market share compared to the MNC car companies. But with massive changes happening this decade and with the rapid transition towards electric cars, will the big 3 Indian car companies continue to have this kind of market lead over MNCs in the future? Apart from the MNC car companies, in this decade, the BIG 3 will face new competition from the imminent arrival of Tesla. They will also have to contend with well funded electric car startups like Ola Electric and smaller startups like Strom Motors. Last, Chinese car companies will set up shop in India. Already we have BYD and MG Motors selling electric cars in India. BYD have started selling the e6 passenger and cargo vans with their blade battery. MG is selling the MG ZS EV in India to massive success. Great Wall Motors is another Chinese company that was supposed to invest in India. They even showcased the ORA electric car for India at an auto expo. They seem to have paused their investments in India, but they should come back in a few years' time.The Chinese electric car market is huge, and in the coming years, the Chinese will start pushing abroad as their home market gets saturated. Unless there are major geopolitical complications, I can see companies like SIAC, XPENG, NIO, WULING, CHERY, and others try to get a slice of the Indian car market.
You may say Tesla won't be a competitor to the BIG 3 as they sell luxury cars. But by 2024 or 2025, Tesla will showcase a micro small car or a hatchback. Call it the Model A or Model 2, the main intention of this car would be to sell in the Asian car market. Imagine a Tesla hatchback selling for Rs 15-18 lakhs, having superior software, and amazing battery technology. That car will rapidly eat into the BIG 3’s market share. I think the BIG 3 won't have to worry about the MNC car companies. In a few years, companies like Toyota, Honda, Nissan, and Hyundai will start to observe their market share dwindling globally and will be busy fighting fires in other markets. India won’t be a priority for them. We are sure these MNC car companies themselves will further lose market share in India as we approach 2030. So the BIG 3 will have to worry more about Tesla, Ola Electric, and Chinese Electric Car companies like BYD and MG. I think these companies will eat into the market share of the BIG 3 as we approach 2030.
And what is the focus of Tesla, Chinese car companies, and Indian startups like Ola Electric?
Yep. You got that right. Electric Cars.
So it is imperative that the BIG 3 - Maruti, Tata Motors, and Mahindra, focus and invest in Electric car technology if they want to retain or grow their market share.
So what should the BIG 3 do?
Here are four focus areas for them.
- Make investments in Lithium Cell Manufacturing
Globally, we are seeing car companies like Tesla, Volkswagen, and BYD all make their own Lithium cells in giga factories. That gives them a huge advantage over costs, quality, and production bottlenecks.Tata Motors, Mahindra, and Maruti can’t rely on vendors to supply them cells. If they want to be competitive, they need to have control over Lithium cell production. Do whatever it takes. Come together and set up a JV. Some people will remember that Mahindra and Ford formed a consortium to make EV's in India. For reasons that remain unclear, the consortium failed before a single positive initiative was announced. And then what happened? Ford had to say goodbye to India and Mahindra was left selling the antiquated eVerito and the eTreo auto. These big companies need to band together if they want to survive.
- Create High Voltage Modular Electric Car Platforms
Tata Motors have the Ziptron platform, but they will need to start planning their next generation platforms which can support larger battery packs, faster charging rates, and higher motor power. Mahindra showcased their MESMA platform back in 2018. In 2022, that looks horribly outdated, and we don’t have even a single production car based on the MESMA platform. For all we know, it was vaporware all along.
- Invest in Software Engineering
Tesla and the Chinese are incredibly advanced when it comes to integrating software in their cars. We have also seen global auto companies like Volkswagen create dedicated software companies to help them do software better. If the BIG 3 want to truly compete with Tesla, Chinese companies or Indian car startups, then they will have to create awesome electric cars that are software driven. That means investing a lot of money to create world class software that will go into these cars.
- Vertical Integration
BYD - The Chinese electric car giant is one of the truly vertically integrated car companies. They control the manufacturing of Lithium Cells and Battery Packs. They make their own semiconductor chips. They have their own EV drivetrain platform with in house manufactured power electronics. This kind of vertical integration will give BYD huge potential to disrupt the car market this decade. All of BYD’s competitors like Tesla, Ford, and Volkswagen, are facing supply constraints. The BIG 3 will need to step up their vertical integration game if they want to be in control.
Among the Big 3, Tata Motors seem to be the most promising, and I predict that by 2030, they will lead both Mahindra and Maruti in passenger car sales. Tata has already acquired funds of around $2 Billion for investment in EV tech development and have announced that they will launch 10 electric car models by 2025. I feel Mahindra should focus more on electrification of their commercial vehicles, as they won't have much competition there.
Regarding Maruti, they will launch electric cars only when their Japanese overlords tell them to. That won’t happen any time soon. Apparently, Suzuki will launch an electric car in India in 2025. Wow. To put that into perspective, that's 42 years after the first Maruti was launched, 25 years after the Reva was launched, and 12 years after the e2o was launched. Truly cutting edge, Maruti. Well done. Maruti may get serious about EV’s one day. Will it be too late by then? Yes. They will definitely lose their market share, if nothing else, and frankly they'll deserve it for their attitude.
So guys, we want Indian car companies to win this race. Everything will depend on how serious they are with Electric Cars. There is going to be a pitched battle this decade between the BIG 3 vs Tesla vs the Chinese vs MNC’s. Whatever happens, the coming 5-6 years will be very interesting.
Thanks for reading. Do write in comments below on your observations and research about the EV strategy of the BIG 3.