In a recent address at the 50th National Management Convention organized by the All India Management Association (AIMA), R.C. Bhargava, the Chairman of Maruti Suzuki, made a compelling case against electric vehicles (EVs) in India. Bhargava argued that EVs wouldn’t be environmentally friendly until at least 50% of India’s electricity comes from renewable sources.
He proposed a shift towards hybrid fuels like compressed natural gas (CNG) and green fuels such as ethanol and hydrogen as a more pragmatic alternative.
Bhargava voiced his concerns about the carbon footprint of electric cars in India, emphasizing that 75% of the country’s electricity is generated from coal. This heavy reliance on coal-fired power plants significantly impacts the environmental benefits of EVs. In his view, until India transitions to cleaner energy sources, hybrid vehicles will be a more eco-conscious choice. Even shifting to CNG vehicles would be a more sustainable option due to CNG’s cleaner combustion compared to petrol.
Bhargava proposed an alternative approach, suggesting,
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Maybe India should move to ethanol, hydrogen, and fuel cell options instead of going for electric cars.
While Maruti has been slightly delayed in entering the electric vehicle market, Bhargava revealed that the company had developed an electric version of the Wagon R. However, the high cost of production hindered its market viability. Maruti now aims to introduce larger electric models that could offer more cost-effective solutions. Even with six electric models in its lineup, Bhargava estimated that electric cars would only constitute 15% to 20% of Maruti’s total sales. Currently, electric vehicles account for a mere 2% share of India’s car market.
Bhargava acknowledged the shift in consumer preferences from small hatchbacks to SUVs, a trend that has impacted the growth of the Indian car market. While the market isn’t entirely shifting, the small car segment’s stagnation has limited the overall growth rate to approximately 5%, rather than the previous 8%. Discussing automotive supply chain challenges, Bhargava noted that there are currently no production constraints due to semiconductor shortages. However, he lamented that all electronics for Indian cars are imported, highlighting the need for domestic component manufacturing to strengthen the automotive supply chain.
Despite various challenges, Bhargava expressed confidence in the future of India’s car market. He emphasized that India offers unparalleled growth potential compared to saturated markets like the US, Japan, and China. Bhargava also pointed out the growing competition in the Indian car market as global carmakers recognize opportunities in evolving technology and regulations.
Regarding the stagnant growth of the Indian manufacturing sector, Bhargava attributed part of the issue to state government bureaucracies that remain entrenched in a mindset of licenses and control. He also noted that entrepreneurs are often more focused on personal wealth accumulation than on company growth. Bhargava underscored the need for a shift in mindset and greater state support to facilitate manufacturing sector growth, which currently stands at 5% while aiming for an annual growth rate of 12%.
Bhargava raised concerns about road safety in India, emphasizing the need for mandatory vehicle fitness certifications, especially for two-wheelers and pedestrians, who constitute a significant portion of road accident victims. He highlighted the importance of stringent driving license tests to improve road safety. While Bhargava anticipates that the transition to new technology and regulations will limit the car industry’s growth to approximately 5% for the next decade, he remains optimistic about India’s automotive sector, provided there are no unexpected economic shocks. Bhargava’s stance on prioritizing hydrogen and ethanol cars over EVs reflects the complex challenges and opportunities in India’s evolving automotive landscape.
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