Pragmatic policy likely on electric two-wheelers in a few months: TVS Motor

TVS Motor Chairman and Managing Director Venu Srinivasan said on Monday that the industry is in talks with the government on NITI Aayog's proposal to switch over to electric vehicles by 2025 and hopes to see a pragmatic policy to come through the next few months. Asserting that hybrid vehicles would be a better option in terms of environment-friendliness, he told shareholders today that the company would be coming out with an electric two-wheeler in the near future.

The company is aiming to make its vehicles BS-VI-compliant during the second half of the fiscal, and fully convert them into BS-VI vehicles in the last quarter of the year, much ahead of the compliance deadline.

There are many problems with the transition to electric. The first is that India produces most of its electricity from poor quality coal that generates very high pollution. In fact BS-VI vehicles are cleaner than coal-based thermal power, he said.

"The second thing I'd like to say is that our transmission losses are the highest in the world. Taking both into account, the current petrol two-wheelers are, in fact, more environmentally friendly than the electric vehicles proposed," he told investors at the company's Annual General Meeting in Chennai today.

Countering another claim that the electric two-wheelers would reduce pollution in places like Ghaziabad, he said only 20 per cent of the pollution in that city comes from vehicles, while the rest comes from crop burning, thermal plants, industrial activity, construction activities and natural dust from the Thar Desert. Of the 20 per cent vehicular pollution, only eight per cent is from two-wheelers.

"So is it the single highest cause of pollution that you are attacking? No. There seems to be some vested interest where they want to promote battery and infra and make money," he said.

Another argument put forth to promote electric two-wheelers is the need to reduce petroleum imports. Eight per cent of petroleum import is for two-wheelers, while the rest is for trucks, tractors, cars, agricultural use and marine use, among other things.

"More importantly, all the electric motor parts and batteries are coming from China. Lithium is controlled by China. You will be dependent on a very critical geopolitical player in the neighbourhood instead of buying oil from open sources. If you put all that together, we aren't yet ready," said Srinivasan. In countries where 60 per cent power is produced from nuclear or renewables, such as France and Germany, EVs could reduce pollution. Even those countries are capping electric vehicles at 25 per cent by 2030.

"I think this, for whatever reason, is a rush. We are in talks with the government and I think some sensible policy will come through in the next few months," he added.

With electric vehicles, the price will also go up from about Rs 65,000 to Rs 1.10 lakh. He wondered whether the government would subsidise Rs 45,000 a vehicle through the FAME Scheme.

"In fact a better solution would be to mildly hybrid. Toyota has said this. Now China is promoting hybrids as they have also realised it is a simpler option. And with the BS-VI regime, a hybrid with the same subsidy will be able to do much more to clean up the environment," he said, adding that while hydrogen is another fuel that is making a comeback and that Toyota and Hyundai are working on it, there are infastructure, storage and handling issues regarding it in India. However, the company has alsways been one step ahead in investing in technology and had started developing electric vehicles three years ago, even before NITI Aayog's announcement was made.

TVS Motor to continue cost reduction amid low growth forecast

The company is expecting the low growth in the industry to persist going forward, because the financial crisis continues and there are no sings of the customer coming back very soon. It will take at least six to nine months, said Srinivasan. The company is aiming at further cost reduction in these difficult times.

"With all the uncertainties, such as low liquidity, new norms coming in, rising costs, erratic monsoon, and global trade turning volatile with the China-US spat, Brexit and tension in the Middle East, we do expect a very unpredictable year. In such a year, we have to keep our costs at the lowest level, so that we can withstand even a major downturn," he told shareholders.

"I must say that given the current situation, we expect this low growth to continue during the coming year because the financial crisis continues and IL&FS and DHFL had defaulted just before the budget. We do not see liquidity coming back to our customers very soon. It will take at least six to nine months. So we do see some continuing pressure in the economy," he added.

There is a major cost reduction programme going on. While the company had achieved a record in cost paring last year, this year it is trying to improve the performance further. Going forward, TVS Motor will continue to strengthen Jupiter brand and international markets, which have delvered better growth. It would look at exporting to Nigeria, Ethiopia, Bangladesh, Iraq, Philippines, among others.