Maruti to start production of electric vehicles soon

The investment will be made through a joint venture with Toshiba and Denso. The battery is the most expensive single part of an EV.

Indicating a shift in stance, the country's biggest car maker, Maruti Suzuki, says it will not hold back investments in electric vehicles (EVs).

It says it will start work on these as soon as consumer preference for EVs is visible.

EVs, it has been decided, are to attract a low Goods and Services Tax (GST) of 12 per cent, compared to a minimum of 29 per cent on small petrol cars and a GST (and cess) of 43 per cent for hybrid cars.

"The government has announced a programme to rapidly promote the use of EVs.

It is a very laudable policy, as it will greatly enhance the usage and, over time, lead to a cleaner environment," Maruti chairman R C Bhargava told shareholders at the company's 36th annual general meeting.

Osamu Suzuki, chairman of Maruti's parent entity, Suzuki Motor Corporation, was also present in the meeting.

The government has an ambitious plan to have an all-EV fleet in the country by 2030.

"Your company will not hold back in the segment. As soon as we can determine the customer preference, we will come up with such models.

Meantime, the focus will be to increase fuel efficiency (in current models) and bring new technologies," said Bhargava.

In April, Suzuki Motor had announced an investment of Rs 1,200 crore (Rs 12 billion) to set up an automotive lithium-ion battery manufacturing unit in India, its biggest market.

The investment will be made through a joint venture with Toshiba and Denso. The battery is the most expensive single part of an EV.

Mahindra & Mahindra (M&M) already produces EVs, though the volume is small.

Tata Motors is said to be working on an electric car. Hyundai of Korea is preparing a plan to introduce electric cars in the Indian market; it shelved an earlier hybrid plan midway after the GST rates were announced.

EESL, a company backed by power public sector units, has floated a tender to purchase 10,000 electric cars over the next 12 months, to be used by government departments and offices.

M&M, Tata Motors, Hyundai & Renault-Nisaan attended EESL's pre-bid meet last week.

Maruti Suzuki managing director Kenichi Ayukawa had said in July that they were awaiting a road map from the government on electric mobility.

"You can import cars from a company like Tesla but people are not looking for such options. People expect an affordable vehicle; else, they will not opt for it. They look to buy electric cars in a price range of Rs 5-10 lakh. We have to study options in this range. At this moment, a limited solution is available," he'd said.

Maruti Suzuki has been expanding sales at double-digits annually. It says it expects the industry to clock a double-digit growth rate over the next three to five years.

Bhargava said the company was on track to achieve annual sales of two million vehicles by 2020.

The company sold 1.44 mn units in the domestic market during 2016-17.

On a shareholder's suggestion that the company should now look at producing for the defence sector, Bhargava said, "It is something which needs to be carefully thought about".

Photograph: Neil Hall/Reuters