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In September, JSW MG Motor India, the newly minted joint venture between SAIC Motor, which is present in 100 countries, and Indian conglomerate JSW Group, launched the Windsor, an electric car that introduced battery as a service (BaaS).
This reduced the upfront price of the vehicle to just under Rs 10 lakh and, in the process, sought to address the price hurdle, which impedes electric car adoption in the country.
Under BaaS, the customer does not own the battery and therefore does not pay its price while buying the car. Instead, she pays an average of Rs 3.5 a kilometre for using the battery, which goes to a finance company, in addition to paying the charging costs.
Windsor is the first offering by JSW MG, in which JSW owns 35 per cent equity.
SAIC, a state-owned company from China, has 49 per cent. Dealers and employees hold the rest.
Bookings for the Windsor clocked an impressive tally of more than 20,000 in October.
It became the bestselling electric car in India for the month, based on wholesale numbers, with 3,000 dispatches.
As much as 15 per cent of the October buyers opted for BaaS, although only two non bank finance companies (NBFCs) were supporting it.
JSW MG was the second largest electric car company in India in October, with its three models selling 4,878 units.
Tata Motors was just a shade ahead with 5,067 units sold of its six models.
These numbers are wholesale dispatches.
Looking at registrations on the VAHAN portal, JSW MG saw its share of the market go up from 16.5 per cent in September to nearly 34 per cent in November (first 20 days).
Tata's share of registrations fell from 62 per cent to below 50 per cent.
JSW MG insiders say Windsor bookings continue unabated at 200 a day in November, and that the company is ramping up production to end this year with an output of 70,000 cars.
Like a BaaS
BaaS makes it cheaper to run the vehicle by paying the monthly outgo for the battery and the charging costs as compared to buying fuel for a vehicle with an internal combustion engine (ICE).
For instance, under a plan offered by Bajaj Finance, a consumer who runs his vehicle for 1,500 km every month, will fork out Rs 5,250 for the battery and another Rs 1,000 for charging over the eight-year life of the battery.
That is still far lower than the Rs 10,500 worth of petrol needed to cover 1,500 km, assuming fuel efficiency of 14-15 km to a litre.
A petrol car would however go on for 15 years, should you want to retain it.
Then there is the kind of car you get. For Rs 9.9 lakh, which is the price of the Windsor, ICE options would be A segment ones such as Maruti s Brezza,
Hyundai's Venue, Tata Nexon, Kia Sonnet, etc, which are shorter than 4 metres and the variant would likely have manual gears.
What we are offering is a car which has internal space (like a Hector on a 2.7-metre wheelbase) of a C segment car, with specifications of a B segment car (4.3 meters in length) with automatic gears, but at the price of an A category car, says Rajeev Chaba, CEO Emeritus of JSW MG.
Now BaaS is being extended to other models, such as the Comet, which is the cheapest electric car in the country priced at Rs 6.99 lakh.
It is now available without the battery for a mere Rs 4.99 lakh.
You can buy the battery under an EMI scheme for an average of Rs 2.50 a kilometre.
Sales of the small electric car have gone up this year (till October) by 73 per cent year.
Soaring ambition
By 2028, JSW MG expects to have 60 to 70 per cent of its sales volumes coming from new energy vehicles.
By then, it wants to expand its capacity and sell at least 300,000 vehicles a year, which would be more than four times what it is likely to clock in 2024.
The company hopes to have a 30 per cent share of the electric car market by 2030.
It has been looking to introduce a plug-in hybrid vehicle. These have an electric motor as well as an ICE engine.
The battery needs to be plugged into an electric socket for charging.
Plug-in hybrids, JSW MG believes, are the way to resolve range anxiety and provide a stepping stone to full electric.
But first it wants to see the tax structure become more favorable towards hybrids.
Giving it hope is that Commerce Minister Piyush Goyal endorsed plug-in hybrids a few days ago.
The company plans to increase localisation to reduce costs. This includes lithium ion batteries and cells, which JSW group companies plans to put in.
It has also mounted a fresh bid, after becoming a joint venture with an Indian partner, to be included in the government s production-linked incentive scheme.
Its earlier proposal, when it was under Chinese control, was neither cleared or rejected.
Company executives say being included under PLI would mean at least two of the company s three electric vehicles will be able to have localisation of more than 50 per cent within a year or so.
Not so serious?
JSW MG s competitors view BaaS more as an activation strategy than a serious business.
Tata Motors chief financial officer P B Balaji said in a post-earnings media call: We see most customers buying the car and not BaaS.
We see it as a more excitement and market activation tactic.
Some others say financing is a problem. Finance companies have high interest costs like Bajaj is asking for 9 per cent.
Such a scheme makes sense if you can rope in green funds with low rates of interest cost.
The very fact that only 15 per cent have taken BaaS is a case in point, says a senior executive of a multinational carmaker.
Chabha admits that big banks such as ICICI Bank and State Bank of India did not show interest, so the company went with NBFCs to build a product offering. But he is ebullient.
In the first month, we have 15 per cent of sales volumes coming from BaaS, which is a good show.
We are now seeing interest from many others too.
We expect competition to join and replicate BaaS, as it is a way to grow the EV market, says Chaba.
JSW MG provides guarantees to the finance companies in situations such as if the battery is taken back for non-payment of the monthly bill.
It is offering to buy back the car at 60 per cent of its original price after three years, provided it is serviced at authorised workshops.
It has also started an experiment with lifetime warranty.
