Maruti Suzuki: Countering the challenge from electric vehicles
Kenichi Ayukawa MD and CEO, Maruti Suzuki India says, we are trying to challenge ourselves as time has come to change the game
Mar 20, 2018
When Kenichi Ayukawa started his stint as managing director of Maruti Suzuki India in 2013, he had to initiate an overhaul of the company following a riot at its plant in Manesar, an industrial town in Haryana, by militant workers.
Maruti's market share in the passenger vehicle segment since recovered from 38 per cent in 2012 to 51 per cent in the first three quarters of the current financial year and that has propelled the company's stock to an all time high - breaching the Rs 10,000 mark - and made it the sixth most valuable company on the BSE. Maruti Suzuki is going back to the drawing board again as the Indian automobile industry stands at the cusp of a shift to electric mobility. In an interview, Ayukawa suggests it will be a challenge for Maruti Suzuki to establish an ecosystem for electric vehicles (EVs) - just as it was a challenge in 1983 when it started to manufacture vehicles with internal combustion engines (ICE). Edited excerpts:
I get a sense that you are going back in time when you set up an ecosystem for ICE vehicles in India...
In a sense, we are trying to challenge ourselves as time has come to change the game. Hence, we have to review (our strategy) and start again from zero.
And the lithium-ion battery plant in Gujarat is just one step in that direction in the current context..
Exactly! We set up the plant earlier for hybrids, but now we are considering it for EVs.
Do you think this move gives you an upper hand in the Indian market?
First come, first serve gets the benefit. But the point is that the time is moving but not quickly changing. Even if we provide EVs, the industry will not change into one that runs on electric completely. So, we have time, and the share of EVs in the market will gradually increase.
With the advent of electric cars, will we get to see small cars as well?
That is a big challenge. We have to study that. It is not easy to find out a solution for that. Cost difference is, of course, high. We also have some added cost in the case of implementing EVs. The battery cost of small cars is so much different -very expensive. Automatically, the cost goes up.
The availability of lithium itself is a problem worldwide. Where will you source lithium from?
We need to decide if we want to buy from a (Latin) American country or some other country. We need to find a source for lithium. At this moment, we have to find concern points and problems and then take counter-measures. We are just starting off. First, we are trying to study what kind of vehicles a customer expects and what the government expects. The idea is to look at some other countries and learn from them.
The initial momentum that was built in favour of EVs on the policy front seems to be fizzling out. The EV policy is not yet in place. Does that put the industry in a dilemma since many carmakers have changed their strategies from hybrid to electric cars?
The point is (that a) sudden change at any time is not easy. A sudden game change is also not easy since we have three to four million people employed in the industry. If we make any change, we will have to retrain those people also. That is not easy. The government also knows that.
What is it that you would want from the government on this front?
The point is that the government is looking for a solution and so are we. We have to collaborate and find out a common solution that works for both. But I think it is not an easy process and it takes time. Even if we set up some direction, we have to modify them keeping in mind real situations.
We want to set up a lithium-ion battery plant, but which country will provide lithium? If we cannot get lithium, we cannot make such a kind of product. How much is possible at how much cost? We will have to start such studies and take counter measures on how we can reduce costs.
It will be impossible for people to buy a Rs 5 lakh car if it climbs up to Rs 20 lakh. Nobody will buy it then.
Once you have your EV ready, which is in 2020, will you also set up your own charging stations?
Those kinds of arrangements need to happen gradually. It is very difficult to arrange those kinds of things nationwide. We have to focus on some area or something like that. As far as we are concerned, we have to set up some charging stations in some parts by collaborating with dealers and business partners. We have to collaborate with governments and other players also.
So, if I am sitting out of Patna with a Maruti EV, will you provide me with charging solutions?
As long as we sell the vehicle, we have to give a charging solution to the customer, this is simple logic. It will be difficult to offer electric vehicles on the rural side, but in cities, it is possible to arrange charging stations at fixed points. We are just starting those studies. At this moment, I have no idea how things will pan out in the future.
How will Suzuki's partnership with Toyota come into play?
Toyota, as you know, has a lot of technology - more than Suzuki. Through this tie-up between Toyota and Suzuki, we may get access to some of Toyota's technology through Suzuki.
Will Toyota have any role in manufacturing?
That is their decision and I don't have any knowledge of it.
In India, we have a bigger business than Toyota, and that is why in India, we requested them that from our side we want to lead the market. Maybe Toyota can help implement some technology in Maruti Suzuki products.
At this point, we have no idea about whether Toyota will need those vehicles. Right now, we have our products and they have theirs.