Ola Electric blitzkrieg has got EV industry charged; here’s what traditional players say

Stocks

Hero says new categories will see many players coming in. Bajaj Auto has an interesting comment: “We have an existing business… those which do not have any can make those dramatic announcements.” The company, however, said the EV disruption is serious. Piaggio has a tip: If you want to be competitive in India, you have to be price-competitive.

‘); $ (‘#lastUpdated_’+articleId).text(resData[stkKey][‘lastupdate’]); //if(resData[stkKey][‘percentchange’] > 0){ // $ (‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”); // $ (‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”); //}else if(resData[stkKey][‘percentchange’] = 0){ $ (‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”); //$ (‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”); $ (‘#gainlosstxt_’+articleId).find(“.arw_red”).removeClass(“arw_red”).addClass(“arw_green”); }else if(resData[stkKey][‘percentchange’] 0) { var resStr=”; var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’; $ .get( “//www.moneycontrol.com/mccode/common/rhsdata.html”, function( data ) { $ (‘#backInner1_rhsPop’).html(data); $ .ajax({url:url, type:”POST”, dataType:”json”, data:{q_f:typparam1,wSec:secglbVar,wArray:lastRsrs}, success:function(d) { if(typparam1==’1′) // rhs { var appndStr=”; var newappndStr = makeMiddleRDivNew(d); appndStr = newappndStr[0]; var titStr=”;var editw=”; var typevar=”; var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’); var phead =’Why add to Portfolio?’; if(secglbVar ==1) { var stkdtxt=’this stock’; var fltxt=’ it ‘; typevar =’Stock ‘; if(lastRsrs.length>1){ stkdtxt=’these stocks’; typevar =’Stocks ‘;fltxt=’ them ‘; } } //var popretStr =lvPOPRHS(phead,pparr); //$ (‘#poprhsAdd’).html(popretStr); //$ (‘.btmbgnwr’).show(); var tickTxt =’‘; if(typparam1==1) { var modalContent = ‘Watchlist has been updated successfully.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //var existsFlag=$ .inArray(‘added’,newappndStr[1]); //$ (‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’); //if(existsFlag == -1) //{ // if(lastRsrs.length > 1) // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’); // else // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’); // //} } //$ (‘.accdiv’).html(”); //$ (‘.accdiv’).html(appndStr); } }, //complete:function(d){ // if(typparam1==1) // { // watchlist_popup(‘open’); // } //} }); }); } else { var disNam =’stock’; if($ (‘#impact_option’).html()==’STOCKS’) disNam =’stock’; if($ (‘#impact_option’).html()==’MUTUAL FUNDS’) disNam =’mutual fund’; if($ (‘#impact_option’).html()==’COMMODITIES’) disNam =’commodity’; alert(‘Please select at least one ‘+disNam); } } else { AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function pcSavePort(param,call_pg,dispId) { var adtxt=”; if(readCookie(‘nnmc’)){ if(call_pg == “2”) { pass_sec = 2; } else { pass_sec = 1; } var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’; $ .ajax({url:url, type:”POST”, //data:{q_f:3,wSec:1,dispid:$ (‘input[name=sc_dispid_port]’).val()}, data:{q_f:3,wSec:pass_sec,dispid:dispId}, dataType:”json”, success:function(d) { //var accStr= ”; //$ .each(d.ac,function(i,v) //{ // accStr+=”+v.nm+”; //}); $ .each(d.data,function(i,v) { if(v.flg == ‘0’) { var modalContent = ‘Scheme added to your portfolio.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //$ (‘#acc_sel_port’).html(accStr); //$ (‘#mcpcp_addportfolio .form_field, .form_btn’).removeClass(‘disabled’); //$ (‘#mcpcp_addportfolio .form_field input, .form_field select, .form_btn input’).attr(‘disabled’, false); // //if(call_pg == “2”) //{ // adtxt =’ Scheme added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //else //{ // adtxt =’ Stock added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //$ (‘#mcpcp_addprof_info’).css(‘background-color’,’#eeffc8′); //$ (‘#mcpcp_addprof_info’).html(adtxt); //$ (‘#mcpcp_addprof_info’).show(); glbbid=v.id; } }); } }); } else { AFTERLOGINCALLBACK = ‘pcSavePort(‘+param+’, ‘+call_pg+’, ‘+dispId+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function commonPopRHS(e) { /*var t = ($ (window).height() – $ (“#” + e).height()) / 2 + $ (window).scrollTop(); var n = ($ (window).width() – $ (“#” + e).width()) / 2 + $ (window).scrollLeft(); $ (“#” + e).css({ position: “absolute”, top: t, left: n }); $ (“#lightbox_cb,#” + e).fadeIn(300); $ (“#lightbox_cb”).remove(); $ (“body”).append(”); $ (“#lightbox_cb”).css({ filter: “alpha(opacity=80)” }).fadeIn()*/ $ (“#myframe”).attr(‘src’,’https://accounts.moneycontrol.com/mclogin/?d=2′); $ (“#LoginModal”).modal(); } function overlay(n) { document.getElementById(‘back’).style.width = document.body.clientWidth + “px”; document.getElementById(‘back’).style.height = document.body.clientHeight +”px”; document.getElementById(‘back’).style.display = ‘block’; jQuery.fn.center = function () { this.css(“position”,”absolute”); var topPos = ($ (window).height() – this.height() ) / 2; this.css(“top”, -topPos).show().animate({‘top’:topPos},300); this.css(“left”, ( $ (window).width() – this.width() ) / 2); return this; } setTimeout(function(){$ (‘#backInner’+n).center()},100); } function closeoverlay(n){ document.getElementById(‘back’).style.display = ‘none’; document.getElementById(‘backInner’+n).style.display = ‘none’; } stk_str=”; stk.forEach(function (stkData,index){ if(index==0){ stk_str+=stkData.stockId.trim(); }else{ stk_str+=’,’+stkData.stockId.trim(); } }); $ .get(‘//www.moneycontrol.com/techmvc/mc_apis/stock_details/?sc_id=’+stk_str, function(data) { stk.forEach(function (stkData,index){ $ (‘#stock-name-‘+stkData.stockId.trim()+’-‘+article_id).text(data[stkData.stockId.trim()][‘nse’][‘shortname’]); }); });

In December 2020, Ola Electric announced plans to pump in Rs 2,400 crore for a factory, which, it claimed, would be the world’s single-largest producer of electric scooters.

In the first week of March, it released pictures of an electric scooter model, which, it said, would go on sale in July, and would be produced at the same factory, in Tamil Nadu, whose initial production capacity was pegged at 2 million units a year.

The company followed it up with an announcement in April, which said that an additional $ 2 billion investment would be made by itself and its partners for setting up 100,000 charging stations across 400 locations; again, the biggest in India.

Though the buzz created by such a steady flow of announcements may not be in the same league as those created by Tesla, it has, nonetheless, made the established players sit up and take notice.

‘Collision imminent between startups, traditional corporates’

Speaking to analysts, Niranjan Gupta, chief financial officer, Hero MotoCorp, said: “Any new category will see many players coming in and that is good because it allows the category to expand and explore. Everyone brings some capability to the table, but, eventually, the market will see consolidation, because this is not about an aggregation play or a software play or an app play. This is hardcore — customer service, vehicle service, aftersales. It is not easy. Even Elon Musk said recently that it is very easy to build prototypes but operationally it is not that easy.”

The 37-year-old Hero MotoCorp itself is yet to launch a single electric model in the market (its first product debuts in early 2022), and rival Bajaj Auto is currently planning to expand the retail footprint for its only electric model Chetak, which has been in the market for 15 months.

A senior executive of Bajaj Auto said: “We have an existing business, but there are those which do not have any business and so they have to make those dramatic announcements and invest. We don’t have to invest because we have the capacities, we have the people and we have the R&D. We started investing in R&D five years back, and it took three years for us to come out with the Chetak.”

Bajaj Auto believes that the EV disruption, however, is serious and is about the same as the birth of motorcycles, which nearly wiped out scooters from the market two decades ago. The Pune-based company agrees that a collision is imminent between the startups and traditional corporate houses.

“The fate of the EV industry is not going to get decided in 2-3 quarters. It is a change, like from like scooters to motorcycles. If somebody wants to see eyeballs to eyeballs in a frantic manner, we will deal with that but in a sustainable manner. We are aware that there will be a collision in the market of two different business models, between ours and the private equity-driven ones, but there are other factors that will decide success and failure,” added the Bajaj Auto official.

What market watchers say

Setting up a retail presence (showrooms), especially in a large country like India, takes time and lots of investments. In a COVID-ravaged economy, fresh investments by franchisees won’t be easy to come by.

Mahantesh Sabarad, head, retail research, SBICAP Securities, said: “Ola’s news of making its own e-bikes is very surprising, given that it has absolutely no domain expertise in manufacturing, let alone automobile manufacturing. Even the landscape for charging is a bit difficult to surmount, given the challenges with respect to land parcel availability and local legislations.”

“Existing two-wheeler companies are much better prepared as they oversee a vast network of vendors as well as distributors and boast of huge cash resources. Manufacturing a highly engineered product like an automobile calls for competence that isn’t just about electric drivetrain but even things like painting, suspension, handling to mention a few. All these go to determine the acceptability of the product”, Sabarad added.

But some others believe that India has reached an inflection point in EVs, and now is the time to build the market. As per data provided by the Society of Manufacturers of Electric Vehicles (SMEV), FY21 saw a 6 percent decline in electric two-wheeler volumes at 1,43,837 units, compared to 1,52,000 units sold in FY20.

Ravi Bhatia, president and director, JATO Dynamics, said: “Electrification of mobility has reached an inflection point. The cost and performance factors have improved. The technology case has also become stronger. Ola has signalled with its recent public pronouncements that it intends to make a play. They are well-funded and electrification sits very well with their core business of shared mobility. Traditional OEMs, battery makers and tech companies will need to collaborate to manage this disruption.”

EVs are expensive, profit-elusive

While startups are stepping on the accelerator, not all established players are gung-ho about entering the EV segment. Costs, especially those of batteries, remain the primary deterrent, followed by a reliance on China for battery cells.

“Designing and producing an electric scooter is not difficult. Powertrain and battery packs are available off the shelf. We have seen a lot of small companies cloning our Vespa and selling them at ridiculous prices. China is a supermarket of electric two-wheelers. A simple tie-up with them can get you everything. But the difficult part is to be profitable,” Diego Graffi, CEO and MD, Piaggio Vehicles, said.

“We have done a lot of retrospective calculation. If you want to be competitive in India, you have to be price-competitive. Selling electric scooters at Rs 1.25 – 1.5 lakh is a challenge because ICE motorcycles are sold at half that price. Offering a product at that price level is not possible if you want to maintain a high standard of quality. You will have to enter the market with a mindset that you will lose money for the first 3-5 years,” Graffi added.