Focus on EVs seems to have pipped that on public transport: Volvo India CEO

In a Q&A Kamal Bali says industry needs a clear policy road map, whichever fuel is opted for; emphasis should be on sustainable mobility instead of congesting roads with electric vehicles

India’s adoption of BS VI norms on April 1, 2020 will soon be followed by up a scrapping policy that could give an impetus to new technology and demand creation in the automobile industry. In an interview with Jyoti Mukul, Kamal Bali, chief executive officer, Volvo India, says that industry requires a clear policy road map, whichever fuel is opted, even as the emphasis should be on sustainable mobility instead of congesting roads with electric vehicles. Edited Excerpts:

Which fuel technology should India be promoting considering that now we have LNG, hybrid and electric all competing?

There are pros and cons of every fuel and it is important that the country sets a road map forward for the choices it will make. No individual energy carrier is capable of meeting all the challenges related to climate change, different types of fuels and drivelines will continue to coexist for the foreseeable future. Today, in India we see discussions around LNG, methanol, ethanol, biogas, electric among other options. Every new option involves large investment into energy production, infrastructure, product development as well as manufacturing. It is important that authorities communicate a clear direction and roadmap. This is key for industry players to judge the market demand and develop a business case for the investments required.

For city buses, both hybrid and electric are of good value. It will often depend upon the application. In the city center and sensitive zones electric vehicles would probably be a good fit. Hybrids could serve better on longer distances such as ring roads and suburbs.

We see much discussions and are closely following the developments in India. We, however, would like to point out that the discussions on electric vehicles in India seem to have superseded the discussions on making public transport the number one choice in Indian cities – through public transport systems that are comfortable and prioritised. By focusing on only the energy carrier – i.e. electricity- we are in the danger of moving into a future of cities where the cities which were earlier congested by diesel vehicles are now congested by electric vehicles. It’s important that we take a holistic approach to sustainable mobility regardless if it is people or goods.

For trucking and long-haul transport, LNG is promising. Our (Volvo) trucks in Europe have an energy-efficiency and performance comparable to that of its diesel-powered counterparts but produces significantly lower CO2 emissions. This has proven to be a success factor in Europe. Using liquefied biogas, also known as bio-LNG, reduces net emissions by up to 100 per cent from tank to wheel (TTW), while using natural gas cuts emissions by around 20 percent (TTW) compared with ordinary European standard diesel. We are aware, the Indian authorities have been working on LNG. At the same time, we know that the government has been discussing and taking steps towards building a methanol economy. The good thing about Methanol Economy – as envisaged by the authorities – is that methanol and its derivatives can be sourced from multiple sources and that offers the nation a chance to be self-sufficient and avoid fuel imports. However, methanol has not evinced the same level of interest from most other parts of the world. We are closely observing the developments being taken on all this fronts.

Should users be given incentives when old vehicles are scrapped?

The scrappage policy for sure can create a new demand segment for the commercial vehicle segment and if you look at it from a longer-term perspective, the scale of the demand would be even higher. The benefits of replacing older vehicles are significant. Comparing the PM emission limits of BSVI trucks with BSI {India 2000 regulations] truck it would take 36 BSVI trucks to match the emissions of one BS1 truck. When taking NOx into account it would take around 20 BSVI trucks.  This also means that we will have more ‘fitter’ vehicles on road which will contribute to better safety. If we scrap trucks of over 15 years - it could provide an additional volume of around 150,000-200,000 or thereabout. If every single truck over 15 years is scrapped that number would be even higher.

Giving users incentives through reduced taxes, registration and road tax will help create the demand. This will be the first time such a policy would be implemented and hence an incentive could be valuable to overcome the initial concerns. Even Germany which is about to implement a scrapping policy [Euro IV – V vehicles] is offering economic incentives as part of the scheme.

How feasible is replicating EU standards in India?

At Volvo group, we cater to emissions norms around the world.  Additionally, our medium duty engine factory in India caters to global demands and hence we would typically be already producing engines that meet Euro norms. This was the case even before BSVI was introduced in India. This will be the case in the future in case we align with EU emission standards. We would, however, like to put in perspective that sustainability [of which emissions is a part] requires many more issues to address.  This includes better road quality, road designs, ensuring steady traffic flows, the right transport concept for the right applications, the right power-to-weight ratios of the vehicles, ensuring that public transport is the number one choice in our cities. For example, concepts such as longer and high capacity road-trains on highways can bring about a significant improvement in fuel consumption and emissions – probably the same impact as moving one level up in emission standards.  That is also the case when we motivate citizens to leave behind their personal vehicles and adopt public transport instead. These are equally important steps to take when it comes to delivering a better sustainability/environmental performance.

Having Indian emission regulations align with EU regulations will also support in in export of products developed in India besides the environmental benefit it brings with it.

Are there some Swedish lessons for the Indian market as far as government policy is concerned?

A good learning from Sweden is the high focus the nation has put in the safety and environment arena. There is a strong incentive as well as disincentives in this regard. We see India taking bold steps also and has committed itself to both these arenas – through its commitment to COP 21 climate goals as well as the recent commitment to reduce fatalities on road as communicated during the Global Ministerial Conference on Road Safety in Stockholm. In fact, we recently, as part of the Sweden-India Transport Innovation & Safety Collaboration conducted a three-day training programme along with Swedish Transport Administration and ARAI on the “Vision Zero Approach” for senior transport and highway professionals across the country.

India remains unique in its circumstances. So, even as we must refer the best practices from across the world, we have to ensure they are adapted to the local needs and priorities.

What kind of demand outlook do you see in the Indian automobile space?

We have many sectors that are driving demand today albeit from a low level. Even during the pandemic, agriculture performed well as a result of good monsoons, limited lockdown and good crop harvest. Thereon, we witnessed a sharp recovery in the e-commerce sector which is doing even better than before. In the last quarter, we have now witnessed increase in the activities around mining and construction segment. Of course, there are other segments that need to return to pre-Covid level but with the PMI Index now reaching at around 58 points (October 2020) there is a good sign that the industry is back to expanding. There also exists a pent-up demand with regard to replacement market. Buses, however, are still witnessing low demand and this may take some time to recover.

When it comes to Volvo Group business with Volvo trucks and construction equipment, we are already back to pace compared to last year and will end the year close to the same figures – thanks to the increase in activity around the mining and construction segment.