Suzuki, Toyota ink pact to make electric cars in India

Indian govt plans to shift to an all-electric vehicle fleet by 2030

Japanese automobile majors Toyota and Suzuki have decided to work together for the introduction of electric vehicles (EVs) in India by 2020. 

Suzuki — which enjoys a 50 per cent share of the domestic passenger vehicle (cars, vans and utility vehicles) market through subsidiary Maruti — has decided to produce EVs in response to a clear government mandate seeking a shift to green mobility. Interestingly, the EV segment in India, the fifth-largest car market, is the first area where the two companies have decided to work together after the global agreement in February. 

The two Japanese companies, which signed a deal early this February for a business partnership, have concluded another tie-up on moving forward in considering a cooperative structure for introducing EVs in the Indian market. Besides producing cars, the companies would work on developing an ecosystem related to EVs through investments in charging facilities and service network. 

“The two companies together will bring the technology and Suzuki will set up manufacturing facilities through Maruti,” R C Bhargava, chairman at Maruti Suzuki, told Business Standard. 

Maruti Suzuki’s stock price gained 2.15 per cent to close at Rs 8,340 at the BSE.

Suzuki would produce EVs and supply some vehicles to Toyota, which would chip in with its technical support. Toyota and Suzuki also plan to conduct a comprehensive study of activities for the widespread acceptance of EVs in India. Such activities encompass the establishment of charging stations, human resources development — training for after-service technicians employed throughout sales networks — and systems for the appropriate treatment of end-of-life batteries, Suzuki said in a statement. 

Early this year, Suzuki had announced that it intended to construct a lithium-ion battery plant in Gujarat, the first such plant in the country. The Rs 1,151-crore unit would be set up with Toshiba and Denso. In addition to lithium-ion batteries, electric motors and other major components would be locally procured for the production of EVs in India, helping the government fulfil its ‘Make-in-India’ initiative in the field of EVs, Suzuki said. 

“The Toyota and Suzuki pact holds tremendous potential, as Toyota is a leader in the hybrid electric space and can help bring various technological solutions on the table. This partnership, owing to the fact that Suzuki is a consistent leader in the Indian market, is well suited to creating solutions needed for India,” said Ashim Sharma, partner and group head (auto, engineering & logistics) at the Nomura Research Institute India.

The government has drawn up ambitious plans for EVs and aims to convert the entire vehicle fleet in the country to electric by 2030. It has also decided to tax EVs at a low rate of 12 per cent under the goods and services tax, against a minimum 29 per cent tax on conventional fuel cars. 

The government is also nudging its ministries and departments to adopt EVs. Energy Efficiency Services Ltd (EESL), a firm owned by power ministry public sector undertakings, recently floated a tender to purchase 10,000 EVs to be used by government officials in the National Capital Region. Maruti did not participate in this tender, which was jointly won by Mahindra & Mahindra and Tata Motors. These are the only two companies manufacturing electric cars in India as of now.

EESL on Wednesday said it would float another tender for 10,000 more in March-April.