Claims of ICE vehicle demise self-serving: Bajaj Auto's Rakesh Sharma

Sharma talks about Bajaj's mega electric vehicle play

During the last few months, Bajaj Auto has seen a huge increase in its electric scooter sales, thanks to the massive distribution expansion and launch of models below Rs 1 lakh for the first time. Rakesh Sharma, executive director, in an email interview with Surajeet Das Gupta, talks about Bajaj’s mega electric vehicle (EV) play. Edited excerpts:   

One of your startup competitors has recently said that internal combustion engine (ICE) players have just two years to do the right thing. Do you see them as big challengers?

Pronouncements proclaiming complete demise of ICE vehicles are perhaps self-serving, ignoring customer needs and challenges which the government faces. In driving the EV business forward, we consider our true opponent to be the ICE vehicle – that is where the larger blue ocean of opportunity lies. In some segments like scooters, EVs can offer a distinctly superior value proposition to the ICE customer in terms of savings, riding experience and convenience. Currently, the penetration of EVs in scooters is about 15 per cent. This may increase to 25 per cent in two years. We will aim for a leadership position in the segment. It also brings absolutely new and additional business to us, not just in India but at a global scale in the future. Similarly e- autos open up the possibility of upgrading customers from e-rickshaws. We were among the first to launch EV scooters in 2019.

So, what is your overall EV strategy for Bajaj?   

We have the widest spectrum of product categories – micro mobility, 2 and 3 wheelers. In due course, we expect to electrify our quadricycle too. In Q1 FY25, we did about 18,000 of all these vehicles put together on an average every month. In the August quarter, this number almost doubled to over 31,000. The electric portfolio accounts for almost 20 per cent of our domestic revenues. That is substantial and will continue to grow at a strong pace.

You do not subscribe to the view of ICE demise soon like your competitors predict...

The transition of ICE vehicles into EVs is a marathon. The industry has to also prepare for a subsidy less operating environment and global competition, particularly from China. The issue is not just about racing to the no 1 position at any cost and securing a pyrrhic victory. It is important to achieve sustainable leadership not just for the sake of the company but also for other stakeholders like vendors and dealers.

But don’t you think EVs, with their low operating costs, will eventually win over ice?
 

Our view on the transition is that ultimately the customer will drive it. In India, there are multiple customer segments with varied use cases – distance travelled, road conditions, charging opportunities and savings, among others. Alongside, there are issues of managing the environmental impact of heightened mobility as well as the implications on forex outflows. Everything combined suggests that we will see different fuel systems co existing. It is difficult to imagine one silver bullet taking care of all issues and requirements. Even today, our 3Ws have fuel systems of diesel, petrol, LPG, CNG, electric and in the near future ethanol. There is a customer driven and commercially proven justification for each. We are preparing to perform under such a scenario.

So, how different is your approach on electrification?

Our approach is not exclusive. It is inclusive and foremost driven by the opportunity to create business value by satisfying customer requirements. Our CNG bike Freedom halves commuting costs and eliminates range anxiety as it is bi-fuel. It provides a comfortable ride on all types of roads and leverages the robust infrastructure the government is putting in place for CNG. It reduces the carbon footprint delivered through a safe and stylish vehicle. In specific use cases, it scores over not just petrol vehicles but also electric scooters. For instance, at full tank, it delivers a 330 km range and takes just a few minutes to refill. This is in contrast to the limited range of e2Ws and the hours of charging.

Ola is challenging you in your big area — electric mobikes. How do you see that opportunity?

Electric motorcycles will need to address customer needs – range, weight and handling. Current tech allows such and other needs to be addressed better in the scooter category. So, we have prioritised it along with 3Ws for development. We believe such sharp focus is a vital ingredient in building a successful new business. Both tech and markets are being monitored and if there is a larger opportunity in the motorcycle space, we will re-prioritise. The great thing is that the underlying technology and supply chain systems can serve both formats.

Do you think that OEMs such as you should be making their own Lithium-ion battery cells like one of your competitors is doing and who believes that will give it a cost and competitive advantage?

Our core business is designing and building vehicles. There are large organisations which specialise in cell technologies. We rather leverage their expertise through strategic collaborations. Moreover, cell chemistries and other EV technologies are developing on multiple fronts. We would not like to lock ourselves in one type of development or the other. We want to retain the agility to leverage new developments.