New Delhi: Maruti Suzuki India Ltd, which posted on Friday posted a 3.4% growth in net profit to ₹2,484.3 crores for the July-September quarter, said that it will build electric cars, as the government pushes for environment-friendly alternatives to diesel and petrol vehicles.
“We will make electric cars. We intend to be leaders in the segment as well,” chairman R.C. Bhargava said at a press conference where the company announced its quarterly earnings. “We will make electric cars but I can’t give you the date just now because it is all very much a work in progress,” RC Bhargava told reporters, after the company posted a 3 per cent rise in quarterly profit, beating analysts’ estimates, reported Times of India.
Bhargava didn’t specify a timeline by when India’s biggest carmaker plans to start manufacturing electric cars. Maruti is expected to benefit from a potential partnership between its parent Suzuki Motor Corp. and Toyota Motor Corp. that seeks to take advantage of emerging trends in the automobile industry such as a push towards green technologies and autonomous driving. The government has already put the industry on notice to shift from manufacturing vehicles that run on petrol and diesel to environment-friendly alternatives to reduce pollution in cities and cut dependence on crude oil imports. Moreover, the government’s ambitious target of having an all-electric fleet of vehicles on India’s roads by 2030 will support the plans and operations of the entire automobile industry ecosystem.
In the three months to September, Maruti’s profit rose 3.4% to Rs2,484.3 crore, from Rs2,401.5 crore a year ago. Net sales rose 21.8% to Rs21,428.1 crore, largely because of a better product mix that helped increase what the company earned from every car it sold. Maruti sold a total of 492,118 vehicles during the quarter, up about 18% from a year ago. The company’s earnings beat estimates. A Bloomberg poll of 22 analysts had expected Maruti to post a net profit of Rs2,227 crore on net sales of Rs22,020.3 crore. The company said net profit growth was slow because it earned less non-operating income. Yields on investments were lower than the year-ago period, the cost of some commodities and advertising expenditure went up and effective tax rates were higher, it said.
Last month, the company has already said that it will not hold back investments in electric vehicles (EVs), and will start work on these as soon as consumer preference for EVs is visible. EVs, it has been decided, are to attract a low Goods and Services Tax (GST) of 12 per cent, compared to a minimum of 29 per cent on small petrol cars and a GST (and cess) of 43 per cent for hybrid cars. “The government has announced a programme to rapidly promote the use of EVs. It is a very laudable policy, as it will greatly enhance the usage and, over time, lead to a cleaner environment,” Maruti chairman R C Bhargava told shareholders at the company’s 36th annual general meeting, reported Business Standard.
In April, Suzuki Motor had announced an investment of Rs 1,200 crore to set up an automotive lithium-ion battery manufacturing unit in India. The investment will be made through a joint venture with Toshiba and Denso. The battery is the most expensive single part of an EV.
Moreover, Mahindra & Mahindra (M&M) is already producing EVs such as hatchback e2oPlus and eVerito, though the volume is small. Tata Motors has recently won the bid from the government to supply 10,000 electric vehicles, which was also contested by Nissan and Mahindra & Mahindra (M&M) but did not manage to get it. While Tata Motors does have electric vehicles, it is mostly in the commercial vehicle space and currently does not have any vehicle in the passenger vehicle space. It already unveiled an electric version of the Tigor and announced that Tata Nano will be converted into an electric car. Increasing competition in this electric vehicle segment is majorly driven by manufacturers such as Maruti Suzuki, Hyundai, Nissan, among others announcing plans to enter this segment.
Sales of electric cars in India remain negligible, mainly due to the high cost of batteries and lack of charging stations. However, the National Democratic Alliance (NDA) government is set to put in place liberal rules for charging stations to power electric vehicles, seeking to facilitate rapid expansion of the infrastructure needed to support its ambition of an all-electric fleet on Indian roads by 2030.