End of the road for Diesel cars!

Maruti Suzuki declared today that they would not manufacture cars with diesel engines starting from 1st April 2020! That is the day on which BS 6 norms for pollution will be implemented in India. This time the government is very stringent, and it is declared that from this date, only the cars BS 6 norms will be registered. Forget the selling; there will be no registration of cars other than BS 6! It is a great thing that the government means business, now!

Engine1

But is this the beginning of the tumultuous scenario in the automobile domain? Is it a mini tsunami? Has this statement started indicating the way things would happen in the auto industry? All these years life was much more straightforward; introduce a new model, play around a bit with the price and periodically change pollution norms when government forces you. The smooth ride was the norm! But a statement by Maruti says that the cost of development of BS 6 compliant diesel engine and the cost of making the BS 6 engine will be so high that in the small car segment, customers may not be able to afford them. Currently, the price difference between petrol and diesel model of a car is around Rs. One Lac. They feel that this difference could be Rs.2/ lacs for BS 6 cars ( ten lacs is a Million). On a vehicle costing Rs. 5 to 6 lacs, difference of two lacs will be too much, and customers may not be able to afford these cars. For cars/SUV’s costing Rs.10/ lacs and above, though the difference will be similar, % increase would not be high. How this sector will perform from next financial year needs to be watched. For SUV (both mini/standard) good news is Maruti Brezza will not be sold; hence manufacturers will rush to pick up the market share up for grabs. Maruti, however, has left the option open for 1.5 L diesel engine cars, used in Brezza.

Diesel engine cost issue due to BS 6, was expected. Volvo has already declared that they will stop making diesel cars when the norms change from Euro 6 to Euro 7, because of the cost of development and the price of the vehicle. Compared to trucks, the number of cars sold is much higher hence a smaller number of diesel cars will be better from the pollution angle.

Why did people use small cars with diesel engines? The lower price of diesel was the main reason. These cars cost approximately Rs. One lacs, plus plus, more than petrol cars. If the usage of vehicles was not enough, then owning such a car was not cost effective. On top of this, diesel engines have periodic mandatory maintenance cost which petrol cars don’t have. In many cases, it was not viable to own a diesel engine car.

With the imminent entry of Electric Vehicles in large numbers, the market is expected to be shaken further. In the late ’90s of the last century, Toyota came up with Prius, their first Hybrid car. (For those new to this subject, a hybrid car is one which runs on petrol and battery combination; each manufacturer has its own combination of the technology) It was expected that Hybrid would be the future and Toyota was expected to be the leaders. Yes, they are still the leaders in Hybrids. But a maverick called Elon Musk decided to plunge into EV’s. General Motors had manufactured around 500 EV’s at the beginning of this century, but then what happened? Petroleum lobby made sure that this initiative was killed. A few years later GM scrapped the vehicles.

Engine2

Combination of Tesla’s efforts, cheaper battery sets (hopefully!) at some stage, fast charging technology are pushing humans towards EV’s. Range per charge still remains the primary concern. Add to this reduction in the price of solar systems is making cheaper fuel for the EV, the Electricity. Now, what is adding to making it more difficult for petroleum products further, are the pollution norms for diesel cars?

What will be the future of diesel engines in the car segment? In India, the overall car segment is under pressure. In the last financial year, four lac more old cars were sold than the number of new cars that were sold. It looks like more small vehicles are being sold in II and III tier cities. Will Maruti’s prediction about diesel engine cars affect thinking by other car manufacturers? Will they also go away from diesel engine cars? Only time will tell.

The current financial year is going to be very tricky for car manufacturers. Let me explain what is involved, as the last date on which the BS IV car will be allowed to be registered. That date is 31/3/2020. To achieve this target, they will have to attempt and sell BS VI models from 1/1/2020. To meet this date, they will be required to push in BS VI vehicles from 1/10/2019. During this transition period, there will be tricky scenarios. BS IV cars will be produced less and less, but customers may want to buy them, as these will be cheaper than BS VI models. There is a possibility that in certain areas there will be customers and no cars; in other areas, there will be cars but no customers. All unsold BS IV cars will have to be sent back to manufacturers for conversion to BS VI at a considerable cost. Predicting requirement from 1/10/2019 to 31/3/2020 is going to be a nightmare for sales teams and along with them the dealers. The trend of lower sales is going to add to the difficulties further.

Will everything be hunky dory after 1/4/2020? That is again a very tough question. To achieve better fuel efficiencies and to go away from petroleum products, there will be efforts to introduce hybrid cars. But except Toyota, nobody has real expertise in this area. The predicted numbers for 2030 are 30 % EV’s, 30% Hybrids and balance IC engine cars, mostly petrol and CNG version. Does it mean that it is a death knell to diesel cars?

Another prediction by Maruti is that for small EV’s, where numbers are high in the typical small car segment, the volumes can be tricky as the price could be between 9 to 12 Lacs. This price is based on battery packs being manufacture in India. Larger cars will cost much more, but the high-price segment is less sensitive to the price tag. How the volumes will be achieved in EV’s, will be difficult to predict. I have not even discussed the charging station infrastructure issues! In India, most cars are parked on the roads for the night, so how and when will the charging be done?

At least in India, there is a significant turmoil about where the car market will go? Will Maruti continue to lead the pack? Will others follow Maruti and go away from small diesel engine cars? Only time will tell.

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Value of Ignorance!

 

Ignorance is bliss translates to “ignorantia sit beatitudo” in Latin! But is it true? Unless we humans accept that we do not know many things in this world we cannot become smarter, knowledgeable and wise! 

Everybody in the world is “blessed” with lack of knowledge! The list includes Einstein, Mozart, Chanakya, Tesla and all greats in their field. Ok, I am still sane but I wanted to make a sensational statement. What I am trying to say is that the greats in their field have terrific subject knowledge, maybe the ultimate knowledge but it is limited to their own field. In other areas, their knowledge could be from limited to zero. I am a Metallurgist by training, worked in foundries, business development and marketing area in my career; did reasonable work in the software area. But my knowledge in these fields is limited and in all other fields closer to nil. I am not shy to talk about it. It’s a fact of life.

 

How much can one learn during the lifetime? After you learn something, unless it is tested in real life, you cannot be sure if the knowledge gained is deep enough! So, with exception of a few people, most have the knowledge or are well versed in one to three areas. Rarest of the rare persons will be highly knowledgeable about more than one areas. But what all this indicates or suggests? This suggests that all of us must be humble enough to realize that this is true status in life and have the humility to accept our general lack of knowledge about everything else!  

What could be a way to attempt to correct this situation? First and foremost is the accept this with humility. The second method, I read somewhere recently about it, and I liked it. Someone suggested that you buy as many books as you can, both physical or e-books. These can be on your favourite subject as well as other subjects which you like, but naturally, you are not an expert in. What does this do? This keeps on giving you reminders of how many things you don’t know, we remain humble! At the same time, should the need arise the books can be referred to readily and we will be able to improve our knowledge?

During your career period, you may not really get time to read books but you can always skim through them. But at the same time, a habit must be cultivated to read something every year, every month and every week! Unless you are 100% sure that you are never going to read any of the books that you buy, keep on buying. Till you develop this habit of reading, maybe joining a library can be a good idea!  

Lifelong learning will help you to be happier, and even stay healthier. Plus, plenty of the smartest names in the business, from Bill Gates to Elon Musk, insist that the best way to get smarter is to read. So, what do you do? You go out and buy books, lots of them. 

But life is busy, and intentions are one thing, actions another. Soon you find your shelves (or e-reader) overflowing with titles you intend to read one day, or books you flipped through once but then abandoned. Is this a disaster for your project to become a smarter, wiser person? 

You might want to read up on tricks to squeeze more reading into your hectic life and why it pays to commit a few hours every week to learning. To start the process why not buy a book which will teach you “how to do” about book reading? But after learning this, it is still possible that your book reading in no way keeps pace with your book buying. Your overstuffed library isn’t a sign of failure or ignorance, but it is a sign that you want and hope to delve in the knowledge bank you have with you. Yes! Your library or can it be called “Virtual library”! It is virtual because though it is there it is not there till you access it!  

Are you actually going to read all those books in your lifetime? Of course not, but that isn’t the point of surrounding yourself with so much potential but as-yet-unrealized knowledge. By providing a constant reminder of all the things you don’t know, your library will keep you intellectually hungry and perpetually curious. An ever-growing collection of books you haven’t yet read can do the same for you.  

A private library is not an ego-boosting extension but a research tool. Read books are far less valuable than unread ones. The library should contain as much of what you do not know as much as your pocket allows you.  You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. Indeed, the more you know, the larger the rows of unread books.  

The virtual library is a powerful reminder of your limitations — the vast quantity of things you don’t know, half-know, or will one day realize you’re wrong about. By living with that reminder daily you can nudge yourself toward the kind of intellectual humility that improves decision-making and drives learning. 

So, stop worrying yourself for buying too many books or for having a to-read list that you could never get through in three lifetimes. All those books you haven’t read are indeed a sign of your ignorance. But if you know how ignorant you are, you’re way ahead of the vast majority of other people. 

At two ends of the spectrum, there are “know all” people and there are “know nothing” people. You and I are in between. Like knowledge of different things, you will realize the real meaning of buying and keeping a large number of books on different subjects.  

“Curiosity killed the cat” is a proverb used to warn of the dangers of unnecessary investigation or experimentation. But in the case of a virtual library that we are talking about, this proverb is not true! Unless you are curious, you won’t feel the urge to know more about different things that we don’t know or areas where your knowledge is limited.

In the current scenario, it makes a lot of sense to understand and know the new things, that are mushrooming around us in IT/Digital area. If we don’t track these things for five years, you will be left far, far behind and will find it difficult to catch up; then you will tend to ignore the subject further because you are left behind. Whether we like it or not, we will have to know about these new things. The situation of being left out is not good. Knowledge about these new IT/Digital things is going to be essential and mandatory. It is going to be like learning of basic reading and writing, of yesterday.

Friends, in pre-modern IT/Digital era, knowledge was essential to remain smarter, knowledgeable and wiser and books have been a major source for that. But post IT/Digital era, this requirement of knowledge update is going to remain but it’s going to be mandatory to continuously update yourself to survive or you may perish! The virtual library in future will be needed to survive! So start downloading or buying those books!

 

 

 

 

 

  

Electric cars, are they round the corner?

Definition of inflexion point: a point on a curve that separates an arc concave upward from one concave downward and vice versa. The term inflexion point was first used by Andy Grove in his book “Only the Paranoids Survive”. An inflexion point can be there in anybody’s life on in the business cycle of the industry. It indicates the total change in the scenario or makes and break situation. The diagram showing the point of inflexion.

 Inflexion point

I visualise a significant point of inflexion in the automobile industry shortly. Different views are floating regarding when the Electric Cars will be mass produced. The year mentioned fairly regularly is 2030! That’s not really far! Why this is going to happen and whether it will happen at all will be based on many factors. Currently, the volume of Electric cars manufactured the world over is not significant. But Nissan, BMW, Ford, GM, Mahindra in a small way and of course Tesla is already making electric cars. I have heard that Toyota plans to come up with a fully electric car by 2019.

 2016electric cars predictiongraph

This is the forecast sale of electric cars as a percentage of total car sales, for the year 2016 but I could not get the real figures. Japan at 9.7% is highest in the number of total cars produced and China at 0.9% is the lowest %. France, Great Britain, Germany, USA, South Korea, Spain are there in between.

 What will give the boost? What factors are going to push this production? When will the momentum gather for the switch to mass production? When will the point of inflexion be reached? Primary factors considered in the usage of automobiles are its price, fuel cost, car driving range, parts cost and main is the cost of ownership. Besides this battery charging infrastructure is going to be the most important aspect that will make or break this change.

 Price factor for electric cars appears to be in reasonable control even without mass production. In the cost of electric cars “Engine & drive train” needs to be brought down; all other things remain the same. When Tesla started producing cars, people looked at it as Elon Musk’s fancy! Tesla is working as a start-up, but it is somehow managing to survive financially. Now they are also coming up with an affordable sedan. Slowly big giants like BMW, GM and others have woken up. The initial experiment started with Toyota’s Prius hybrid. The thinking was to just increase the fuel efficiency of the existing car system, and Prius hybrid was the first successful attempt. But it was definitely a minor change in thinking and not the game changer like fully Electric car. As per current thinking even in India, Government has increased the Tax on hybrids. When asked, the minister said, “When Electric cars are the future why bother about hybrids!” Electric cars will, of course, need Government support by way of lower taxes to make them attractive for buyers. Government support will also be needed for battery charging infrastructure.

 The second factor is the cost of fuel. With many shocks offered by Petroleum politics, the world has been looking to go away from fossil fuels. Plus the world has woken up to climate change and is aggressively looking to control pollution. Cars are known to be significant pollutants. Stringent control is being sought on exhausts from cars. But this will happen only in newer cars, old polluting cars cannot be wished away. Volvo has made a statement that the cost of manufacturing car systems to match pollution norms in 2022/23 will be so high that they will stop making diesel engines. To overcome the pollution issue, Germany has declared that by 2030 only electric cars will be manufactured in Germany. To achieve this target, they will really have to work hard, but German car makers have the technology, financial clout, will and wherewithal to achieve this target; they are working very aggressively. Best non-polluting fuel obviously is electricity. But the cost of producing electricity was a major factor hindering its usage in cars using battery banks and of course the cost of batteries. Solar and wind energy seem to be galloping ahead of other sources to make electricity cheap. The classic example is Germany. On a day in 2016, 85% of electricity produced in Germany, was from non-conventional methods.

https://energytransition.org/2016/05/germany-nearly-reached-100-percent-renewable-power-on-sunday/

With the abundance of cheap electricity, on that day the rates of electricity went in negative in tendering process! Recently, California produced 67% of electricity, on a particular day,  by non-conventional methods causing serious disruption in electricity pricing mechanism! World over including India, Solar and other non-conventional methods are very aggressively pursued. By 2030 it looks like the world will easily achieve the goal of cheap fuel in the form of electricity!

Currently, when we travel by car, we do not think how much distance we are going to travel. This is because fuel infrastructure is fully established world over. Whenever needed, we just refuel and move ahead. This is not going to be so easy, at least today, in electric cars. There are two major points. First is charging stations and second is charging time. Both need to be vastly improved. Charging time is the evolution of technology, in cell phones, rapid charging technology is already available, so maybe it’s a matter of time when we get this in car battery charging. Charging infra, of course, has to come up, but when the number of electric cars increases, the infra will come up. The range per charge is also a matter of technology, so hopefully, it will rapidly increase. Similar to what we do today while driving long distance, we should be able to stop for coffee and washroom break and get batteries recharged. Lo, we are on the way! 2030 very much possible. But my take is that this will happen faster in Europe, Japan & Korea because such things are national policies and are easier to implement in these areas because of the smaller size of the nations plus most of European nations, are developed nations.  In geographically large countries like Uthe S, Canada and China plus India, this change may happen region wise or state wise starting with highways. City limits will adopt faster as people can charge their cars in their own homes. 

 Replacement parts and cost of ownership are combination factors. In the electric cars, drive train, exhaust systems as we know them today, will simply be not there being replaced by battery packs, motors & drives. Less number of mechanical parts is going to definitely reduce the repairs and servicing cost. This factor has nothing to do with 2030. As the cost of ownership comes down, more people will be interested in driving electric cars.

 Another major change is going to be the nature automotive components industry. When major systems like drive trains & exhaust system are not needed, current manufacturers will find in a drastic reduction in parts needed by industry; over a period these will be only needed in old cars. With a mandate to supply parts for ten years, 2040 will be the last straw on the back of the Camel for this industry assuming by 2030 electric cars will be used in large numbers. How will current component manufacturers of these components handle change? Will they start making parts needed for electric cars? Do they have the technology? Only time can tell? How will Bosch’s, Conti’s, Denso’s and Valeo’s of this world handle the situation only time can tell. I am sharing one important information about the change that has already happened. Nvidia Graphics, www.nvidia.com  producing chips and cards with their GPU technology are already vendors for Toyota, Mercedes, Audi, Honda, BMW, Volvo. This is because of the rapid increase in usage of onboard computers to perform various functions, including self-driving cars. Five years back, I am not sure if Nvidia name was much known in the automotive world! Point of inflection? Yes my friends this is the point of inflection and in this business jungle, snipers in the form of technology are hiding! You never know when you will get your bullet! Yes, my conclusion,” ELECTRIC CARS ARE COMING IN A BIG WAY BY 2030”!

 

 

 

Low Aim is a Crime!

India got its independence in 1947. India missed the industrialization bus by a century because British allowed only a few benefits of industrialization to percolate to India.  Before independence educated Indians were interested in working for British, whatever work they could get, mostly they got clerical jobs; those were the only real jobs available anyway! British chose the people for senior admin positions and made them brown sahebs. These proxy Britishers were more British than the Britishers themselves.

This scenario put India under the gloom of disease of getting satisfied on achieving small things and doing mundane things. This led to metastatic mentality of under achievers; those who were trying to do something different were looked down upon and discouraged from doing anything different. Some of us from our generation were able to improve on this thought process and later generation became even more active and started taking risks.

IT sector was the first sector where India did pretty well, financially. Y2K issue was the one that gave impetus to Indian IT sector; middle class started growing faster than ever and large Indian populace started having money, living in foreign countries for work and started buying their own homes in a big way. This of course combined with official opening of Indian economy in 90’s. Effect of higher salaries in IT sector was seen in other sectors like engineering, pharma, finance and so on. But this success hid one thing from general populace and even from IT sector that the “great” work that we were doing was actually mundane work done for others as a service. This model kept on working well till about a couple of years back. Then the signals started coming that the mundane work that was outsourced to India can be automated so….

Circa 2017! Large Indian IT companies are sitting on big pile of US Dollars. This indicates their past success, financially. But it appears that these large “successful” companies were run more by accountants than by entrepreneurs! So they have made big money, hundreds of thousands of millions, many of them in dollar terms. But since the scenario started changing a couple of years back, it is obvious that if you don’t move up the value chain, you are going to come down as fast as you have gone up! The fact that these companies are sitting on a big pile of dollars shows that our mentality of mundane “services” type of work has not changed. This pile of money should not have been there; it should have been invested in going up the value chain! But even today this money is being used to buy back shares! The big bosses have not thought in terms of creating own IPR’s or products in any field, IT or Engineering or Pharma! When “services” are generating money why bother.

To give an example of how things are changing, when you “talk” to say Amazon on chat about some issues, the “Ravindra” or “Asha” who is taking to you may be a “BOT”. What is a BOT? An Internet Bot, also known as web robot, WWW robot or simply bot, is a software application that runs automated tasks (scripts) over the Internet. Typically, bots perform tasks that are both simple and structurally repetitive, at a much higher rate than would be possible for a human alone. The largest use of bots is in web spidering (web crawler), in which an automated script fetches, analyzes and files information from web servers at many times the speed of a human. More than half of all web traffic is made up of bots. (This is Wikipedia definition of BOT)

How this is typically done is very similar to self-check-out counters in big departmental stores. At these check-out stations, for a group of ten such stations there is one supervisor helping, if you need any help. So what this system does is, instead ten people manning ten checkout stations, one person is sufficient. These BOTS also do the same thing. Now do you understand how the nature of business is changing? If your business is dependent on someone else’s way of working, you are in trouble if automation comes into picture.

What is the way out? Going up the value chain; but if you are a company with 100 to 150 thousand employees with “service” level skills you have tough task on hand. Basically it’s a tough call for the senior management to change its own ways from accountant based running module to technologist based running module. Who runs highly successful companies? Apple, Facebook, Microsoft, Google, Nvidia, you just list such companies and will see that these are technology driven companies. Yes, finances are very important but if the company is run by accountants they will never take risks! But when you don’t take risks and try and don’t keep abreast with new technologies or create new technologies, you will never know what hit you! How many of us know that Google and Apple are spending big money on Car technology, and they are creating newer technology in cars which was never even thought of. Nvidia is already a big auto system vendor to VW’s, Audis and Mercs of this world. They have invented technologies which are forcing these Auto giants to use new technologies to remain competitive in business. Elon Musk of Tesla had the audacity to start making Electric Cars and even start making space vehicles using venture capital.

Of course there is silver lining to each dark cloud! The surprise is that the silver lining is coming not from private sector but Government sector. ISRO, Metro projects implementation, Solar Energy project implementations, highways all over India are sign of we Indians have started getting hang of the situation. On IT side one of the success stories of product selling is Tally ERP. Yes it has sold hundreds of thousands of copies and is unquestionably India’s “Numero Uno” product on IT side! If Tally is doable why can’t others do it? India is the largest democracy and is the only country in the world where all elections use EVM’s- electronic voting machines! Paper ballots are Passe’ in India! The EVM’s were developed by C-DAC! Aadhar card is one such initiative that has become pride of the nation! All these projects indicate that we are slowly coming out of the Chalta Hai mentality! Chalta Hai is a phrase indicating Small achievement is good enough! We should have Sachin Tendulkar’s in each field then only we as a nation can start achieving things!

So friends we started with discussion about Indian mentality of being happy with whatever little is achieved! Will our giants survive the onslaught of market changes? They have the money but do they have the wherewithal other than money? Do they have the mind set? Do they have the technological willpower to go up the value chain? Going up value chain is real hard and smart work. I hope these giants do it, but we are still discussing US H1B visa rules, which is the backbone of current business model of sending people on site to provide services! I hope our current young generation and future generation are as audacious as Elon Musk!