Is it three cheers for EV’s or one cheer?

EV’s are here to stay!

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The other day I was at a party held by foundry technology experts group to commemorate an individual landmark. Fish, chicken and various tikkas were available in abundance. Liquor was flowing and I was as usual high with my drink H2O on the rocks! Different subjects were being discussed, old memories were shared. It was a fun atmosphere. I asked someone who is in foundry related service industry, “What do you think will be the effect EV’s on your business? And when do you think it will start affecting your current business?” He was very candid and said, “Yes, this is going to affect my business in a big way, that may be felt from year 2030. But then by that time it will be for my next generation to handle it, and not me!”

There were 2/3 others in this discussion. One of them was a foundry expert plus, energy consultant. Another person was a foundry expert for an International giant for Asia Pacific region. I am none of these but as a hobby, I read a lot about Electric Vehicles and consequently about Energy situation. It was mentioned that one the industrial giants, Kalyani group is already jumping the EV components bandwagon. Tata, Mahindra, Suzuki-Toyota combine, Hyundai (they claim that they will launch their first EV in India ahead of Suzuki-Toyota combine in 2019 itself.) will be four major players in India; for these four mentioned companies, it is imperative to be in EV market. Suzuki manufactures and sells more than 50% of their global production in India. Hyundai’s India % is sizable. Tata/Mahindra are local companies so they have to do it and have started off well in EV’s. My other friends were arguing that that 2030 is too early but inflexion point for production will come around 2040 which is 22 years hence.

(Point of Inflexion means a moment of dramatic change, especially in the development of a company, industry, or market.) 

Another argument was about power availability in India. I felt that people’s information on power situation in India was a little dated. India has jumped the power bandwagon in a big way. Solar and wind power may not need long distance transmission of power as is normally done, thereby reducing transmission losses. It could be done locally and there are huge number of diesel engine run water pumps in India, in rural areas. I will not go into details of whether this achievable but I can say that power generation costs have come down in India by using non- conventional methods; one tender was sanctioned in Gujarat in Dec 2017, at Rs.3/ per unit as against Rs.6/ plus of coal and fossil fuel methods.

http://powermin.nic.in/en/content/power-sector-glance-all-india

https://en.wikipedia.org/wiki/Renewable_energy_in_India

These links give details about power generation situation in India as on Dec 2017 and renewable energy projections upto 2022, respectively. The argument in the party was that current power production is way below even today’s needs, so how can India feed EV requirements. When fossil fuels rates are controlled by Arabs how will we get cheap power? The two links clearly show that the current power generation situation is not as bad it is thought by many. In some areas in India there is a power surplus. Our current problem is that the grids are not able to distribute the power from surplus areas. As more and more power in India is going to be generated by non-conventional sources like solar and wind, price reduction  of power will quickly happen and capacities will be added faster! This is already happening in Germany and in California!

According to my understanding the Point of Inflexion for introduction of EV as a product reached long back. In September 2017 total EV production in the world was 1,23,000 which was 56% above 2016 Sept sell. Extrapolated to yearly sale it will be 1.45 million against world production of around 90 million. This is about 1.6%. This indicates that point of inflexion of product proving is crossed. There are reasonable number EV’s on the road. Major manufacturers like VW, Toyota, Ford, Nissan already have big plans for EV’s which will start rolling out in larger numbers.

In the discussion I was having, someone had a view that EV is just a passing fad and will die soon. IC engines can never die! This I felt was a very naive thinking. This gentleman also suggested that many products showed a lot of initial potential and then died. There are two strong reasons why this will not happen for EV. First is pollution. Delhi, London, Beijing and many others are classic examples of what havoc pollution can do. World is not left with many choices but to get pollution free methods of motoring around. Secondly, countries which have large amount of fossil fuels currently, control the economy and inflation related issues. World already has said enough is enough. Big searches for different methods are underway for alternative fuel. Already some major cities and some small nations have started creating laws which will be effective in not allowing diesel cars within their limits ; later on they will not allow even registration of fossil fuel cars.

Smaller companies have already made their foray into electric tempo, riksha. These are one of the most polluting vehicles. This is a good sign as the last mile is always tricky. These are not very costly and fancy vehicles, so big shots will not be interested. Another good sign is people are also talking of making ships run on EV! It is doable, weight and space is not an issue for them. Buses appear to be next after cars but I am reading about leading companies like Hero, Bajaj and Honda foraying into Electric two wheelers.

So, whether we like it or not, whether we know about it or not, whether we want it or not EV’s are here to come. So, during my next party with H2O on the rocks discussion will be more about when and not about “if” of EV’s. Cheers!

And The winner is….

Crystal gazing of EV scenario in India!

InternetGenie

Pramod somehow managed to make Internet Genie run at the high speed that was expected of him. Genie as usual started narrating a story. He started with a question, “I want your frank opinion about Indian Electric Vehicle scenario, your favourite subject.” Pramod knew that if he uttered a word, Genie would slip out of his control and system will hang! So Pramod did not give any reply to the question asked.

As usual Genie kept on talking. Pramod,  only a few months back, there was not much clarity about EV’s in India, but you had once said that Indian EV scenario depended mostly upon the international companies who have a large market share in car segment in India. Their current share must be around 75%. Mahindra had their foray in EV since some years back but have hardly got much traction. But suddenly the scenario has changed. It appears that many people have been working on EV’s, secretly. Last month Tata Motors grabbed an order of 10000 EV’s from a Government department for supply within one year. Pramod, this was a surprise for all! There is a story in today’s papers that Tata has invested US$ 900 million in Tesla Competitor, “Faraday Future.” This could be the secret of Tata getting ready for mass production, with “Tiago Electric?”! This indicates that both Indian companies Mahindra and Tata are well ahead of the pack for the Indian operations as their EV’s have reached production level.

What will be the situation in 2022, Pramod, five years from now? I know that Suzuki and Toyota have come together in India. Suzuki will produce EV’s for themselves as well as for Toyota, in India. Technology for EV will be provided by Toyota. These two have already joined hands with Denso, a Toyota group company, for manufacturing batteries, in Gujarat. So, this group will be the first to have their own batteries in Indian market! This will give them cost advantage. They are talking of their EV being available in India from 2020.

Honda is talking of EV in India by 2019! Hyundai has not said much but I am sure they will be around the corner! Nissan Renault is quite ahead in the global market for EV’s; if they decide to come to India, they have the wherewithal. But main India strategy has to be pricing as usual, quality must be good anyway! That is where Suzuki and Hyundai will have advantage over others as they are successfully doing this for so many years. But Pramod, don’t forget that Tata has reached mass production level already in 2017! So, they will have advantage over others!

Pramod there is breaking news below! 

https://auto.economictimes.indiatimes.com/news/passenger-vehicle/cars/pm-narendra-modi-to-unveil-fleet-of-400-tata-nano-electric-for-a-cab-aggregator/61754665

NanoElectric

Pramod, I saw just now in Economic Times that PM Modi will inaugurate a fleet of 400 EV Nanos for OLA, in Delhi on 28th November! Looks like Tata Motors have hired Usain Bolt to learn how to make a clean start against all competitors!

There is not much clarity in heavy vehicles and buses. Goldstone Infratech from Hyderabad appears to have reached mass production stage as they have orders from Himachal Pradesh transport for 25 buses, the buses have already started plying; they also have orders from BEST, Mumbai for ten buses. In Mumbai, buses will run 220 km per charge and in Himachal hilly area the buses will run 110 km per charge. It is too early to predict more  as none of the others have said anything.

GoldstoneBus

Pramod, what about infrastructure for charging? Well, Suzuki-Toyota combine have said that they will invest heavily in this area too. Government of India is also going to invest heavily in infrastructure. Oil companies, Indian Oil/BPCL et al have said that they will jointly put up the battery plants and invest heavily in charging infrastructure! They already have petrol pumps all over India along the roads! Things look reasonably good in infra area ! Now Pramod, I want you to stand on the stage and call the winner by saying, “And the winner is…”

Pramod, I want your reply on this as I know that you have strong views!! Pramod just could not keep quiet. He said, “Under Indian conditions, Tata Motors turned about to be the dark horse! Mahindra has been around for some time. But Suzuki Toyota could be the force the to recon with!  “

With this statement Pramod broke the golden rule of silence that Genie had locked him in.  At that instant Genie slipped out of Pramod’s grasp, Genie’s speed became equivalent of 2 G and system hung!  Genie could not help but make a passing remark before escaping. ” Pramod, don’t forget Hyundai!”

 

 

Auto Industry 2040?

Auto Industry Circa 2040. where will it be?

WOW! MMG! DISCO! These could be names of some of the leading auto component industries in the year 2040! Why have I selected the year 2040? Simply because everyone is talking of this year for introduction of electric cars in a big way; from this year onwards, the real downward trend in manufacture and use of IC engines in the cars, as we know them today, will begin. I am simply assuming that the cars will be available, similar to the cars of today. Masses of cars will be driven by humans, they will have a steering wheel and a power plant/train to give them. They will have some form of braking, electrical system handling various functions, wheels and body with fuel storage area, air conditioning and so on! Things inside could be fancier with more and more entertainment, superior navigation abilities, drivers may become more stress free as cars systems will be able to understand many things and may take over some functions from humans. Internet of things (IOT) will allow things that are not even thought of today.

This is part of evolution of human race but this could be culmination of major change that is taking place currently. The “new” car industry is putting its toddler’s steps today. Evolution is nature as everything in this world is always evolving! Basic driver for these changes is computers and computer chips. The car industry will be using different chips and will capture lots of data data generated by various systems. This data will be in endless loop and will allow cars to function more and more efficiently.

What will be the difference in the cars of today and those in 2040? Today’s power plant, the Engine & Drive train will be replaced by Batteries and Motors. Today’s drive train, gear boxes etc will be just be not there. The exhaust system as is known today will be simply not be needed because there will be no IC engine, both Petrol and Diesel. Gear box and the whole system is really not needed because their function can easily be handled by Electric Motors. Even today, in electric cars, there is a single gear which reduces the RPM to what is needed to drive the car at allowed speeds!

There are many companies that are manufacturing the components that are discussed above. These components may become redundant over a period of time due to introduction of electric cars. Bosch, Denso, Continental, Valeo, Aisin Seiki are some of the major players that manufacture the cluster of these components. These companies together manufacture products worth US $200/ billions every year.  These products may comprise of 40% to 70% of their current turnover. The giants must be already studying the questions that have come to my mind. How are they handling these questions? I am sure it’s a tough call to all of them though they have the where withal and deep pockets to handle difficult situations. Some have started making navigation products, some are making parking assist, camera -related systems. But suddenly new names are being heard in these discussions as vendors. CISCO, NVIDIA are some of them. Some are direct vendors to car makers and some are vendors to components manufacturers.  Where is the real scope for new development and business? Battery packs, battery charging technology to increase per charge distance that the cars can travel today! All other developments that are computer related can also happen in IC engine cars too! TESLA is already building a giga factory for their Battery Packs! So will the “new” component business be taken over by Car Manufacturers? Suzuki, Toyota and Toshiba are coming together in India for big battery plant! What happens to smaller manufacturers of these components? Will they survive the major change? Will “WOW! MMG! DISCO!” replace them? Only time can tell.

In car making, after a long time, new name TESLA, started coming into prominence. TESLA came mainly for the new product offering. It appears that technology like fashion goes round! Till first two decades of last century, IC engine based transportation was not very popular. Trains used steam, cars used electric power plants; but battery technology could not catch with the then needs. Hence IC engine cars and trains became popular. From the existing car manufacturers, some are already manufacturing electric cars more than what TESLA is producing. On top of that they have a running profitable business producing IC engine cars. But one thing is for sure they have the humility and know where they lack. Look at what Volkswagen Brand CEO Deiss has to say about TESLA! 

VOLKSWAGEN brand CEO Diess has said that VW which manufactured 5,987,800 cars last year has to catch up with Tesla which produced 83922 cars last year. “Tesla belongs among the competitors which has abilities that we currently do not have,” Diess said in the interview with “Inside”, a publication for VW employees. Around half of Tesla’s engineers are software experts, while at VW’s core brand it is a much lower proportion, Diess said. Tesla has good electric motors, a fast charging network, autonomous driving technology, internet connectivity, and a new approach toward vehicle distribution. “This shows that we need to significantly improve. We can do this. We measure ourselves against Tesla quite deliberately. Our goal: Using our abilities not just to catch up, but even to overtake,” Diess drives an electric VW Golf.

 Current giants have ready infrastructure and eco system to make and sell millions of cars. They of course lack Electric car eco system as mentioned by Diess above. Their main struggle will be recharging stations for electric cars; but TESLA is also going face the same problem! The question arises if TESLA, a loss making company, a start-up, survive? Let’s look at the startups from the Silicon Valley and the west coast, who really made it big in computer industry sunrise era. Google, Facebook, Microsoft, Apple they all became very big with the products/services that never existed before. TESLA is pitted against the giants for making existing products where the main “driver” is only a different technology! That’s a huge disadvantage. Fighting against giants, who have woken up a bit late, like Mercedes, Honda BMW, Toyota, GM, Ford, Fiat, Hyundai is going to be very very tough for TESLA! Some of these giants are also going to suffer or may merge! My take,Continental TESLA may cease to exist  by 2040 or even earlier as it is known today! Takeover? Maybe!