Connect with us

Business

Of India’s 150 million drivers, only 8,000 want electric cars. This is why

Published

on

Hyundai Motor Co. launched India’s first electric SUV this summer with a quirky TV commercial urging millennials to “Drive Into the Future.” A few months later, the automaker finds itself on a lonesome road.

In a nation of about 150 million drivers, only 130 Kona SUVs were sold to dealers through August. That slow pace is emblematic of the difficulties carmakers face in establishing an electric foothold in the fourth-biggest auto market, even with committed government support.

The Kona sells for about $35,000 while the average Indian earns about $2,000 a year — and the best-selling gas guzzler costs $4,000. Yet Kona’s sticker price only kicks off the conversation about why electric vehicles (EV) aren’t gaining traction in India — there’s also a lack of charging infrastructure, a reluctance by banks to finance purchases and an unwillingness among government departments to use EVs as directed.

Barely more than 8,000 EVs were sold locally during the past six years, according to data compiled by Bloomberg. China sells more than that in two days, according to BloombergNEF projections.

“The affordability of electric cars in India is just not there,” said R.C. Bhargava, chairman of Maruti Suzuki India Ltd., maker of the sales leader Alto. “I don’t think the government or the car companies expect that in the next two to three years there will be any real buying of electric vehicles.”

The segment still isn’t making meaningful strides more than four years after the government started promoting cleaner vehicles for one of the world’s most-polluted countries. In February, Prime Minister Narendra Modi’s administration committed to spending $1.4 billion on subsidies, infrastructure and publicity.

The potential of India’s EV market can’t be ignored. There are only 27 cars for every 1,000 Indians, compared with 570 for the same number of Germans, giving global automakers an opportunity to challenge the dominance of Maruti –- the unit of Japan’s Suzuki Motor Corp. that sells every other car on local roads.

Maruti’s not introducing its first EV until next year. Tata Motors Ltd. and Mahindra & Mahindra Ltd. build some base-level electric cars, yet they have a limited range or are exclusively for government use. The Kona gives Hyundai a first-mover advantage in a market where EVs may comprise 28% of new vehicle sales by 2040, according to BNEF.

Not only Hyundai sees opportunity in Asia’s third-largest economy. MG Motor, the iconic British carmaker owned by China’s SAIC Motor Corp., and Japan’s Nissan Motor Co. see EVs as a way to expand in the country.

“Somebody has to take the leadership, and it will trickle down,” said Rajeev Chaba, managing director of MG Motor India, which plans to launch an electric SUV by December.

The process of scaling up will be slow, and MG Motors would be satisfied selling 100 cars a month initially.

“We have to start somewhere,” Chaba said.

Right now, though, consumers pass over electric cars for bigger, longer-range and cheaper gas guzzlers, said Vinkesh Gulati, vice president of the Federation of Automobile Dealers Associations, which represents more than 80% of automobile dealers in India.

More than half of the passenger vehicles sold in India last year cost $8,000 or less, according to BNEF. Electric cars won’t achieve price parity with gasoline-powered cars until the early 2030s, BNEF said.

“Consumers care about EVs, the excitement is there,” Gulati said. “But that stops the moment we tell them the price.”

Yet even for those who can afford the Kona, plugging in is problematic. Nidhi Maheshwary, a 40-year-old finance professional working near New Delhi, wanted to buy an EV to show her children an example of environmental responsibility.

So when Hyundai launched the Kona, Maheshwary ordered one. Sounds easy, but it didn’t turn out that way.

Almost immediately, she got into a spat with neighbours about charging the SUV in her apartment building’s basement lot. The residents’ society said it posed a fire risk -– even though Hyundai engineers and the fire department said it was safe.

So Maheshwary charges the car at her office while weighing potential recourse against those neighbours. Hyundai offers two small chargers with the Kona, although it can take as many as 19 hours to fill up the vehicle.

India had an estimated 650 charging stations for cars and SUVs in 2018, according to BNEF. China, the largest market for EVs, has about 456,000 charging points, official data shows.

India’s sparse charging infrastructure stems from locals’ chicken-and-egg approach to the issue.

At a conference in New Delhi last month, government officials and EV-component makers debated whether to create adequate charging infrastructure to promote sales or whether to wait until there are enough EVs on the roads before building it out.

“We are pretty sure that people are going to like our EV, but we would have our challenges like infrastructure,” Chaba said. “But we have our plans to handle that.”

Those include first requiring that the buyer can install a charger at home, he said.

But there’s another factor besides income that makes it difficult to pay for one of these cars. The unaffordability of EVs also stems from the unavailability of financing, said Pranavant P., a partner at Deloitte India focusing on the future of mobility.

Until there’s an established secondary market for EVs, banks and other institutions are hesitant to extend purchasing loans, he said. A majority of Indian vehicle sales are financed by lenders.

The government, both federal and local, will have to offer help for EVs to be adopted in the mass market, said Puneet Anand, group head of marketing at Hyundai Motor India. Modi’s budget in July included incentives such as reduced taxes, income tax benefits and import duty exemptions for certain EV parts.

The first beneficiaries will be the ubiquitous scooters and motorcycles — with subsidies meaning to support sales of 1 million two-wheelers, compared with 55,000 electric cars.

Yet the government still needs to practice what it’s preaching. Energy Efficiency Services Ltd., a joint venture of state-run companies responsible for replacing state vehicles with EVs, awarded its first tender in September 2017 for 10,000 cars.

But as of July, agencies had accepted only 1,000 of them. Now EESL is offering the vehicles to taxi companies.

None of that helps Devdas Nair, a 34-year-old advertising professional in New Delhi looking for new wheels. He wants to try an EV and says he’d pay somewhat more to help the environment and for future savings. Yet for him right now, it’s too much of a gamble.

“I was excited about the Kona, but the price tag is just too much,” he said. “We don’t even know how the charging infrastructure is going to be in India. That makes me rethink — actually not think about it at all.

source

Business

Economic growth set to bounce back as slump bottoms out: Govt

Published

on

Indian economic growth is poised to bounce back after slipping to a more than six-year low of 4.5% in the July-September quarter as the government has taken measures to prop up investments and consumer demand, a top government adviser said. “Corporate tax reductions, the Insolvency and Bankruptcy Code and the banking sector reforms have helped and will help propel growth further,” Sanjeev Sanyal, principal economic adviser at the finance ministry, told Reuters.

The Insolvency and Bankruptcy Code, introduced in May 2016, has helped banks to recover billions of dollars stuck in outstanding corporate loans and offer loans to new borrowers.

Sanyal said economic growth was set to accelerate to 6% in the financial year beginning in April, compared with estimated growth of 5.0% in the current one.

But many private economists are less optimistic, saying the current downturn may continue for the next few quarters due to a dip in private investments and tepid consumer demand.

Nomura said Asia’s third-largest economy will see a sub-par recovery, and forecast 4.7% GDP growth for the current fiscal year and 5.7% for the next fiscal year.

Sanyal dismissed the conservative estimates and said his numbers took into account early signs of recovery in manufacturing and a pick-up in consumer demand.

He said the government expected that average consumer price inflation would fall to 4% in the next financial year beginning April, after a recent spike driven largely by food prices.

There is enough space for the central bank to further cut interest rates, however, as inflation was likely to ease following a fall in vegetable prices, he said.

“While there was a slowdown, this slowdown has by and large now bottomed out, and if anything from here on, growth is going to go up,” Sanyal said.

Finance Minister Nirmala Sitharaman, who tabled her annual budget earlier this month, told parliament on Tuesday that the signs of “green shoots were visible” and the economy was no longer in trouble.

The Reserve Bank of India last week kept it policy rates steady but downwardly revised the country’s growth forecast for the first half of the next fiscal year to 5.5-6.0% from an earlier projection of 5.9%-6.3%.

Sanyal said the budget has offered a clutch of tax incentives for sovereign wealth and insurance funds, which would leave more banking funds for private companies despite higher state borrowings.

Other than the coronavirus outbreak in China, there is no “major other disruption,” to India, he said adding it was difficult to quantify the impact as the situation was still evolving.

source

Continue Reading

Business

Taking steps to fix GST loopholes, says Nirmala Sitharaman

Published

on

Finance minister Nirmala Sitharaman said on Saturday that the government was taking several steps such as using data analytics to plug loopholes in the Goods and Services Tax (GST) collection and prevent particular areas of misuse and gaming of the system.

During the last three months, the GST collection crossed Rs one lakh crore every month, she said addressing a press conference in Chennai on Budget 2020-21.

At the GST Council meetings, there was a feedback from state finance ministers about various loopholes due to which tax revenue was not accruing to the government, she said. To plug such loopholes and to halt particular areas of misuse and gaming of the system, a lot of steps were being taken, she said.

“Economy is at its robust level and macroeconomics is at its best. The fundamentals are strong. The foreign exchange reserves and FDI investments are at their maximum level,” she said.

She said that there is also a plan by Centre to increase the interaction of banking officials.

She exuded confidence that “India will get back to 8% growth” and said the government is making efforts to “pursue the goals”.

Revenue secretary Ajay Bhushan Pandey said a targeted approach was being followed by tapping on data analytics and Artificial Intelligence and it has helped improve GST collections. In November the collection was close to ~1,04,000 crore and in December it was about Rs 1,03,000 crore, while in January it was around Rs 1,11,000 crore, he said.

The economy has improved and the improved collection was in view of several measures taken, he said. Citing use of data analytics, he said data from income tax, GST, customs, export and import was being mined.

A red flag report on areas of mismatch was prepared, he said, adding a large number of people were tax complaint and honest tax payers. It was only a fraction that might be a few thousand of GST taxpayers who required scrutiny, he said.

In cases of mismatch being up to a level, the tax payers are notified through a text message (SMS) and if it was large, officials are also notified to find out if the discrepancy was due to a genuine reason or otherwise.

Such targeted measures have helped the government improve the tax collections without any “overreach,” he said.

The government will continue to follow identification of problem areas. “We will continue this further and improve collection through data analytics and artificial intelligence so that people who are trying to gain the system are identified in their pursuit and honest taxpayers can be completely free of hassles,” he said.

source

Continue Reading

Business

Facebook adds Dropbox CEO to the board of directors

Published

on

Mark Zuckerberg has made his long-time friend Drew Houston, co-founder and CEO of file hosting service Dropbox, one of the members of Facebook board of directors.

Zuckerberg and Houston have been friends for several years, appearing in photos together at birthday parties and other events.

“Houston brings valuable perspective to our board as a leader of a technology company with services used by millions of people and businesses,” Zuckerberg said in a statement late Monday.

“It’s been inspiring to watch Facebook grow into a platform that reaches billions of people around the world. I’m looking forward to working with Mark and the rest of the Board on the many opportunities and challenges ahead,” added Houston.

Houston co-founded Dropbox in 2007 with Arash Ferdowsi.

He has led the company’s growth from a simple idea to a service used by over 600 million people around the world.

Today, the company is one of the world’s leading business collaboration platforms with 14 million paying subscribers and 2,300 employees across 12 global offices.

Facebook has undergone various board changes in the recent past.

In April last year, Netflix CEO Reed Hastings left Facebook’s board after serving on it for eight years.

The social networking giant then added Paypal’s senior vice president of core markets Peggy Alford, who became the first African-American woman to serve on its board.

Facebook’s current board members are: Mark Zuckerberg; Peggy Alford, Senior Vice President, Core Markets of PayPal Holdings, Inc; Marc L. Andreessen, Andreessen Horowitz; Kenneth I. Chenault, Chairman and Managing Director, General Catalyst; Drew Houston, Co-Founder and CEO, Dropbox; Sheryl K. Sandberg, Chief Operating Officer, Facebook; Peter A. Thiel, Founders Fund; and Jeffrey D. Zients, CEO, the Cranemere Group.

source

Continue Reading

Newsletters

Enter your email address to get latest updates

Advertisement

Trending

Copyright © 2018 - 2019 Delhi Wire.