Political and Legal Environment

The political environment is favourable for EVs as Govt. is providing incentives to

manufacturers.

Environmental/ Ecological Environment

With the need to reduce pollution the push for cleaner fuels and vehicles running on these
fuels has gone up. Govt also seems committed to meeting its reduced emission targets and
thus, the Environmental/ Ecological Environment is also favourable.

But since India generates 75% of its energy requirements from plants running on Coal
adoption of EVs may only shift the pollution from cities to vicinities where these plants are
located.

Social Environment
India has been a market dominated by small cars but is now transitioning towards SUVs as
per the data available. Thus, if small and medium size SUVs can offer an electric powertrain
then consumers may switch to EVs subject to other contributing factors.

Technological Environment
India still lacks the relevant technology and charging infrastructure for manufacturing
batteries and battery modules. Firms like TM, MEM, HMIL etc. are either developing
technologies in-house or are planning to import components from neighbouring countries like
China which are market leaders in this segment.

Economic Environment
The cost of Lithium-ion batteries has dropped by 73% from $1000 to $272 and this period
coincided with a rise in demand for SUVs on the backdrop of a rise in income and aspirations
of the Indian population. Thus, affordability doesn’t seem to be an issue.

Ex. Env. Mahindra Electric Tata Motors Maruti Suzuki Hyundai Motors BYD
P 5 5 5 5 5
E NA NA NA NA NA
S NA NA NA NA NA
T 4 5 1 2 3
E 4 5 1 3 2
L 5 (Doubt) 5 (Doubt) 5 (Doubt) 5 (Doubt) 5 (Doubt)

4Ms Mahindra Electric Tata Motors Maruti Suzuki Hyundai Motors BYD
Money
5 4 1 2 3
(Doubt)
Men NA NA NA NA NA
Machine NA NA NA NA NA
Material NA NA NA NA NA

Porter 5 Mahindra Electric Tata Motors Maruti Suzuki Hyundai Motors BYD
BBP 4 5 2 3 1
SBP NA NA NA NA NA
NE NA NA NA NA NA
 Porter 5 Mahindra Electric Tata Motors Maruti Suzuki Hyundai Motors BYD
Subs. NA NA NA NA NA
IIR 4 5 2 3 1

OPPORTUNITY THREAT ANALYSIS

 Oil Scenario: India's oil import bill is expected to be USD 90 Bn in 2017-18 and
further rising by 77.8% to USD 160 Bn by 2030. The government’s push to India’s
EV program aims to reduce Oil import bills by shifting 30% of the country’s
transport fleet to electric by 2030.
 NEMMP: Central Govt launched FAME initiative which proposed achieving 6
million to 7 million sales of hybrid vehicles and EVs in India YoY from 2020 by
POLITICAL

providing various Fiscal (Tax holidays, Duty Exemptions, Inexpensive Land and
Power Availability) and Non-Fiscal incentives (waiving Road Tax registration
yes yes charges for EV vehicles) worth 87.3 billion INR to EV firms until 2020.
 Charging infrastructure: Govt’s proposal for setting up EV charging stations
every 3 Kms in cities with over a million people and every 50 km on busy national
highways, will help create robust EV ecosystem.
 Threat: Automobile industry has to spend an estimated investment of more than
600 billion INR to shift from BS4 to BS6. This will further stretch the budgets of
R&D department of Automobile industry.

 Incentives to Buyers: As part of INR 94 Bn package for encouraging adoption of

electric and hybrid vehicles, govt is planning to offer incentives to consumers
across various automobile categories ranging from INR 20K-5 million (20%-25%
of maximum factory price) to scrap their old Gasoline and petrol vehicles and
ECONOMICAL

purchase EVs.
 Incentives to Firms: To incentivize EV firms, Govt has proposed to provide
various Fiscal (Tax holidays, Duty Exemptions, Inexpensive Land and Power
yes yes Availability) and Non-Fiscal incentives (waiving Road Tax registration charges for
EV vehicles) worth 87.3 billion INR to EV firms until 2020.
 Subsidies to PSUs: Govt also considered providing subsidies to PSUs (NTPC,
PGCIL, IOCL) in the energy sector to initiate setting up charging stations.
 Threat: There is a threat that EV based automobile environment in India will make
many of the casting, forging and machining sector unviable, risking about 1.5 Mn
jobs in an already job stressed market.
SOCIOCULTURAL

yes  -
  Drop in Battery cost: The price of Li-Ion batteries has dropped by 73% from 1000
TECHNOLOGICAL

$ /kWh in 2010 to 273 $/kWh in 2016. Li-ion is advantageous as it could be

recycled for future use. Also, it is expected that the cost of batteries would be
halved making EVs more affordable in the future.
 Acquisition of Reva: This has helped Mahindra acquire the technologies
yes yes developed by Reva
 Threat: India still lacks the relevant technology and charging infrastructure for
manufacturing batteries and battery modules. Firms like TM, MEM, HMIL etc. are
either developing technologies in-house or are planning to import components from
neighbouring countries like China which are market leaders in this segment.
ECOLOGICAL

 Carbon emission commitments: The Indian Government was pushing EVs

because of its global commitment to control carbon emissions. The Govt aims to
reduce pollution, cut emissions, and boost energy security.
yes yes  Threats: The country met 75% of its energy needs by burning fossil fuels. It was
felt that EVs on roads would only move the pollutions off city roads to its
hinterlands.

 Indigenous production requirements: The gov planned to double the mandatory

local content in EVs to 70% in coming 3 years from present 35%. And planned to
impose heavy duties on import.
Threats:
 Regulatory bodies: The Indian automobile industry has faced brunt of
LEGAL

interventions from various regulatory bodies in India like National Green Tribunal,
yes yes The Supreme Court, The GST Council, NITI Ayog and Ministry of Urban
development, power and Environment and forest, which had led to an environment
of confusion and uncertainty for the industry.
 Emission Standards: Indian Government decided to leapfrog from BS-IV
emission standard to BS-VI emission standards for all of its gasoline and diesel
driven vehicles by 2020.
 OPPORTUNIT
Y THREAT ANALYSIS
 Battery module: Critical supply (contributing 70% of EV cost)
Significant opportunity for MEM in Li-ion batteries in face of high future demand for
SUPPLIERS / VENDORS

batteries (expected 26% growth per year to reach $5billion in 2024); Collaboration
with domestic players (ex. LG chem Ltd) for both battery module and pack.
 High economic returns expected in case of backward integration: 80% market
value capture when only raw materials imported and battery locally manufactured vs
only 30% market capture when cells imported and locally assembled.
yes yes  Battery manufacturing - Potential suppliers of batteries could augment the
production of EVs; Indian firms, such as, Hero Future, Ravin Group, BHEL &
foreign firms, such as, EnerBlu & Delta are some potential options.
 Govt push: Plan for mandatory local content in EVs to 70% by 2021 can provide
stimulus to domestic supply of EV components.
 Challenges: China already most competent player in EV market (60% global market
share). Import of Chinese auto parts to India rose by ~ 44% (from $2.5B in 2013 to
$3.6B in 2017).
 Major demand: Currently from taxi operators and other fleet segment
(collaboration with Ola, Uber, etc). Good expected growth projections
on EVs (40% of PV market share by 2030).
 Future PV growth prospects: in SUV segment (21% sales growth
recorded in FY 2017/18).
 Government incentives for General Buyers can be good
BUYERS

motivation: Up to Rs.2.5 lac to scrap old diesel & gasoline vehicles

yes
and buy EVs.
 Government itself as a Buyer: Procurement by EESL through tender;
Provided INR 4.4 bn to states for EV procurement under FAME.
However, Current demand for PVs still limited (MEM sales in FY
2017/18 only 4000, majority in rickshaws and vans).
 Challenges: performance, range, cost (affordability), public charging
infrastructure - can be deterrent to buyers.
 Chinese firm BYD - Planned to invest 2 billion in 2018 for
manufacturing 5000 electric buses per year.
NEW

 Other global players - FM logistic, Terra Motors, Uniti Sweden, etc.

yes
plan to establish manufacturing hubs for EVs.
 Chinese firms (already dominating international market with 60%
share) willing to enter domestic market to create monopoly.
SUBSTITUTES REGULATORY

 Lack of clarity: The Indian automatic industry has faced the brunt of intervention
from various regulatory bodies in India like National Green Tribunal, the supreme
Court, The GST Council, NITI Ayog and Ministries of Urban development, power
yes and Environment and forest, which had led to an environment of confusion and
uncertainty for industry.
In september-2018, many macro and micro issues were present in the overall
environment that was being created for EVs.
 Hybrid vehicles - possible interim solutions in face of uncertainty with regards to EV
cost structures and ecosystem evolution.
 Fuel cell (hydrogen) vehicles - Being developed by HMC.
yes
  Tata motors - Big player; Operating in three levels of electrification (plug & play
solution, modified Omega architecture, dedicated EV architecture), Created dedicated
electric mobility division with support from other Tata subsidiaries.
COMPETITORS

 Maruti Suzuki India Ltd - largest car manufacturer in India; Pooled $180 million in
2017 for Li-ion batteries production; Collaborating with partners across various
ecosystem fronts; Plans to refine its ICE vehicles to make them more fuel efficient &
yes environment friendly.
 Hyundai MIL - Biggest car exporter in India; Developing both battery EVs and fuel
cell vehicles; Plan to invest over $1 billion by 2020.
 BYD - Plans to invest Rs 2 billion in establishing manufacturing plant; Teamed with
domestic firm to work on EVs with fast-charge batteries running 400km on full
charge.
COLLABORATORS

 Fleet segment - MEM partnered with Ola Cabs and Uber in bringing the EVs to
some major Indian cities, leading to significant opportunities in the segment for taxi
yes operators and the like.
 Foreign partners - MEM along with Pininfarina and with Ford Motor Company
coordinated to produce their own products, strengthening the possibility to be part of
the global markets.
 Battery production - MEM and LG Chem Ltd. collaborated to be a prospective
supplier of lithium-ion batteries by establishing a facility of module and pack.

STRENGTH WEAKNESS ANALYSIS

 Retraining of manpower: Due to technology shift from ICEs to EVs,
current manpower (mechanical) will have to be either trained to the new
MAN

required manpower (mostly electrical and electronic systems) or new

yes
manpower needs to be hired.

 MEM’s technological edge: Mahindra had planned to invest around

35-40 billion in MEM's EV business, 8 billion in product development
and capacity expansion. It also aimed to have at least 4 new EV
models on road by 2021, and the remained would be put towards
MACHINE

developing a battery module plant that would have a capacity to make

yes half a million battery modules per year. The plant would also house a
battery module pack line.
 Mahindra entered powertrain and drivetrain technology to provide
mobility solution to enable shared electric mobility.
 MEM is also developing infrastructure to support an electric - led
mobility system.
MATERIAL

 Dependency on external vendors for battery and battery

management systems: It is expected to create a huge ecosystem for
yes
battery manufacturing, recycling, and charging infrastructure. In future
India will have to depend on China for battery imports. For e.g.,
Groupe Renault's electric version car Kwid, would have battery and
battery management systems manufactured in China. Exhibit 6 shows
the increasing market trend in the imports of automobile parts from
China.

 Budget constraints due to BS6 and low success rate of new

vehicles: In 2016, Indian Govt decided that it would leapfrog from
BS4 emission standards to BS6 emission standards by 2020. This
MONEY

stressed the budgets of many automobile manufacturers including

yes MEM which had to work on both EV and BS6 vehicles.
As per BCG matrix, BS6 vehicles would fall under the cash cows
category and EVs would fall under question marks category.
 With intensifying competition and a success ration of only 2:10 for
every new model ROI and viability was a challenge.