Cut To The Chase: Bajaj Is VERY Disappointed With Government Over Sub 150cc Vehicle Ban
The following article is Rajiv Bajaj’s interview to a leading daily
Are the budget proposals enough for established players to take a plunge into EVs and discontinue the production of conventional vehicles?
It is not the manufacturers that decide. There was a very famous saying by Soichiro Honda (founder of Honda Motor), that it is not the manufacturer who shapes the market, it is the customer. Whatever incentives are there, they are available to all, it doesn’t matter whether they are existing OEMs (original equipment manufacturers) or new startups. And nobody from the OEM side or SIAM (Society of Indian Automobile Manufacturers) side has said that we are on one side and the startups on the other side — we are all on the same side. The government has not said the benefits are only for startups and not for OEMs. Whatever benefit is there, it is available for everyone.
The thing is, whether you are an OEM or a startup, you can only make the vehicle to best of your abilities. Ultimately, the customer has to buy it. And that is where the problem starts. Today, electric vehicles constitute less than 1% of the size of the industry and for the life of me, I cannot understand how somebody can imagine that 1% can become 100% in six years’ time.
So, you are not per se objecting to EVs?
Rajiv Bajaj: Nobody in SIAM has objected to electric vehicles or to incentives for electric vehicles. Electric two-wheelers and rickshaws have been plying in India for years and their numbers have been growing. I, as an autorickshaw maker, never said that do not allow e-rickshaws. Let one minister, secretary, or an editor of a newspaper or news channel stand up and say that.
We are all for electric vehicles and we are all for supporting and incentivising electric vehicles. At the same time, we are also saying that we are the same industry who are making world-class two-wheelers and three-wheelers. The proof of that is that we are exporting 3 million vehicles every year. These are earning a great name for our country across. These are earning $3 billion of forex.
Nobody refutes the fact that Indian two- and three-wheelers are the most fuel-efficient and least polluting in the world, including the Niti Aayog. They can keep saying that the industry is resisting BS-VI, but that is all theory. The reality is that Indian two- and three-wheelers are the most fuel-efficient and least polluting in the world.
When one is supportive of EVs, why is there one faction which wants to ban IC (internal combustion) engine? When you say that one technology is outstanding, you go ahead and please promote it. When four-stroke engines were first brought into the country by Hero Honda, why did you not say that ban the two-stroke engine? Two-stroke and four-stroke were overlapping for almost 20 years. Even today some of our three-wheelers are two-stroke. As long as emission norms are being met and the emission is low, how do you care whether it is two-stroke, four-stroke or twenty-stroke? In the same way, when Bajaj made the quadricycle, did we say that ban everyone’s three-wheelers?
Assuming that electric vehicles are better — and I’m once again saying that I don’t think they are better; they are good and so are IC engines — even then, why do you ban the other technology? When IndiGo or Jet Airways start, does it mean that you ban Indian Airlines? Just because 4G comes, do you ban 2G? Let the customer decide. This is one principle because of which I don’t agree with banning IC engine vehicles.
There is also a practical reason. EV acceptance today is only 1%. And people are bringing them from China — 99% of EV sellers are traders, they are not engineers. They are just traders who are giving jobs to China by bringing the vehicles from there and dumping them in this market.
But after doing all this, if your acceptance is only 1%, then I want to ask the government that do you really want to take this one swallow and make a summer out of it? Because tomorrow, if you force us all to go that way and the customer doesn’t accept it, what will happen to the industry? That means the IC engine is stopped, all those people are out of jobs, and electric vehicles are not selling. What are we supposed to do then? Shut shop and sit at home? This is the most absurd thing. To me, this is a Sheikh Chilli kind of thing, a self-inflicted pain.
If EV is so good, they are getting all the support and customers love them, automatically they are going to grow. And like the two-stroke two-wheeler has become zero today, one day IC engine will also become zero. If EVs were already 30% of the market, then it would make sense, the critical mass already would have been there. I don’t know of any example in the world where somebody takes 1% of something and says that this is good enough to become 100%.
Policy wonks are pointing towards China and its successful migration towards EVs…
Rajiv Bajaj: The Chinese example is being completely misunderstood. In China, they started banning IC-engine two-wheelers only in select cities like Shanghai, Beijing, etc. So, China was doing something very selective and targeted. Whereas our people are doing something very general.
Also, when they introduced the electric vehicle in China, they proposed a policy called 20-40. This means that the vehicle should not go at more than 20 kmph and the weight should be less than 40 kilograms. The two big advantages of this rule are that the technology doesn’t become a challenge and the acquisition cost remains low.
In India, no such a rule has been proposed. Rather the Indian government has proposed the reverse — they have defined a minimum top speed and minimum gradability. This kind of vehicles will cost Rs 1.5-2 lakh. China had a willingness towards a minimalistic approach whereas we seem to have a maximisation approach.
The third thing that China did was they built huge infrastructure in terms of road connectivity and made special lanes which were reserved for pedestrians, cyclists and such vehicles which complied with the 20-40 rule. This was to address the safety and congestion issues arising out of 20-40 vehicles plying on the same roads as conventional vehicles.
And finally, the GDP per capita in Shanghai, Beijing and other cities was at such a level that people who bought normal two-wheelers were able to upgrade and buy cars. This is evident from the ratio of two-wheelers to cars in China, where it is as low as 3 and in India where it is close to 10. So, in China, the market got polarised. Some people went down to the 20-40 vehicles and the people who didn’t want to downgrade from regular two-wheelers to 20-40 vehicles were able to afford to upgrade to a small car.
In India, none of this is possible. First of all, India is trying to make one rule for the whole country when the focus should be on the cities. Secondly, there is no minimalistic approach like 20-40, in fact, it is the opposite. Thirdly, when will the roads come so that these vehicles can be ridden safely — I don’t know. And finally, is it possible that people can leave a Pulsar or a scooter today and buy an Alto? I don’t think so.
You cannot take just one piece of the China puzzle. China said that these four pieces have to come together to make the big picture. We are committed to electric vehicles but because of this ‘trial balloon’ which has been floated by Niti Aayog, am I going to panic and change the direction of my ship to a new destination? No. Because I am not convinced that it will work.
Startups say it is very difficult for big companies to change overnight and hence they are criticising…
Rajiv Bajaj: Bajaj Auto is a company which has gone from scooters to two-wheelers to being a global company. No one needed to tell us to make quadricycle when we were already making auto rickshaws. We don’t have to prove our credibility to people who have done nothing so far.
As I said, startups are of two types — 99% are the traders bringing goods from China and I am an engineer, I don’t need to understand my engineering from a trader. And the 1% who are engineers, I want to tell them that you have just started off. Let’s see you do something first.
Why are you asking for my world-class product to be banned? Today you have introduced an electric vehicle with certain performance and next year I will introduce an electric vehicle and let us see what that is. Suppose my electric vehicle is better than yours, can I ask the government to ban you? That is my answer to them. I understand all arguments in favour of EVs but I understand no argument for banning the IC engine. The automotive industry is not the only reason for pollution, everybody knows the statistics. And the statistics are not from SIAM, they are from very neutral bodies including NGOs and IITs.
When Niti Aayog said that if we don’t make such a tough policy, tomorrow the Supreme Court will come down heavily and they will enforce it, my answer to that was that if the Supreme Court is so powerful, then please request them for the sake of all Indians that in five years they make Air India into a Singapore Airlines. We would all be very grateful to finally have a decent airline to fly with.
They are saying that we should not miss the EV revolution. When you want to do something revolutionary, you have to first establish proof of concept. When you want to swim instead of walking, you don’t suddenly just jump into the ocean. You first go into a shallow pool. You are talking about smart cities. My understanding is that one of the fundamental requirements of smart cities is Swachh Bharat. If my city is not clean, how can it be smart? Pune is supposed to be a smart city. There is not one area in Pune that is cleaner than it was five years ago. Yes, some small areas get cleaned and people talk about it — but that used to happen before too.
The greatest marketing wisdom I ever learned is when in trouble, narrow your focus. Focus your resources and develop a proof of concept. Same thing they are trying to do here. I would say you take four cities of India which are very polluted like Shanghai or Beijing, and debate what should be done to get 100% electric vehicles there. Instead, you try to make an all-India policy.
Once the government or Niti Aayog decides something, it is very difficult to make them change their mind. Are you hopeful?
I totally disagree because I have seen many U-turns on this issue. Let us not forget, two years back in September 2017, Mr (Nitin) Gadkari himself had made some very ambitious statements which were withdrawn after a few months. In fact, if you ask the general opinion of the business community or even the general public, they will say that the government is full of U-turns and flip flops. And this is true of not just this government, this is true of all governments.
I don’t think this will be the first time that the government has gone back and revised its view. Having said that, the Niti Aayog has repeatedly said that this is just a proposal, it has not been finalised. It is just being discussed with the industry. So, it would be wrong to say that this is a decision and now the decision is being changed. This is only a draft notification and I don’t see any problem for the government to revise a draft notification.
On your plans to bring your own EVs by 2020…
If for some reason the whole country wants to buy my electric vehicles from 2020, of course, I will increase the capacity and make it available. As far as startups are concerned, they can import tomorrow also. The reason they have not imported in large quantities is that people don’t want to buy those products. We are not coming in their way; the customers are rejecting them. These people should put their house in order instead of trying to shut somebody else’s house.
What do we think?
Well Mr Rajiv Bajaj would win all archery awards because every arrow (answer) hits the target perfectly. IC engines in any capacity cannot vanish overnight. They have to be phased out from cities first and then slowly to go away from pocket of the country. IC engines have given this world mobility and opened up this planet’s pocket to every living being breathing in it. You still cannot do a road trip of 2500 kms in an electric vehicle for the next 25 years. We are that far away (the entire world counted in) in terms of infrastructure. Petrol pumps cannot be found in some places even today throughout the world. How can there be charging options in the middle of nowhere.
100-150cc motorcycles in the Asian scenario, are still used to do 100 kms, plus, a day in most cases because they provide mobility to the needy. A mobility solution that allows the nation to grow with its small but significant contribution. No two wheeler can provide more than 200 kms of range today. While everyone loves electric revolution to take place, borderline blackmailing is not the solution. Electric is here to be a part of the mobility scheme along with IC engines. A planet where dinosaurs once existed.