Maruti-Suzuki is likely to manufacture electric motors for its small cars like Alto, Wagon R, Celerio and A-Star. The move is in-line with Maruti-Suzuki’s attempt of entering affordable yet environment friendly car segment. The company is likely to start the sales by 2020.

India: India’s largest car manufacturer Maruti Suzuki has decided to build electric motors for its small cars—Alto, Wagon R, Celerio and A-Star. The car maker is planning to dive into the manufacturing of electric vehicles in its hatchback segment as it aims to foray into a large market for affordable eco-friendly vehicles. Besides, it is planning to create an alternative to petrol and diesel vehicles and plans to launch more CNG-run vehicles in the coming years.

The company had earlier informed of its plans of selling electric vehicles (EVs) by 2020 by beginning the manufacturing at its factory in Gujarat. Apart from EVs, the company will also set up a lithium-ion battery factory that will charge electric, hybrid and other vehicles from fixed kiosks. While Denso will provide technology for setting-up lithium-ion battery factory, Toshiba will power cell modules.

Together Suzuki, Denso, and Toshiba are likely to invest around USD 180 Million for the proposed Gujrat plant, which is projected to be functional by 2020. The manufacturing unit will power Maruti and Suzuki’s electric vehicles fleet comprising of existing petrol and diesel models as well as new EVs.

In November 2017, Maruti-Suzuki signed an agreement with Japanese automobile giant Toyota to consider a joint structure for the introduction of electric cars in India in 2020. Apart from this this, Mahindra & Mahindra (M&M) and Tata Motors are also trying to start electric vehicles manufacturing in the country.

The introduction of small electric cars by Maruti is being termed as a big move. With Maruti’s logistical expertise and large network of dealers/service stations it could make the Wagon R Electric the first Indian mass produced and sold EV. The new WagonR with its electric version is anticipated to launch in India by 2020. The Maruti WagonR Electric will be developed in partnership with Toyota.

According to the Chairman of Maruti Suzuki, India needs to develop a strategy that alleviates risks like the rising price of crude, which increases the burden on country's balance of trade, in the short term and the long term. The Chairman believes that the Indian car market is unique, as 75% of cars that are sold, are below 4 meters in length and cost under 6.5 lakh at the factory level. Electrification of compact cars in the short term needs to be considered in terms of affordability as well as the creation of the required charging infrastructure all India.

The government is targeting 100 per cent EVs for public mobility and 40 percent electric for personal mobility by 2030. According to a report by Niti Aayog in May 2017, the passenger mobility shared, electric, and connected in India can reduce its energy demand by 64% and carbon emissions by 37 per cent in 2030.

According to TechSci Research, the decision by Maruti-Suzuki to delve into the electric vehicle segment with its affordable small cars such as Alto, Wagon R, Celerio and A-Star is anticipated to have a positive impact on the adoption of electric vehicles because of its aim of electrifying affordable cars, logistical expertise and large network of dealers/service stations. Increasing consumer preference towards electric vehicles coupled with growing concerns associated with rising air pollution levels across the country is anticipated to drive the Electric Vehicle Market in India in the coming years. Growth is also anticipated due to increasing number of research & development efforts by various leading automobile companies to develop more advanced, affordable and feature-rich electric vehicles. Moreover, with increasing number of government initiatives to encourage adoption of cleaner vehicles, demand for electric vehicles in the country is expected to grow at a rapid pace during the forecast period. The move is also likely to have a positive impact on the growth of small electric vehicles globally.

According to the recently published report by TechSci Research, “India Electric Vehicle Market By Vehicle Type (Three-Wheeler, Two-Wheeler, Passenger Car & Bus), By Drivetrain Technology (Battery Electric Vehicle Vs. Plug-in Electric Vehicle), Competition Forecast & Opportunities, FY2013 – FY2023”, India electric vehicle market is projected to grow at a CAGR of over 37%, during FY2018-FY2023. Robust market growth is anticipated on account of rising number of government initiatives such as incentive schemes to encourage adoption of environment-friendly electric vehicles, growing consumer inclination towards electric vehicles, concerns over harmful effects of air pollution, and huge investments by various OEMs for developing more affordable and premium electric vehicles in the coming years.

According to the recently published report by TechSci Research, “Global Small Electric Vehicle Market, By Technology (Hybrid Electric Vehicle, Plug-In Hybrid Electric Vehicle, Battery Electric Vehicle), By Battery Type, By Geography, Competition Forecast & Opportunities, 2022”, Global small electric vehicle market stood at around $ 6 billion in 2016, and is forecast to grow at a CAGR of 23% during 2017 – 2022, to reach $ 20.7 billion, on account of increasing consumer inclination towards electric passenger cars coupled with declining prices of electric vehicles. Moreover, the boost in demand for small electric vehicles can be attributed to favorable government policies and continuing surge in R&D investments by several OEMs to develop premium quality and affordable small electric vehicles. All the above stated factors along with growing penetration of small electric vehicles in developing economies are anticipated to positively impact the market over the course of next five years.