In conversation with Rajeev Chaba, MD, MG Motor India
Speaking about MG Motor’s EV initiative, Rajeev said:
MG India is owned by SAIC, which has a joint venture with CATL which is the number one battery manufacturer in the world. So SAIC and CATL have this collaboration of 51.9 for the cell, module and whole battery pack, so this puts us into a very unique position which I would like to argue no other OEM has, because we have invested in cell manufacturing and battery manufacturing, so this gives us a unique advantage because in terms of technology, in terms of cost, in terms of other second life of battery issues, we should be one step ahead of the competition on this basic thing
Next, he spoke about the plans for the overall facility:
In terms of both scale and capacity, this is one of those unique facilities, which has the largest capacity, with a lot of investment gone into it. Ultimately this is going to be the biggest battery plant in the world. The capacity of this plant in all the phases when it is complete in the next few years is going to be 36 GWh. Right now, Tesla, the current number one plant is close to 20GWh, so this is going to the world’s biggest battery development right now. So that will help us in giving that scale, along with other advantages of cost should apply to all SAIC joint ventures, and SAIC is going to use this for the VW joint venture, GM joint venture, with the MG brand, with the Buick brand and also Maxus. SO MG India will automatically get an advantage. Hopefully our volumes will be high enough to take care of this pricing advantage
Speaking on the feasibility of the program, with regards to the fact that the batteries are assembled in India (in keeping with the government’s Make in India initiative,) he said:
We are doing the feasibility as we speak. Initially it starts with import, as our volumes are low, but then we will do the assembly operations, then the repair of the batteries; finally we’ll look into the second life of the batteries, the whole lifecycle management. Now, when we talk about the ‘Make in India’ programme, my perspective is that it is not going to be cell manufacturing in India so soon, because that’s a different volume altogether, which needs billions of dollars of investment, so that will not happen. But yes, people will import the cell to make the module, and module to pack. That’s what is going to happen. And by the way, you need to know that normally you do not need to repair the cell, you can repair a module but you don’t repair a cell. So I think for some time, as far as I can see, I think that cell manufacturing in India is not going to be very easy in the near future.
He then moved on to MG Motor’s plans for the kind of developments expected for the end of lifecycle of the batteries:
This whole game is about having partnerships and collaborations. So you need to have the ecosystem. As an example, when we launched the Hector, we had a huge ecosystem with all the global technology players in the country. Likewise, for the EV we are doing the same thing, for the charging we are tying up with lots of players. For the end of life cycle of the batteries, whether the second life of the batteries or urban mining of the batteries, or can you recycle some of the materials. So we are talking to some global players who want to come into India for the EV business in the future. Luckily we have some time still, because the battery is going to be used for six to seven years at least, and then we have to think about the battery’s second life usage. So we are very serious and are developing this infrastructure in a very sincere way, and on December 5 when we’ll showcase our car in India, hopefully we’ll announce more partnerships. Additionally, under the ‘Make in India’ programme, it’s imperative to do the assembly here, so we are not going to be volume-bound, the only thing is that right now we want to set up as fast as possible, and so we don’t have the time to set up an assembly, but that will happen in a year or so. Also, basically, you’ll be buying the battery from here, which is our own in a way, we can technically argue that it’s SAIC’s plant. This plant is going to give the battery to the MG ZS.
This was followed by some questions fielded by our editor, Sirish Chandran:
Sirish Chandran – What is your electric strategy for India, and why do you have the electric car coming in as your second product for India?
Rajeev Chaba – I think the way the whole MG evolution is happening in India, I believe that we are in a unique position to differentiate our products based on technology. Technology is one big pillar; like how the Hector is a ‘connected car’ which is a first for India, and still I’d like to argue that the kind of technology we’ve got is the best in the country, because we have things like over-the-air updates which no other player in the country has, and we’ll keep improving as we speak. In gen-2 or gen-3, we’ll get more into a smart car. Likewise, on the EV, I believe our product is going to be the first of its kind in the country with the kind of range it has, the overall size of the vehicle, the space, and the features. Again, there’s connected car and now the EV, so the whole thing is that we want to showcase our technology and how we can differentiate ourselves, to establish the MG brand in the consumers’ mind as a technologically-leading brand.
SC – Is India ready for electric cars?
RC – So we need to ask when India was ready for smart phones, or connected cars, or EVs. I think we don’t need to wait for the perfect scenario, or you come and evolve along with the infrastructure. I’m sure we’ll all agree at least the government has been talking about EVs for the last two-three years, and I know there are many customers who are ready right now to switch to EV. So I think we need to take the plunge to move along with the infrastructure development and typically that’s what happens in India, where demand gets generated a little bit and supply follows. It is not the other way round where supply comes first and demand follows.
SC – What are you doing in terms of infrastructure for charging and for making the customer’s life easy for owing an electric car?
RC – Definitely we expect help from all the stakeholders because we alone cannot do it. But to take care of the basic need of a customer we are going to put infrastructure on our own, with regards to the basic charging at home. As an example, to take care of the basic need of a customer we are going to put infrastructure on our own, so the charging at home we’ll take care of. So if you have a car, we’ll make sure you have the equipment for overnight charging. We’re also going to put some high-speed chargers at the dealers. I assume that we can collaborate with other OEMs in the future and suppose in some apartment there is a charger, whether it’s our car or a competitor’s car, we can share the charger. Also, we have the backing of the government, as the government is coming out with their plans to put chargers on highways and some tenders have been floated, so the government’s charging system is also going to complement this whole thing. So again this will grow, this will happen over a period of time nothing can happen tomorrow suddenly, and we want to be part of the initial set of players who will be involved in this whole thing.
SC – You talked about doing things differently from other manufacturers. How are you going to differentiate yourself?
RC – The very topic that we’re talking about is differentiating us; I hope, as we are the ones who can talk with confidence, and with some substance that we are going to implement this way. Secondly, apart from this, there are other issues such as brand assurance, customer handling, dealer handling; there again we want to ensure that the customers have more confidence in handling our product. We’re not the best yet, but we’re trying to make sure that we can differentiate ourselves. The full value proposition from our side with regards to technology, the way we are trying to help start-ups to handle this technology or even in EVs as we talk about it, there can be various business revenue streams as you go forward, a lot of start-ups are going to get an advantage from this whole thing, so the way we are going to hand-hold and mentor these kind of start-ups is the differentiating factor. So I think we are definitely going to disrupt in some way, and hopefully people can associate us with the disruption.
SC – And are you looking at more affordable electric cars for India soon?
RC – Definitely, that’s the answer in the future, because right now when we are talking about the volumes, cars worth 25 lakh will have limited volumes, but if you can get a car for about 10, 12 or 15 lakh or even one below 10 lakh, it’s going to democratise EVs in the country. So we have our eyes on that. It’s too early right now to say anything but that’s definitely what our intention would be in the midterm to long term.
SC – Do you have a time frame for it? Three years, or five, or eight years?
RC – Too difficult to say, this whole thing has to evolve, but mid-term to long term, we would have a capability to do it and we would like to experiment for sure.
SC – How many dealerships would have the ZS EV at the launch?
RC – So initially we are going to restrict to a few cities only, so in five cities we’ll launch it, and then we’ll see the demand. Also, you know, it depends on the road conditions because as you know the batteries are at the bottom of the car, so the big humps should not be there, because ground clearance is an issue, so it cannot be driven on any kind of road, or taken off road. Even in developed cities, it is restricted right now in certain cities. Also, extreme weather, like in the case of extreme cold conditions is not very good for battery life. Luckily in India we don’t have areas of extreme cold. So we are going to restrict it initially, but we have been testing the battery since last one and a half years, so we are quite confident about the good driving conditions.
SC – You’re also going to assemble the ZS EV in India, so you’re going to have CKD operations?
RC – We are going to assemble the car in Halol in our Baroda plant. As we speak, we’ve already produced more than 12 cars. And we should start production in December and deliveries should start in January.
SC – And do you have any local component or any local value-engineered thing going into it?
RC – So we have some localisation, which is though not as big as the hector, but as we go forward we’ll start localising more and more
Finally, Rajeev spoke about the difference in the governance system in China and India.
I was based in China for some time like when this whole thing was getting planned in 2011-2012, so I have seen the way it was happened in China. The Chinese system is very ideal, but because of the governance system in the two countries, I think for India it remains very theoretical to implement the Chinese kind of system. But, if need to have a very clean, theoretical way, I would say if we could just copy the Chinese system we would be very successful.
What does it mean?
They first spoke about how to get the raw materials for a cell plant, so they took care of the raw material site, and then they made cells, modules in the back. For the supply side they gave some incentive, And then went on to the demand side, where they specified the amount of subsidy that they will give in the initial years, no questions asked, whether for PHEV, or full EV, they planned subsidies through sales tax reduction or excise duty reduction, the Indian equivalent of which is GST.
But apart from that, they said they will give this kind of flexibility for five or six years, after which I will give subsidies based on the range of the car. So you can’t produce less efficient electric EVs. The range has to be a minimum of 300km to apply for the subsidy. And now they’re taking the game to the next level. So I think this whole evolution in china has happened in a very textbook style, which makes complete sense, and is a long-term strategy, where the players have been given enough time to plan and execute. In our country because of the governance system, because of the various stakeholders, unfortunately the policy is sometimes not very clear, or the timeframe is not sufficient or it is not for long term. So I think on each and every area we can improve, but then again, due to the nature of our governance it becomes slightly complicated