Producing Electric Vehicles In India: The Tesla Way
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Tesla Motors is revolutionizing the way that people have always thought of vehicles. The company started by a group of engineers in 2003 is fast-tracking the world's evolution to sustainable energy. Tesla proved that people don't need to compromise on any other front to drive electric vehicles. Electric vehicles could give a better driving experience to the user, be quicker and more fun to drive than gasoline cars. The best-selling battery electric passenger car manufacturer by cars sold in 2019 has emerged to be the global king of battery capacity.
Elon Musk, the chief executive officer of Tesla, is one of the global icons of the modern era. He has modernized transportation on Earth and in space. Elon Musk, with his path-breaking earlier ventures like PayPal, SpaceX and The Boring Company in three completely different industries is an incredible entrepreneur and visionary. From day one, Musk had a solid plan to achieve his lofty business goals set out for Tesla. His goal was not to experiment with a one-off electric sports car when the first sports car Roadster was launched in 2008. Instead, his goal was to build mass-market cars with Electric battery technology. Musk has had a clear vision and a long-term goal, before its first vehicle rolled off the production line. Nothing at Tesla happens by chance, the idea was backed by Tesla's uncompromising focus on technology. It has always been technology, technology and technology for Elon Musk. While observers smirked at his vision, unwavering Musk focused on building cars with lithium ion battery technology right from day one. At the end, armed with a great team of likeminded consummate engineers, he delivered to the world cars that were faster, stunning, sustainable, stylish and fashionable than the contemporaries.
For Tesla Motors, cutting edge technology is everything. Musk, an engineer himself, focused right from the beginning on an ultimate reliable technology product. The technology was his obsession. Tesla's technology is so good that other car companies rely on it. Even his critics would agree the company is so far ahead in the competition when it comes to research and development, technology and innovation that it's hard to even talk about them in the same league.
Peter Thiel, an early investor mentioned in his book Zero to One, about Tesla Technology "Tesla's technology is so good that other car companies rely on it: Daimler uses Tesla's battery packs; Mercedes-Benz uses a Tesla powertrain; Toyota uses a Tesla motor. General Motors has even created a task force to track Tesla's next moves."
Tesla understood right from the beginning; the most critical part of getting EV right would be the battery. It could be the difference between success and failure. Tesla built its battery factory in Nevada called the Giga factory with a capacity to produce 500,000 cars in 2020, collaborating with the best in business. Moreover, Tesla took its distribution, service and maintenance on itself and did not appoint a dealer. Beginning in 2012, Tesla built charging stations called Superchargers for quick charging of cars. These are called Tesla Stations.
Tesla has been immensely successful in USA stock markets with its market cap touching $140 billion, which is more than that of GM, Ford, Chrysler combined. This is incredible for a company that is yet to break even. Tesla is an extraordinary success in a market when established much bigger players like GM, Ford, Nissan failed in EV.
India's Suggested Business Model For Building EVs
The Indian automobile market is at its crossroads. The demanding environment norms are making the OEMs invest continuously in their IC engine vehicles. In a high price-sensitive market, it is eating into their profitability. The Indian government is very serious about strict emission control and has rolled out a time-bound plan to shift to electric vehicles. The government wants to have 100 per cent electric two-wheelers and three-wheelers by 2025. For an auto industry which ranks no. 4 globally on annual car production, with very low electric vehicle penetration right now, it is very ambitious.
In the current Indian market scenario, there are plenty of new players entering the EV segment. Most of these are in 3 wheelers and some in 2 wheeler manufacturing space. Many of these entrants have taken the opportunistic route to make a quick economic success by simply importing the kits from China and selling in India. These compete in the low end of the three-wheeler segment and dominate the e-rickshaw category. These vehicle segments are today crowded by these early movers relying completely on cheap imports from China. There is a great opportunity for serious Indian players to get into manufacturing EVs with indigenous design and development. A well-focused R&D based vehicle would be a serious contender for long-run success.
Indian companies should adopt a Tesla model in their business with a clear focus on the following business goals:
- Invest in the high end of technology backed by a committed team of engineers led by an experienced industry professional.
- Adopt "Make In India" right from the beginning and get the supply chain right. with localization targets right from the beginning. 100 per cent local content and zero imports. Work with local battery and powertrain supplier partners.
- Don't just sell the vehicle; deliver an end to end solution to the customer, which will include the vehicle as a service. Deliver a complete mobility solution, not just a vehicle. Adopt hardware-as-a-service model
The three-wheeler makers need to build reliable vehicles that would change the way the market looks at the three-wheelers today. Market image of shabby looking, poorly designed, low end, ragtag three-wheeler needs to change, with its growing 1 million-plus annual vehicle production segment. Modern OEMs need to work with design houses, investing in contemporary & stylish designs in the metal body. On the performance side, the makers need to ensure battery performance with a very effective thermal management system and a very efficient drive train. Also, safety is a critical part of EV. This will make the difference between an ordinary and a world-class product.
In the post COVID-19 world, the environment has been the only gainer with nature rebooting itself. It will change the way we live in our society with health and safety, taking a higher priority over others. Hence it is very critical to get the battery vehicle product right. This is where the focus on quality, reliability and technology comes in. A supply chain with reliable supplier partners for these critical parts like Li-Ion batteries needs to be set up. Indian must figure out supplies lines of critical materials and get its mega battery manufacturing quickly. The choice of battery technology needs to be done carefully and safety protocol needs to be established. India needs to tie up with foreign countries for the supply of lithium, cobalt, copper and other minerals and materials for a mass scale energy security. On the demand side, the successful companies will create a pan India network for providing mobility as a service solution. Vehicle makers must look for export markets right now. Collaborations should be set up in regions like ASEAN, Africa and Latin America where there is bound to be a huge demand for these vehicles.
Every electric vehicle manufacturer in India with the above manufacturing vision should aim to be a high-end manufacturer of EVs.
To have the Tesla of two- and three- wheelers should be our vision for the EV.