NEW DELHI : Switching to electric vehicles (EVs) is at the top of Tata Motors’ priorities, but it is also important to promote “emission-friendly" technologies such as compressed natural gas (CNG), Shailesh Chandra, managing director, Tata Motors Passenger Vehicles & Tata Passenger Electric Mobility, said in an interview. While electric vehicles (EVs) already account for 6% of Tata Motors’ passenger vehicle portfolio, with the share being as high as 15% in the case of models where both EV & IC variants are offered, Chandra says CNGs will likely account for over 30% of the compact sedan and hatchback segmants, and 7%-10% of total sales volumes in the near term. Edited excerpts.
How do you view the energy transition taking place in the auto sector in the years to come?
We have seen demand for CNG increase over the last two years, which has been basically propelled by rising petrol and diesel prices where customers are looking for options that provide lower cost of running. Another big enabler driving adoption is the growing number of CNG stations in the country, which is now more than 3,500. Segments in which the Tiago and Tigor are present (hatchback and compact sedan) saw diesel options fading away because of BS-VI implementation, and so we find the CNG opportunity is growing in these two segments specifically. In the coming years, with the aggressive numbers that the government has in mind for expanding the CNG stations, this segment is poised to grow. That is a positive indication because internal combustion engine (ICE) technology is going to stay relevant for some time. This is a transition decade, and the government is targeting 30% penetration of electric by the end of 2030, but that still leaves 70% of the market that will be ICE technology. It is better that we move faster in those ICE vehicles to emission-friendly technologies, which can also reduce the burden of fossil fuel import. That’s the way we view the future of CNG, as an option for ICE-run technologies.
How big is the opportunity in the CNG passenger car market?
Last year, the CNG market was around 100,000 units in a 3 million passenger car market. This year, that number should grow nearly 100% to more than 200,000 units, which would mean that we’d already be at a penetration of 7%-8%. Going forward, as we see 800-1,000 CNG stations added every year, we will see steep growth in this market.
How does CNG technology fit into your portfolio, which already leads the market for EVs and has also seen significant traction in the petrol and diesel variants with the New Forever range of cars?
Transition to electric vehicles should be at the top of the list of our priorities because that’s a zero-emissions technology. In the process of acceleration there are many barriers to overcome. The whole ecosystem has to be created, talent and skill have to be developed to handle this segment, and charging infrastructure needs to be built. That said, there are also 150 ICE models for customers to choose from, competing with just three or four products in EVs. So, we need time to build more products. So, there will be a transition period even as we priortize electric. Even if we imagine that the sector is a 7 million market from 3 million today and 2 million will be EVs by 2030, there will still be 5 million ICE vehicles on the road. CNG will, therefore, play a major role in the future of ICE-technology vehicles.
How will you position yourself vis-à-vis competitors such as Maruti Suzuki and Hyundai, which mostly offer CNG options on base trims of their models?
We are positioning our CNG vehicles as aspirational vehicles, not compromised cars. Therefore, the issues on performance have been taken care of. We have given special fail-safings to ensure the platform itself is very safe. We have robustly tested our vehicles to ensure incidents specific to CNG in the past do not happen. Even if there is leakage of gas or a thermal incident, there are proactive fail-safings given to prevent any major incident. We want this to be an aspirational car. We will not give only CNG options in lower trims where there are fewer features. We find customers are ready to pay for better features.
Customer demand for personal mobility has been robust through the pandemic, but supply chain constraints have hindered production. Are there issues with the availability of CNG kits that could hinder production?
There are supply chain issues in all segments where ramp-up is needed, whether it is electric, CNG, or ICE. We have been proactively working on creating more options for ourselves and are working to best meet the demand we have. There is stress on the supply side apart from the semi-conductor issue also. We are taking mitigation steps to address those challenges.
How has semi-conductor availability panned out, especially as Omicron creates further uncertainties?
We had better assurances from our tier-1 suppliers where we were facing challenges of electronic components, but Omicron has gotten into the mix of the challenges that we have but so far we haven’t seen any significant impact, and I hope we are at the peak as far as India is concerned, though the supply chain is also impacted by global events. We have, however, seen a slight improvement in semi-conductor supply compared to Q2 and Q3.
Have there been any indications of Omicron-related certainties impacting customer demand?
We’ve seen only a very slight drop. The key concern seems to be customers being unable to take test drives as a result of concerns of catching the infection. The one relief at the moment is the Omicron wave has come as a flash flood, and if that’s the case I am hoping the worst is behind us. The demand is still strong.
