By Venkatachari Jagannathan Chennai, Jan 22 : The year 2023 will be the year of consolidation for the fragmented Indian electric vehicle (EV) industry that is peppered with small players, said a top official of Bharat New-Energy that rolls out electric motorcycles. "Yes, 2023 will be the year of consolidation. Consolidation will be driven by regulations which will make it difficult for most of the slow-speed and China white-label players to compete. The startup entry barrier is also significantly increased due to regulations, and I think new startups will have a very tough time entering the market," Anirudh Ravi Narayanan, CEO and Co-Founder, told IANS. Narayanan was previously at McKinsey in the Silicon Valley Office, USA. He has done his MBA from Yale University, Engineering from Rose-Hulman Institute of Technology, and worked for various prestigious companies including Airbus, and Philips. Excerpts from an interview: IANS: What is the trend you see in the sales of EVs in India? Narayanan: 2022 was a blockbuster year for EVs witnessing many times growth over 2021. The year 2023 will see growth, but not at the same rate as 2022. This is due to regulatory changes focused on safety and stronger enforcement of localisation which has affected some of the previously leading players. However, these changes are very much needed and welcomed. The quality and capability of the industry will be much enhanced due to these and it is better for the country in the long run. The sales of EV two wheelers will cross one million this year. IANS: Where does your company figure in this? Narayanan: We are starting from behind, but will be in the top five next year. IANS: Is India ready for mass adoption of EVs? If yes, why, and if no, why? Narayanan: People are ready, but more investment is needed from OEMs (original equipment manufacturers) in infrastructure, better products that give peace of mind to customers, more range of products that cover more types of users, and wider distribution and service network. IANS: How do you create a compelling reason to buy an EV without any fear (like the petrol-fired ones)? The challenges are cost, charging networks, and infrastructure. Narayanan: EVs have to be better than or equal to internal combustion engine (ICE) equivalents in every way - value, performance, convenience, driving experience and others. This is our goal and how we plan to create a compelling reason for adoption. IANS: For how long can the industry bet on government subsidies? Already complaints are there of the misuse of the subsidy by some players. Narayanan: Any well-run company must do scenario planning and be ready for all scenarios. While we hope and anticipate that there will be some type of subsidy continuation post-March 2024, we are ready to face the discontinuation of FAME from March 2024 and PLI (Production Linked Incentive Scheme) from March 2027 if need be. This may have a demand impact on the industry and slow down adoption, but we are prepared for this scenario. IANS: On technology development - it is said much of the developments are happening in the passenger vehicle segment and not in the two-wheelers. For example, it takes longer to charge a two-wheeler as compared to an electric car. What is your company planning to do about this? Narayanan: I beg to differ - I would argue there is more innovation happening domestically on the two-wheeler front since India is leading the two-wheeler market in the world. Some upcoming announcements we have regarding new vehicles and vehicle technology stack will prove this point. Besides, more investment and R&D are going into EV two-wheeler development here than anywhere else in the world. I strongly believe India will be very strong globally in EV two-wheelers. In the four wheelers, on the other hand, we are more following global innovations than innovating domestically. IANS: I understand three-wheeler EVs are selling more owing to the battery swapping facility which is not there in the case of two-wheelers, your views? Narayanan: Yes, I agree battery swapping will help boost the two-wheeler industry, and I look forward to the government policy in this regard. However, greater three wheeler adoption is also because of the economics of the industry. Three-wheelers are used in commercial applications with a high amount of driving every day. Cost per km is very important and a higher up-front cost of the vehicle is acceptable. Hence EVs can gain faster adoption in three wheelers. IANS: With EVs, India is shifting its import dependence from the Middle East (oil) to China (lithium ion and rare earth materials). How can India be self-sufficient? Narayanan: India will definitely set up local manufacturing for these import dependencies. The government is doing the right thing in encouraging local manufacturing of all the key parts towards the goal of Atmanirbhar Bharat. ' I'm confident within three years or even sooner we will be able to address many of the import dependencies. IANS: Localisation levels in the industry and for your company? What are the items you import and from where? Narayanan: We (or our suppliers) need to import cells, rare earth magnets, and semiconductors. These three are not available in India yet. Apart from that, everything else is domestically sourced. IANS: Other vehicle segments that you are looking at to enter. Narayanan: As of now, we will remain focused on two-wheelers. IANS: What is the outlook on sales in rural areas -- for the industry and your company? Narayanan: We observe very good demand from rural areas as well, and we plan to set up a distribution network equally focused on rural areas as much as urban areas. Not enough investment in distribution and infrastructure is happening in rural areas - we hope to change that. (Venkatachari Jagannathan can be reached at v.jagannathan@ians.in) /IANS