Focused on self-charging hybrids before introducing EVs: Lexus

At a time when luxury automakers are shifting focus towards battery electric vehicles, Japanese luxury auto manufacturer Lexus is currently focusing on strong hybrid vehicles and aims to improve on charging infrastructure, battery chemistry and charging time before taking the "giant leap of introducing battery electric vehicles."

Naveen Soni, President, Lexus India, in an interaction with Fortune India, says the transition from internal combustion engines (ICE) powertrains to electric vehicles will eventually happen. "But I think we still have to see the charging infrastructure, battery chemistries, the charging time etc, before we can take a big leap into battery vehicles. We are currently focusing on strong hybrids, but in the future, we intend to move towards battery electric vehicles," adds Soni.

According to Soni, self-charging hybrid electric vehicles are the correct strategy of Lexus for the current market condition, "which has a limited charging infrastructure and the battery chemistries are such that we would like to improve on those." The company currently has hybrid versions of Lexus ES, Lexus NX, Lexus RX, Lexus LS and Lexus LC 500h in the domestic market.

The Japanese luxury carmaker has a global mandate of having an all-battery electric vehicle portfolio by 2035. The company, which currently has strong hybrid vehicles in its fleet, showcased two battery electric vehicle concepts—LF-ZC Sedan and LF-ZL ultra-luxury car— at the Tokyo Mobility Show last month. The company plans to launch these vehicles by 2026.

"Battery electric vehicles have found favour recently. The government is also pushing a lot of battery-electric vehicles going forward. But at the same time, for us, the current infrastructure that is available and the current battery chemistries that are available we feel that the self-charging hybrid electric vehicles seem to be the best way forward. And from a sustainability point of view, from a fuel-efficiency point of view, from a lack of dependence on a charging infrastructure point of view, this technology becomes the best," opines Soni.

A recent report by the Confederation of Indian Industry (CII) estimates a requirement of 13 lakh charging stations by 2030 to support aggressive EV uptake. According to CII estimates, with 22 lakh EVs, the ratio of public chargers to EVs in India is very low (around 1:223). India will need 13 lakh public chargers by 2030, it says.

The maker of SUV NX and sedan RX clocked a 76% growth in terms of retail sales in CY2022. The company is anticipating a similar performance for CY2023. According to Soni, Lexus ES, which is an executive sedan model, has been the best-performing model for the company, garnering 85% of the total sales so far.

While the automobile industry globally is shifting from the small car segment to SUVs (sports utility vehicles), Soni says that the luxury car market already has a distinct preference for sedans. "But the penetration of SUVs is growing and we hope to see more and more SUVs coming into the market. But at the same time, sedans will always occupy a certain portion of the market," says Soni.

For the outlook of luxury car sales in India, Soni observes that the luxury car market is likely to clock 42,000-45,000 in terms of retail sales this calendar year, which is the highest. It will, however, remain less than 1.5% of the entire automobile market, which is aiming to clock more than 4 million sales this year, he adds. 

Nonetheless, Soni observes that the tipping point for the automobile industry will be once the per capita income rises and more people will be able to participate in the luxury car segment.

“Achieving a six-factor multiplier in per capita income will help the industry to increase its base from the current 1-1.5% to maybe atleast the next level which is Japan where the luxury car penetration is 3-5%,” says Soni.