Future of mobility: It’s clean and connected

“What makes us human?” asks British actor Benedict Cumberbatch in iconic British motor brand Morris Garages’ (MG) latest advertisement for its Hector SUV running on Indian screens. “Sometimes it feels like we have forgotten. Maybe we can learn again from someone who’s been learning from us,” he says.

“Welcome Benedict,” says a voice inside the burgundy-red SUV as he gets into the driver’s seat.

“Hello MG,” replies Cumberbatch.As he begins to drive, on his voice command, the artificial intelligence (AI)-based virtual assistant turns the AC on, plays his favourite music, and opens the sunroof.

“Thanks Hector! That was fun,” says Cumberbatch as he gets out and locks the car upon reaching his destination.

MG’s pitch to Indian audiences is a snapshot of the current trend in the Indian auto scene: AI-enabled connected cars for the young, tech-savvy, pop-culture-loving consumer. The 95-year-old Birmingham-based company—a subsidiary of Shanghai-based SAIC Motor since 2008—has long been popular in India as a maker of classic sports cars, roadsters, and cabriolets. With the Hector, MG has entered the growing premium SUV segment. Except this is not your typical SUV. The company likes to call the Hector India’s first “Internet car”; in other words, it’s India’s first connected car. “Basically, this means that you are always connected to your surroundings on a real-time basis. It means that you get real-time,not really algorithm-based traffic [updates]. It means if there is an emergency, we can run the services to you,and much more. If Internet 2.0 was about touch, Internet 3.0 is going to be about the talk,” explains Rajeev Chaba, president and MD of MG Motor India.

MG unveiled the Hector in India in May. Chaba doesn’t think the late entry into the premium SUV market in India is a concern. “Some will say that we have a huge challenge since we’re late, but on the other hand, it’s also an opportunity. We were very clear about our launch story.We thought that one way of differentiating our brand from the competition is to lead certain changes,” he says.

Like MG, many other global and domestic automakers have launched models equipped with new technology and design as they vie for a slice of India’s automobile market pie. India is expected to have twice as many vehicles on road by 2040. “The future is going to be very exciting. India is a massive opportunity. There will be more technological churn... autonomous-driving features will start coming to India like lane driving and lane switching going forward,” Chaba says. The future may look promising, but the present and the recent past have been rather grim. The world’s fourth-largest automobile market is going through a really rough patch. Sales have hit the skids for more than a year; passenger vehicle sales plunged 26.03% in May from a year ago—the steepest decline in nearly 18 years. A liquidity crunch and concerns over the results ahead of the recently-concluded general election weighed heavily on market sentiment, slowing down demand. The industry—which is racing against time to meet the deadline for the Bharat Stage (BS) VI emission norms—sees no sign of recovery soon. Many automakers are cutting down on production to cope with burgeoning inventories from falling sales.

Research firm Elara Capital says a reason for slowing industry growth in the past two years has been fewer new model launches. “The share of new model launches in overall industry volume has reduced from 18% in FY17 to 3%in FY19,” says the firm in a report. “In FY20,we expect new model launches to form 6% of industry volumes and the industry to grow at3% year-on-year,” the report adds.

Sridhar V., partner and practice leader at Grant Thornton India, feels there was muted sentiment in the industry due to rising fuel costs, increased insurance premium, and pre-election uncertainty. “And then there is also the transitionto BS VI. The likes of Maruti, whose volumes are dependent on the smaller passenger vehicles, have taken a conscious decision that building another diesel engine to comply with BS VI would make those cars a lot more expensive. But Hyundai also has good coverage on the smaller segment cars but they are going ahead with it [diesel cars]. There is uncertainty in the transition as well. This trend [slowdown] is expected to continue in the near term,” he says.

At a time when the Indian automotive industry is going through a massive churn, automakers see the need to adapt to fast-changing market trends to spur sales and put the industry back on the growth track. Apart from efficiency and pricing, consumers these days are looking at how connected they can be with their cars. To tap into that opportunity, automakers are lining up new launches in line with their expectations.

Recently, South Korean automobile major Hyundai launched its fully connected SUV called the Venue. It has 10 modified special features for the Indian market. Hyundai says its new launches will function like high-performance computers on wheels. Much like the Hector, the company has a cloud-based voice recognition system. “Venue will be India’s first fully-connected SUV equipped with our global Blue Link Connected Technology. The Indian market is at the centre of Hyundai’s global growth plan and the launch of Venue will strengthen our commitment to the Indian market and fulfil our promise of creating a happy life for our customers,” S.S. Kim, CEO, Hyundai Motor India, says.

Some had foreseen the trend. The country’s fourth-largest carmaker Tata Motors—which posted strong growth in April thanks to its new launches such as the Tiago, Nexon, and Tigor—had announced India’s first connected car, the Tamo Racemo,two years ago at the Geneva Motor Show. However, the project wasn’t launched commercially due to investment-related issues. The company’s CEO and managing director, Guenter Butschek, says that India was not ready for connected vehicles back then. “But we took the concept of [the] connected vehicle out of the fridge awhile ago. We will soon launch a connected vehicle...with an element of safety, convenience, and comfort,” he says. “It’s not just about entertaining you.”

Butschek is right. Safety issues like data privacy are a major concern for people looking to buy these connected cars with no proper data protection law in India so far.“First, paramount to us is consumer safety. It means we will not provide any feature on the car that will distract you from driving. Also, we make sure the data resides in India and is being used only for car and driving-related issues. Thanks to Microsoft, we have a lot of firewalls,” MG’s Rajeev Chaba says.

As of now, the penetration of connected cars in India is just 1.2%, which is expected to reach 2.7% by 2023, according to an estimate by data research firm Statista India.Like connected cars, another big trend is emerging in the Indian auto sector mainly due to increasing awareness about rising pollution levels—electric mobility. A recent report by the World Health Organization says 14 of the 20 most polluted cities in the world are in India. As a signatory to the Paris Agreement, India is committed to bringing down greenhouse gas emissions by 33%-35% by 2030.It had also promised to ensure at least 40% of its energy will be generated from non-fossil fuel sources such as solar,wind or bio-fuels by 2030. According to the environment ministry, the transportation sector emitted about 188 million tonnes of carbon dioxide (CO2) until 2010, and alone accounts for 87% of total CO2 emissions.

Electric vehicles could be the answer to India’s emissions target. There are no emissions from these vehicles and they are at least 3-3.5times more energy efficient than the traditional internal combustion engine (ICE)-based vehicles for routine operations. Also, driving EVs is cheaper (you need to pay only for charging), convenient, reliable, and safer than ICE vehicles. It needs less maintainance and makes no noise.

Since the industry has been witnessing a decline in sales for more than a year now, auto companies feel that two trends—connectivity and electric mobility—can be potential catalysts for the industry’s revival. Analysts say clean mobility will not only decrease India’s fuel dependency but also make business sense for automakers. EVs will represent 10% of India’s total passenger vehicle fleet in 2040, according to New Energy Finance Long-term Electric Vehicle Outlook 2018, a report by Bloomberg.A recent estimate by the government’s think tank NITI Aayog says EVs are likely to save$60 billion in fuel cost by 2030, making the EV pitch even stronger.

According to data from the Society of Manufacturers of Electric Vehicles, total EV sales in India in FY19 grew 1,256% to 759,600 units,from 56,000 units in FY18. In February, thethen interim finance minister Piyush Goyal, in his Budget speech, stressed on the adoption of EVs to reduce the country’s dependence on fuel imports and gas. Recently, NITI Aayog proposed all new cars sold for commercial purposes after 2026 should be electric. The government is also mulling incentives for setting up battery-making units by 2022 with an investment of $50 billion. Together with phase 2 of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme, there seems to be an obvious push by the government on automakers.

Taking a cue, Morris Garages is planning to launch four new cars in the next two years in India and its latest offerings will be among the first all-electric SUVs to hit Indian shores in December, and will take on Hyundai’s Kona EV.

However, there are some industry voices who advise caution. “This move [towards EVs] will be very critical because it impacts an industry that is a significant contributor to the country’s GDP [gross domestic product] and is a large creator of jobs. It also puts the industry, manufacturers, and customers in unfamiliar territory, as the automotive ecosystem all over the world is still only beginning to understand the development and applications of EV technologies,” Pawan Munjal, chairman of Hero MotoCorp, India’s biggest two-wheeler maker, said in a statement.

He added that in such a scenario, coming close on the heels of the implementation of BS VI emission norms in 2020, “this move could have serious implications on theindustry and the millions who are dependent on it. Therefore, we propose a more cautious, clear and realistic roadmap towards the adoption of EVs”.

The Automotive Component Manufacturers Association (ACMA) also stresses on the need for a calibrated move towards e-mobility. “The auto component industry in India is facing one of the severest challenges at this juncture. While on the one hand it is faced with the daunting task of meeting the stringent deadlines of transitioning from BS IV to BS VI and a host of safety norms, on the other, poor vehicle sales for close to a year now have the industry worried. It is to be noted India is the only country in the world to have bypassed a generation of technology as its commitment to producing vehicles with better emissions,” said Ram Venkataramani, president, ACMA.

Also, for greener public transport, NITI Aayog suggests that 40% of all cars used by major cab operators such as OLA and Uber be electric by 2026. Ratan Tata-backed Ola Electric says since commercial customers care more about cost per km, adoption of EVs makes sense. “The reason for that is because electric is much cheaper to operate, there is fewer moving parts and cost per km from a fuel perspective goes down. Our first priority is how to make the customers comfortable with purchasing electric two- or three-wheelers. So, we’re focussing very heavily on charging and swapping infrastructure,” says Anand Shah, senior vice president and head, strategic initiatives, OLA. The firm aims to ply 1 million EVs on Indian roads by 2021. OLA first ventured into the EV space with its electric car fleet as a part of its pilot project in Nagpur in 2017 with an initial investment of $8 million but the project didn’t take off as drivers were dissatisfied with inadequate infrastructure and additional costs involved. “The lessons we learnt were that there needs to be more choice of electric cars. I think the first impediment is that there are not enough options and the second is that the policy is not clear. So, that was an experiment to figure out if we can be an early mover in making electric viable. If we hadn’t done it in 2017 we wouldn’t have the confidence to do it in 2019. The only regret is that we didn’t do it earlier,” Shah says. Bigger players like Mahindra & Mahindra are also backing Blu Smart, a ride-hailing service in Delhi-NCR, to get on the shared electric mobility revolution. The company says that 500 Mahindra eVerito sedans will be inducted into the BluSmart fleet by March 2020 and plans to expand across other Indian cities as well.

Mahesh Babu, CEO of Mahindra Electric, says, “Mahindra’s electric vehicles have already crossed the landmark figure of 130 million electric km, which in turn has helped to save over 11,000 tonnes of CO2 emissions across the country. Today, we are proud to flag off our zero-emission,all-electric Mahindra eVerito sedans and make them available on the Blu Smart app. This marks another big step forward in the electric mobility revolution in India.”

With so many players, the road ahead for the industry seems much cleaner. Many players are already experimenting with eco-friendly automobiles such as hybrids,plug-ins, EVs, fuel cells, etc. Automakers feel the most obvious way to improve the quality of life and public health issues is zero-emission vehicles and a well-connected smart drive.

(This story was originally published in the July 2019 issue of the magazine.)