Is India Ready For Automotive Disruption
Indian customer will be more than willing to embrace electric vehicles as costs come down and charging stations become available
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A few months ago the automotive industry was shaken up by the news that Joshua Brown, a Tesla owner in Florida died while driving on auto-pilot mode. This was the first instance of a driver of a self-driving car being killed on the road. That he may have been driving too fast or watching a Harry Potter movie (as claimed by sources) is immaterial. The fact that this happened in a 'self-driven car', is what jolted the industry and regulators alike. Tesla was quick to point out that this was the first known autopilot death in roughly 130 million miles of people driving driverless cars (the fatality rate across the industry averages one every 94 million miles). This statistic is interesting because it points to the technology being safer than existing technology and therefore one that will make our roads safer and consequently end up saving more lives.
Technology, connectivity and innovation have completely disrupted the auto sector today - so much so that the term 'Big Three' is now more reflective of 'electrification,' 'on-demand personal transportation' and 'automation' rather than the holy trinity from Detroit - Ford, Chrysler and General Motors. The new 'Big Three' create a whole new basis of competition and also bring in high doses of artificial intelligence, machine learning, and mapping where the incumbents do not have an obvious advantage over technology companies.
Even Uber, arguably the most disruptive company ever, is rooting for self-driving technology, testing driverless technology. In fact, Uber's Self-Driving Truck made history last month when it made its first delivery of 50,000 Budweiser beers! While there was a driver on board to monitor systems, he reportedly made use of his time by doing some yoga while the truck was cruising! Not to be left out, BMW, Audi, Ford, Toyota, Honda and practically every global car maker is in the smart and/or electric car race, playing catch up with Google, Apple, Tesla and Uber.
Automation and electrification will eventually make for a safer and cleaner ecosystem while on-demand transportation will dramatically expand car use and cause more people to opt out of car ownership. Affordability is still work-in-progress and is more a question of the economics of demand and supply as electric and self-driving car ownership continues to rise, despite high prices. Ford has gone on to create a new subsidiary that is working on 'ride-sharing' and 'self-driving cars.' Volkswagen, not to be left behind, has hired videogame specialists from Electronic Arts and engineers from Walt Disney Studios to work on multi-media systems and autonomous driving projects. Some of the best electric cars today are offered not just by Tesla but also by Chevrolet (Bolt), Nissan (Leaf), Volkswagen (e-Golf and e-Up), Renault (Zoe), Kia (Soul) and the BMW (i3).
Disruption in the Indian automotive sector
On-demand personal transportation led by Uber and Ola is making deep inroads into the Indian psyche. The Modi government is already talking about an all-electric car ecosystem by 2030. The question is, how are Indian automakers approaching the tipping point of the driverless / smart electric vehicle led disruption? How are the Mahindra's or the Tata's planning to deal with these tectonic shifts? Is the US$74 billion Indian auto industry (expected to reach US$ 300 billion by 2026) ready to embrace change and if so how?
Looking eastwards Tesla has already started accepted pre-order bookings from India for its Model 3 (available at some point in 2017). Elon Musk tweeted that the car would come with an India-wide supercharger network, which can charge the vehicle in 75 minutes. That would be a significant disruptor, more so given that Tesla is not a conventional automaker, has absolutely no presence in the country today and lastly, because India is by no means an ideal destination (at least in terms of available infrastructure). At the lower end of the spectrum, a dozen electric and hybrid cars are likely to be launched in the next three years with Mahindra & Mahindra (M&M), Hyundai, Toyota and Nissan joining market leader Maruti Suzuki in adopting this technology. Incidentally sales of the Toyota Camry Hybrid have jumped from approximately 40 per month in 2015 to over 125 each month in 2016 and Honda just announced a hybrid Accord in India as well. More manufacturers and price options will only help grow the market for alternative technologies.
While electric will change market dynamics in India and also be clean for the environment, self-driving cars will be a problem. India's current traffic infrastructure and driving habits will just not allow for autonomous driving in the foreseeable future. Even in the US, the most progressive country in terms of adopting disruptive technologies and despite the significant visibility of Google's driverless cars, self-driving technology raises serious concerns. While the pros are well known - less accidents, potentially lower insurance pay-outs (most accidents are caused by human error), reduced driver fatigue, being disabled friendly (a sight impaired person could, technically drive one), and improved traffic conditions etc, there is also higher ownership costs and the very real dangers of a software malfunction or malicious disruption (a car could potentially be hacked into and controlled remotely).
Developing fail-safe software for fully autonomous cars is not just about writing millions of lines of code but more a complete rethink on how software is designed and expected to perform under 'real' conditions. While a software crash or malfunction in a phone or laptop is par-for-the-course, the same development in a car could be fatal for the occupants. Moreover driverless cars rely primarily on pre-programmed route data, so they don't obey things such as temporary traffic lights. These cars also have problems figuring out what objects in their path are harmless, so if a child in the car in front threw out a empty chips packet, the car may swerve for no reason, causing an accident. The unexpected adventures of Indian traffic as I see it, would be too primordial for technology to overcome.
With electric cars a key problem would be that of 'range anxiety' that drivers will experience as they near the end of the power discharge point. Globally the average range promised by most electric car manufacturers is in the region of 90-250 miles (144 - 400 kms) on a single charge. Tesla however offers a model that can go up to 300 miles (482 kms) on a single charge - just enough to get you from Delhi to Agra and back (with some city driving thrown in). The only home-grown Indian electric car - Mahindra's e2o has a range of 120 kms. But newer cars can be expected to have improved range - but still not enough to get from Delhi to Agra and back!
Given changing consumer mind-sets, the Indian customer will be more than willing to embrace electric vehicles as costs come down and charging stations become available. Electric cars are important if pollution levels are to be reduced in cities like Delhi, arguably the most polluted in the world. The government should consider lowering taxes for automakers to provide an impetus to both manufacturing as well as R&D (and this should include improving technology for the batteries as well). As the electric and hybrid-electric crusade hots up, expect the Indian automotive landscape to transform significantly. For the better!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.