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India’s Top Carmaker Bets on Hybrids Over EVs in Clean Shift

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(Bloomberg) -- Maruti Suzuki India Ltd., the automaker that sells every other car on the nation’s roads, believes electric vehicles aren’t the answer to reducing carbon emissions in the world’s third-biggest releaser of greenhouse gases -- at least not in the immediate future.

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India’s largest automaker reckons that vehicles powered by hybrid technology, natural gas and biofuels present a better path toward a cleaner future than electric cars considering the nation generates about 75% of its electricity from dirty coal, Chairman R.C. Bhargava said in an interview.

“Talking about electric cars without looking at the greenness of the electricity generated in the country is an inadequate approach to this problem,” Bhargava said in an interview from his home in Delhi last week. “Until the time we have a cleaner grid power, it’s necessary to use all the available technologies like compressed natural gas, ethanol, hybrid and biogas, which will help reduce the carbon footprint and not push any one technology.”

Those views put Bhargava at odds somewhat with several of the world’s largest car manufacturers, including No. 2 player Volkswagen AG, which is forecast to unseat Tesla Inc. as the leading maker of electric cars as soon as 2024. Toyota Motor Corp., which sells the most cars globally, is putting a lot of money into electrifying its line up too but believes in hybrid technology as a logical interim step while the industry builds out stable battery supply chains.

Read more: How Supply Chain Snags Could Put the Brakes on the EV Revolution

India’s shift to electric vehicles is also much slower than other major markets like China and the US even though Prime Minister Narendra Modi has committed to making the South Asian nation a net-zero carbon emitting one by 2070. Arthur D. Little estimates by 2030, electric passenger cars will make up only about 5% of total EV sales. More progress on the two- and three-wheeler front will bring the automobile battery-powered total to about one-third.

Charging EVs with clean energy and reducing dependence on coal is difficult in India, the world’s second-most populous country with some 1.4 billion people. The nation was forced to import millions of tons of coal after electricity demand soared amid scorching summer temperatures and rising industrial activity after the pandemic.

Maruti plans to launch its first hybrid car under a partnership between its parent Suzuki Motor Corp. and Toyota within 12 months, Bhargava said. Hybrid cars are also a better alternative than EVs given India lacks adequate charging infrastructure, he said.

Maruti will additionally move “aggressively” into cars that run on compressed natural gas because they’re cleaner than petrol or diesel models and cheaper than EVs, making them a viable option for low-income consumers who want to upgrade from a two-wheeler, he said. Although compressed natural gas is a fossil fuel, it’s one of the cleanest burning in terms of emissions.

As the availability of chips improves, Maruti expects to sell 600,000 compressed natural gas cars in the year ending March 2023 versus 230,000 units the previous fiscal year. Maruti currently has nine compressed natural gas models and is planning to introduce more such variants.

Using biofuels to power passenger cars is another alternative, however the investment to make it commercially viable is lacking, Bhargava said.

There are problems with biofuels also, with their prolonged use in cars potentially extremely harmful to the planet’s limited farmland.

India currently blends gasoline with 10% ethanol, which is largely derived from sugarcane, while roughly two-fifths of America’s corn and soybean crops end up burned in engines. Indonesia’s expected consumption of 10 billion liters of biodiesel this year will use up almost a quarter of its palm oil crop.

But India does have a big advantage when it comes to generating biogas, considering it has the largest cattle population in the world and the chief raw material for biogas is cattle dung, Bhargava said.

Maruti is working with the government and oil companies to boost the production of biogas, he said, adding that the government should give incentives for its production and create vendor development projects to improve the collection, transport and storage of dung from villages.

Developing cleaner alternatives will mean Maruti and its suppliers will have to bolster their engineering capabilities, Bhargava said. Maruti plans to hire more engineers, he said, declining to specify the percentage of manpower expansion.

“EVs are not going to be a large part of car sales, irrespective of what other manufacturers are saying or planning,” Bhargava said. “The ability to get green transportation is going to take time in India because of the nature of our electricity generation.”

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