India issues world's largest e-car tender

posted by Su-San Sit
11 October 2017

Tata Motors and Mahindra & Mahindra (M&M) have both won a tender to supply 10,000 electric vehicles to replace petrol and diesel cars used by India’s government departments. 

Last week, Tata won the initial tender to supply 10,000 Tigor sedans for Rs11.2 lakh ($17,200) each, inclusive of the goods and services tax (GST) and a five-year warranty.

The Indian government said the vehicles would be procured by state-owned Energy Efficiency Services (EESL) to lay the foundation for its ambitious plan for a mass shift to electric vehicles by 2030.

“Tata Motors quoted the lowest price of Rs10.16 lakh, exclusive of GST in the competitive bidding,” it said. 

“The vehicle will be provided to the EESL for Rs11.2 lakh, which will be inclusive of GST and comprehensive five-year warranty, which is 25% below the current retail prices of a similar e-car with three-year warranty.” 

However, after failing to win the initial bid to supply its e-Verito for Rs13 lakh each, M&M this week announced it would match Tata’s price to win 40% of the order.

Saurabh Kumar, EESL managing director, confirmed that the both companies would be supplying a portion of the 10,000 cars in two phases—500 supplied in November 2017 and the remaining 9,500 cars in the second phase on a date which is yet to be announced. 

“EESL confirms order for phase one of its electric vehicle tender, M&M matches lowest bid price, quoted by Tata Motors,” he said.

“As per the tender conditions, M&M can supply up to 40% of the order but they have agreed to supply 30% of the order of 500 electric cars in phase one. Thus they would supply 150 cars and Tata Motors would supply 350 cars.”

He added that as per the tender agreement M&M could also supply 40% of the rest of the 9,500 cars in phase two.

“It is up to them to decide about the quantum of supply within their permissible limit [of 40%].”

However Pawan Goenka, managing director of M&M, said the company had not made a decision concerning the second phase of the tender and would have to look at the costings before bidding.

“We have been selling electric vehicles in the country for the last five years so we have an idea about the costing of various components and we find it difficult to comprehend the pricing offered by the other bidder,” he said. 

“We will have to take a hard look as whether it would be justifiable to participate in the second phase.”

Guenter Butschek, CEO and managing director of Tata Motors, welcomed EESL’s initiative.

“EESL’s tender provided us the opportunity to participate in boosting e-mobility in the country; at the same time accelerate our efforts to offer a full range of electric vehicles to the Indian consumers.”

Tata, M&M and Nissan Motor participated in the tender, the world’s largest single electric vehicle procurement. 

Kumar said Nissan’s bid had failed to qualify.

“Nissan Motor could not qualify for the bid as they could not indicate what product they are going to offer,” he said.

Sending a clear signal that India is moving towards electric vehicles, the GST Council set a 12% tax rate for electric vehicles in May, compared with 28% for petrol, diesel and hybrid vehicles.

Indian auto firms were also warned by the government earlier this month to switch production to vehicles that run on non-polluting alternative fuels or risk being overtaken by inevitable policy change.

H.V Harish, partner at consulting firm Grant Thornton, warned that the government’s policies and rapid push into electric vehicles could affect the manufacturing industry. 

“While the order is a big positive for Tata Motors and sends out a strong signal with regard to government’s intent on electric vehicles, the policymakers have to think through the impact of such a rapid shift,” he said.

“It is going to create a big disruption in the ecosystem of vehicles that run on internal combustion engines and impact several jobs.”

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