Electric vehicles gaining traction in India, but long-term policy needed: Lohia Auto CEO

Electric Vehicles (EVs) are slowly making inroads in the Indian automobile industry with the level of adoption accelerating in each year. Especially, the adoption rate in the two-wheelers and three-wheelers is higher in recent days. Total EV sales reached 1.53 million by the end of 2023, up from 1.02 million reported in 2022. Two-wheelers (2W) and three-wheelers (3W) experienced growth of 37 per cent and 66 per cent respectively during last year.

Lohia Auto, which is one of the major players in two-wheeler and three-wheeler EV space, has seen sound growth on the back of such rising adoption. In a conversation with the Bizz Buzz, Ayush Lohia, CEO of Lohia Auto said that the company is well-placed to cash in on the emerging demand in the EV space. With its own state of the art manufacturing facility and sound R&D, the company is witnessing good growth in the three-wheeler segment. Lohia said that the government should spell out a long-term EV policy spanning three-five years, which will help the stakeholders to do investment planning accordingly

How do you view the growth of EV (Electric Vehicle) sector in India in the last five years?

There has been a substantial growth in the EV sector in the last five years. Five years back, there were hardly any numbers. Now, in percentage term, EV two-wheelers constitute around 5 per cent of total market share. Even all the government schemes (in the transportation sector like JNNURM) are getting converted into electric vehicle schemes. In the cars segment also, big players like Tata have substantial share in the EV car segment. Post 2018-2019, when subsidy scheme was announced, there has been a substantial improvement. So, the past has been good but it’s the future, which is the concerning area. Of course, both central and state governments have taken up several initiatives to promote EVs in India. But there is a space for improvement. Because apart from a few States, others have not taken any substantial steps.

Do you think there is enough awareness being created to attract consumers to opt for EVs over gasoline vehicles?

For last six months, if you see, the numbers are almost stagnant. Numbers have not shown any drastic step forward. The new subsidies and measures have not given any push to the market. Last month also, major players like Ola, Bajaj, and TVS have reduced their prices. Those benefits to the users have not converted into sales. This is definitely a point of concern, which needs to be evaluated. This has to be done at company level, government level and an individual level. And there have to more creation of awareness among users to shift from ICE vehicles to EVs.

Lohia Auto is one of the major players in the EV space with presence in both two-wheeler and three-wheeler segments. What is your opinion about the adoption level of your products?

Adoption has been better in the three-wheeler segment as compared to two-wheelers. For us also, three-wheeler is better. As far as market penetration is concerned, eastern and northern regions have seen better adoption of three-wheelers under the EV space. In the two-wheeler segment, both north and south regions have balanced presence. Pricing and taste of customers are the other factors that drive the adoption in different regions.

Though creation of a distribution network for EVs is a challenge given the dominance of ICE vehicles, stakeholders realise that EV is the future and that is the reason that many dealers seek to have a stake in this space. We have more than 100 dealers with a presence in more than 40 cities.

How has been growth of the company in recent years? Can you throw some light on this aspect?

As far as growth is concerned, it has come to pre-pandemic levels and we expect it to continue in the future. We have seen better growth in the three-wheeler segment as compared to two-wheelers. That is purely because we have shied away from the subsidy part in the two-wheeler segment. Without subsidy, three-wheelers have a better prospect than two-wheelers. We have also focused on low-speed vehicles in two-wheelers than high-speed ones.

Lohia Auto has its own manufacturing facility. How much of manufacturing is done in your own manufacturing capacity? What kind of dependence do you have on ancillaries?

Big portion of value addition is done inhouse by us. We have weld shop, paint shop, assembly lines, backward-integrated manufacturing capacity. So, we have a very high level of vertical integration. Our manufacturing capacity at Kashipur, Uttarakhand can manufacture around 100,000 units per annum. So, it’s of big size and the facility is there with us from the early days. We are equipped enough to manufacture large number of vehicles on our own and have the financial power to do it. That is the reason we have not applied for any PLI (production-linked scheme). Right now, we don’t have any capital expenditure plan for the manufacturing facility. We will definitely evolve and come up with new products. We will do the investment in the R&D and related areas.

What is the team size of Lohia Auto now? Do you plan to add staffers in the coming quarters?

We have around 400 people in our system. This includes the people in the manufacturing facility. As far as research is concerned, we do research on the product development side. Adoption of new technology is another focus area. We do most of the R&D inhouse and don’t depend much on outside parties. A lot of localisation has been done to manufacture our product and import only some critical elements.

How do you fund your investments as this is a capital-heavy business? Have you raised capital from external sources?

We have not raised capital from outside. Our internal group companies have supported us. We also make sure that we don’t turn to debt very frequently. Our approach is very demand-based. That’s the reason that we don’t have any challenge.

Are you operationally profitable now? Can you throw some light into this aspect?

We can say that we are profitable at multiple levels. At some levels, we are yet to achieve profitability. As far as entity level profitability is concerned, we are expecting to be profitable in the next one year or so.

Where do you view the company’s growth in the next three to five years?

There are multiple things how the future is going to be. Electric vehicle adoption will definitely accelerate a lot by 2028-30. Two major actions that will accelerate this trend are- firstly the cost of battery is likely to go down. We have seen many facilities coming up in this space. As battery is 40-50 per cent of the total cost, cost reduction will definitely drive adoption. Secondly, if the government provides a roadmap for three to five years, then it will accelerate adoption of EVs. I will urge the government that a clear roadmap with defined policies for next 3-5 years should be pronounced. That can help the ecosystem a lot.