MD of Tube Investments of India (TII) has said that the Company will be soon launching electric tractors and three wheelers.
Key points to note –
- Initially a low HP electric tractor will be launched, maximum by July 2022.
- Electric three wheeler will be launched by August 2022.
- Both these segments are selected as the company expects adoption to be much faster in these, given their commercial application and hence savings on the running costs, compared with passenger vehicles (cars, scooters, bikes).
- TII has currently decided to stay away from electric 2-wheelers and 4-wheelers due to the above reason and also intense competition.
My take –
- Segments selected and the reasoning makes sense.
- In tractors they are targeting low HP and logically so, given the lower capacity battery requirements and hence the reduced costs. However –
- Low HP tractor market in India is small. Besides, there is an increasing shift towards higher HP variants due to their better efficiencies. Market sizes –
- Upto 20 HP: 3-3.5%
- 21-30 HP: 6-7%
- 31-40 HP: 25-30%
- 41-50 HP: 50%
- 51 HP+: 12-13%
- TII would be mostly targeting the upto 20 HP segment initially.
- It would be imprudent to assume that tractor companies like Mahindra and Escorts would be twiddling their thumbs and would not participate if there is a potential. Only difference – they may not be as vocal.
- Low HP tractor market in India is small. Besides, there is an increasing shift towards higher HP variants due to their better efficiencies. Market sizes –
- In three wheelers too, there is established competition including Bajaj, Mahindra, Piaggio and Atul with electric variants already in the market.
- For TII, both would mean new businesses with associated execution challenges.
Given the underlying dynamics, I am not excited with the proposed launches in the near term and would rather watch how the situation unfolds.
Till then, I am happy burning fuel !