Maruti Suzuki to generate 15-20% of sales from EVs in seven years

India’s largest car manufacturer, Maruti Suzuki, has laid out ambitious plans for the future, encompassing both electric vehicles (EVs) and internal combustion engine (ICE) vehicles. The company aims to maintain leadership in the Indian market, while also expanding exports significantly.

It will also continue to push its advantage in the SUV segment, going by the company’s annual report.

Maruti’s Electric Vehicle Foray

As the Indian automotive market begins its pivot towards EVs, Maruti is gearing up to enter the space in 2025. The company is developing its first EV model at its Gujarat plant, with plans to launch six EV models by 2031 that would comprise 15-20% of total sales.

Maruti has been the slowest to take to the EV bandwagon, and critics have accused it of being complacent in its overwhelming market share in the traditional business.

While others — such as Tata Motors and MG — already have multiple EV models in the market, Maruti’s first model is still at least two years away.

Going by the company’s annual report, the initial model planned for 2025 will allow the company to test the waters as customer interest and charging infrastructure develops.

While Maruti has been conducting EV trials and testing for some years, its serious thrust began in 2019 when parent company Suzuki Motor Corporation (SMC) announced a Rs 10,440 crore investment in a new facility in Gujarat specifically for EVs and batteries. The first phase of the project is expected to be commissioned by 2025.

SMC is providing the EV technology and components to Maruti through its partnership with Toyota. Maruti will develop the upper vehicle body and assemble the EVs in India. Localisation of battery packs and motors will happen gradually.

Affordable Models

On the positive side, Maruti’s models will target the affordable segment given Maruti’s focus on high volume mass market models. Industry experts believe it will be priced around Rs 10-15 lakh, comparable to its smaller ICE models like the Swift or Baleno. This would make it among the most affordable EVs in the market.

Maruti will initially target the personal mobility segment before considering fleet customers. It remains cautious about the total cost of ownership of EVs for private buyers. The company may consider innovative business models like battery leasing to improve affordability.

Maruti aims to keep prices low by localizing a large portion of EV components. However, the battery cells and semiconductor chips will continue to be imported though.

The company is also investing in charging infrastructure, working with national and state governments to establish networks across India.

While Maruti enters the EV space, it expects the transition from ICE vehicles to be gradual, with EVs contributing just 5% of private car sales by 2030. Therefore, its core focus remains on improving and expanding its traditional ICE vehicle models.

Scaling Up Capacity for ICE Vehicles

Even as the company is drawing up its EV plans, it is yet to give up on the traditional internal combustion engine or ICE models.

It has set itself a target of selling over 2 million cars per year in India by around 2028-31. This will involve significantly increasing manufacturing capacity. At present, it is selling around 1.7 lakh (170,000) vehicles per month.

The company currently has an installed production capacity of around 2.25 million units across its Manesar and Gurgaon plants in Haryana. The first step in its expansion plans is a new facility being set up in Kharkhoda, also in Haryana.

The first phase of the Kharkhoda plant will have a capacity of 250,000 units. Construction work has commenced, with production expected to begin in 2025. The investment for this phase is pegged at Rs 11,000 crore.

Maruti plans to replicate this sized plant every year, adding around 250,000 units of capacity annually. The intent is to have 1 million units capacity operational at Kharkhoda by 2031.

Additionally, the company is searching for a second site to set up another manufacturing base over the next 8-10 years. This is expected to be a 1 million unit facility that will take total annual production capacity to over 2 million units. The location has not been finalised yet.

The expansion is needed as Maruti forecasts domestic passenger vehicle demand to grow at a CAGR of around 6% until 2031, reaching 5-6 million units. With its existing market share of 43%, annual sales of 2 million units would help maintain leadership position.

Maruti also expects a strong uptick in exports, targeting shipments of 750,000-800,000 units by 2031 compared to around 250,000 units in 2022-23. This will further raise overall volumes beyond 2 million units.

The company is expanding production capacity in line with its principle of maintaining excess capacity of at least 1 year’s demand at any given time. This helps it respond faster to unexpected spikes in market requirements.

Product Enhancements

Alongside boosting production capacity, Maruti is focused on strengthening and broadening its product portfolio.

In the small car segment which has traditionally driven Maruti’s volumes, growth is expected to slow to under 2% CAGR over the next decade. The company plans to continue updating its popular models like the Alto, WagonR, Swift and Baleno.

A key focus area is increasing the share of SUVs, where Maruti has lagged behind competitors like Hyundai and Tata Motors. The company aims to become the leader in the SUV segment by 2024.

The launch of feature-rich models like the Brezza, Grand Vitara in 2022 and Jimny in 2023 has given a strong boost to the company’s SUV portfolio, making it India’s No.1 seller of such vehicles. It is expected to launch one more offering, Fronx, in this category this year.

Another target segment is premium vehicles, where the company has had limited presence. The newly launched Grand Vitara and XL6 are resulting in increasing customer traction in premium segments. Maruti aims to build on this positioning with more launches over the next 3-5 years.

Commercial vehicles are another new area Maruti is evaluating. A small commercial vehicle on the Vitara Brezza platform may be launched in the next few years to target food delivery, e-commerce logistics and similar services.

Maruti is also extending its successful CNG technology to more models, with 14 of its 16 offerings now available with factory-fitted CNG. It aims to maintain leadership in the CNG segment, which it believes will continue to gain share over the next decade.