Traffic moves along a highway during evening rush hour in Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Maruti Suzuki Says Investments Into Fossil-Fuel Engines To Continue For A Decade

Maruti Suzuki India Ltd., India’s largest carmaker, doesn’t see the government’s electric vehicle push slowing down investments into fossil-fuel powered engines for at least a decade.

The nation’s aim to turn all cars electric by 2030 is unlikely and automakers, including Maruti Suzuki, are looking to get to a point where four out of every 10 vehicles they sell would be battery-powered by then, Chairman RC Bhargava said at a media interaction in New Delhi. The single-largest challenge for the company would be to electrify small cars and price them comparably to their conventional ones, he said.

Electric vehicles today cost twice as much as fossil-fuel variants. The government has lowered the Goods and Services Tax on such cars to 12 percent compared to the minimum 43 percent levy on other passenger vehicles.

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Investments to develop internal-combustion engines will continue to make them cleaner, said Bhargava. The company will also look at launching more hybrids, he said.

While Maruti Suzuki's parent, Suzuki Motor Corp., has tied up with Toyota Motor Corp. to jointly develop electric vehicles, the Indian arm does not plan to invest any resources into research and development of the technology, citing duplication. Bhargava said the company has “no expertise” in electric vehicle technology and would rely on the two Japanese auto majors for them.

Maruti Suzuki has a mild hybrid motor in its 1.3-litre diesel engine that powers the Ciaz sedan, Ertiga compact utility vehicle, and S-Cross crossover compact SUV. The company’s petrol engines would receive hybrid fitments in the future, the research for which would also be carried out by its Japanese parent, Bhargava said.

Capacity constraints would continue being a sticky point for the automaker in 2018 with waiting periods not expected to come down, he said. Maruti Suzuki is commissioning its first assembly line at its new Gujarat unit, with the second plant expected to start production only in early 2019. The plan is to end 2018-19 with an annual production capacity of 2,50,000 units from its Gujarat unit.

The automaker also plans to increase output at its manufacturing unit in Manesar, Haryana, but won’t add a new assembly line there, Bhargava said.