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Bajaj Auto seeks to slow down its plans on vehicle electrification

Bajaj Auto attempted to switch from its initial plans to produce electrified two-wheelers due to the increased cost of batteries. The batteries are usually imported from China, although the coronavirus pandemic has limited sufficient shipping of the commodity. The company became India’s first auto manufacturer to launch an electrically powered two-wheeler, Chetak, in 2020’s financial year.  

However, the launch was initiated in two cities, only with deliveries conducted to clients who made preliminary bookings several months ago. Rakesh Sharma, the company’s executive director, in a statement, mentioned the convenience of electric vehicles to the masses and the ecosystem as well. Conversely, the commercial viability for the product is precarious due to the costly batteries which limit mass production. The planned program that had been earlier commissioned by Bajaj Auto will become halted for a certain period before a subsequent implementation.

The company, which dominates in the production of three-wheelers, anticipated the introduction of the locomotives by 2017 but later canceled the plans. The reason for the decision was the high cost of vehicle batteries.

Despite a decrease in battery price according to a report by Avendus Capital, the batteries are still costly for the majority of people in India to manage. However, technological advancements are aimed at slicing the costs of the batteries by a significant amount. The battery will thus become prevalent in almost all regions of the country. The prevailing uncertainties and economic instabilities are the cause of a stagnated advancement with the initial electrification scheme.  

The battery prices are projected to drop remarkably by 2025, according to the Avendus Capital report, despite China’s monopoly in lithium cell production. Further, India and China’s geopolitical variation has caused a massive interruption in the supply of the product. Several dominant companies have thus integrated their battery-manufacture operations in the country to stimulate battery production. India has heightened its investigation on cargos at the ports, which has delayed the inflow of goods. The enhanced scrutiny has affected the company since the batteries get delayed before approval by the authority. 

In conclusion, despite its dominance in the automobile industry, Bajaj Auto experiences disfavoured economies of scale. The company thus is restricted from mass production of electrified two-wheelers due to the costly batteries. The coronavirus pandemic has also stimulated the slowed initiation of the plan due to the closure of borders. The firm will hence need to establish a subsequent period for the commencement of the program.