Although electric vehicles (EVs) are the future of transportation, automobile makers in India are stuck in the past. Despite government encouragement to enhance EV adoption, carmakers like Maruti Suzuki, Tata Motors, and Mahindra and Mahindra (M&M) are not shy about expanding capacity for internal combustion engine vehicles (ICEV) to satisfy unmet demand.
According to the advice provided by the chief financial officers (CFOs) of all of the enterprises named above, a total of Rs 20,000 crore will be invested over the next few fiscal years to ramp up the manufacture of waitlisted models.
Mahindra & Mahindra (M&M), which is still bullish on its diesel powertrains, has announced plans to increase overall SUV capacity to around 6 lakh units per year over the next 12-15 months. The country’s top SUV manufacturer, which had a monthly output of 29,000 units per month until the past fiscal year, is currently seeing waiting periods of up to 22 months for its bestselling models such as the XUV700. M&M had announced a Rs 7,900 crore investment over three years, concluding in FY24, to ramp up manufacturing.
Tata Motors has announced a Rs 6,000 crore investment in its standalone business, which covers both passenger and commercial vehicles. Pathamadai Balachandran Balaji, Group CFO, stated that the company, which presently produces 50,000 units per month, will be able to debottleneck its existing auto factory capacities to generate around 55,000 units per month, or 6.5 lakh units per year.
More on Plans
Once its Sanand facility (bought from Ford) is operational, the Mumbai-based automaker would have an extra 25,000-30,000 units of capacity per month, bringing its total manufacturing capacity to more than 9 lakh vehicles per year. Tata Motors also plans to invest 2.5 billion pounds in its British affiliate Jaguar Land Rover during current fiscal year. It will help to meet increased demand for Range Rover Sport and Defender SUVs.
Maruti Suzuki India has also stated that it aims to invest over Rs 7,000 crore this year in different initiatives. It includes the development of a new plant in Haryana and the launch of new models. This is 40% more than was originally budgeted for this fiscal year. The company has already begun construction on the new site in the Sonipat district.
Ajay Seth, CFO of Maruti Suzuki, stated that the funds set aside will cover a variety of activities. So that will be a significant amount of capex. Aside from that, all of the new models launch that we are making require an investment in tooling, etc.
That will most likely be another major piece of capex. These are the two regions where the capex will be the highest. Then there’s the usual capital expenditure on other elements of the firm, such as R&D and maintenance capex. So these are the primary areas in which we will invest.”
Carmakers’ plans to increase ICEV production coincides with the government’s push for EVs, with a goal of reaching 30 percent EV sales penetration for private cars (down from 100 percent previously), 70 percent for commercial vehicles, 40 percent for buses, and 80 percent for two- and three-wheelers by 2030.
According to auto analysts, EV adoption would be slow due to a lack of suitable supporting infrastructure. It includes charging stations along highways.
What is ICE?
An internal combustion engine (ICE or IC engine) is a type of heat engine. In this fuel is burned with an oxidizer (typically air) in a combustion chamber. It is part of the working fluid flow circuit. The expansion of the high-temperature and high-pressure combustion gases applies direct force to some components of an internal combustion engine (ICE).
The force is often applied to pistons in a piston engine, turbine blades in a gas turbine, a rotor in a Wankel engine, or a nozzle in a nozzle engine (jet engine). This force moves the component, converting chemical energy into kinetic energy. It is then utilized to push, move, or power whatever the engine is coupled to. For applications where engine weight or size was more critical, this substituted the external combustion engine.
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