State owned Energy Efficiency Services Ltd, which is spearheading the government's electric mobility programme in India, is planning to come up with a fresh tender of 10,000 units by the end of this fiscal year.
EESL, a joint venture of four power PSUs--NTPC, REC, PFC and POWERGRID-- had in the past disrupted the LED bulb industry by floating bulk tenders that lead to a eight-fold decline in price of a 9 watt LED bulb in three years. In the case of electric vehicles, an industry still in its infancy in the country, it is trying a similar trick to provide a springboard for manufacturing of electric cars in the country. In August earlier this year, it came out with its first tender of 10,000 vehicles. The first phase of 500 vehicles is being supplied by the two successful bidders--Tata Motors and Mahindra and Mahindra.
"So far, we have confirmed orders for 2,000 vehicles from various government bodies. We are confident that by June, we would be able to get orders for all the cars that would be procured from the first tender," sais Saurabh Kumar, managing director, EESL. "The first lot of vehicles under phase 1 of 500 units would be given to us by end of this month. We will come out with a fresh tender of probably the same size by March-April 2018."
The first tender had received three bids in total but Japanese automaker Nissan's global best-seller Leaf was disqualified on technical grounds. The lowest bidder was Tata Motors for its electric version of compact sedan Tigor followed by Mahindra and Mahindra for its e-Verito. Mahindra's bid was, however, much higher than Tata's but the company has offered to match Tata's price for its share--150 cars-- of the first phase.
"For the second phase, we will again offer 30 per cent of the order to Mahindra if they are ready to match the lowest bidder," Kumar added.
The clamor for electrification of vehicles has intensified in India and elsewhere over the last 12 months. Various ministers in the government have already expressed their intention to completely electrify the passenger vehicle industry by 2030. Unlike the LED bulbs where EESL directly sells the bulbs to consumers, it has no intention of doing the same for electric cars and will stay focussed only on the fleet used directly by the government.
"Right now, the government uses around 500,000 cars. Around 80 per cent of them are used for inter-city use, which makes it practical for them to be replaced by electric cars, which have a relatively limited range," Kumar said. "So we are potentially, looking at a large market over the next 5 years."
Thanks to these cars, the company has increased its investment outlook for future to Rs 10,000 crore over the next two years. This is a significant jump from the cumulative investment of Rs 3,000 crore over the last 7 years that it has made so far,
"The company is also growing in size and so is our scope of operations. We should close this year with a turnover of Rs 3,500 crore against Rs 1,200 crore last year. Our profits have also grown simultaneously. In FY 18, we should have a profit of around Rs 80 crore," he said.