JSW Energy will invest up to Rs4000 crore to produce electric vehicles (EV), the company’s joint managing director and chief executive officer (CEO) Prashant Jain said on Friday. He also said that the company is in talks with several state governments for setting up its plants and is also holding discussions with several technology providers.
The first electric vehicles from the group will hit the roads by 2020, Jain added.
Billionaire Sajjan Jindal had earlier said that the group will set up the EV business on its own and initially buy batteries from suppliers in a January interview with BloombergQuint at the World Economic Forum (WEF) in Davos.
“We expect a significant surge in car demand in the country, which will increasingly navigate towards EVs,” said Jain. “We are a growth-oriented company, but currently there’s very little scope for growth in the power sector. EVs are in the adjacent space.”
On Friday, the company reported a 40% decline in consolidated net profit to Rs217 crore for the quarter ended June 2017, largely due to a 8.9% drop in revenue and a jump in fuel costs.
India’s electric mobility mission envisages to put 6 million electric vehicles on roads by 2020 and aims to make the country an all-electric vehicle market by 2030. So far, electric vehicle sales haven’t found many takers in the absence of incentives, infrastructure and (till now) a policy framework.
Jain highlighted several incentives the government is currently providing to EVs—from almost a 30 percentage point lower goods and services tax (GST) to a Rs1.37 lakh subsidy to their owners.
Currently, Mahindra & Mahindra Ltd is the only automaker that sells a fully electric car, while companies including Maruti Suzuki India Ltd and Toyota Motor Corp. offer hybrid versions.
However, ever since the Narendra Modi-led government expressed its intent for a mass-scale shift to electric vehicles by 2030 so that every vehicle—both personal and commercial—on Indian roads by then are those that are powered by electricity, a lot of non-automobile companies such as NTPC Ltd and Bharat Heavy Electricals Ltd (BHEL) have come forward with their plans in the space.
India’s current installed capacity of 314,642 MW and projects under construction are expected to meet the country’s electricity demand till 2026. This could be the trigger for JSW to scout for new growth areas.
Analysts say JSW investors might not appreciate its entry into the electric vehicles segment.
“Investors are likely to approach the stock very cautiously, particularly given the environment for electric vehicles in India. One needs to ascertain how successful the management can be in a completely new business and also the kind of incentives, if any, the company is likely to get from the government,” said Gaurang Shah, vice-president at Geojit BNP Paribas.
Amrit Raj contributed to this story.