M&M prefers caution as its mantra while ramping up EV output
HighlightsMahindra is deliberately slowing EV deliveries to ensure quality customer experience amid complex new tech and delivery processes. A strong shift in demand toward higher-range EV variants is prompting M&M to rework its product mix and introduce new 79 kWh options. Despite industry-wide slowdown, M&M expects to outpace market growth driven by new launches, strong EV bookings, and sustained demand for Thar Roxx.
New Delhi:
Mahindra & Mahindra is taking one step at a time when it comes to ramping up electric vehicle numbers, its top management told analysts at a recent Q&A session following the fourth quarter results. The transcript has since been uploaded on the company's website.
'This is a business which we don't want to be rash and ramp up for two reasons. There is a lot of product complexity and we are learning new technologies as we ramp up and so are our suppliers. So, we have to be very cautious in the way we ramp up production,'
Rajesh Jejurikar
, ED and CEO, Auto and Farm Sectors, said.
Over the last 40 days, he continued, the company has also learnt that it need to be as cautious on the delivery process with customers since EVs are 'way, way, way more complex than what we thought or what we are used to in the ICE world'.
It takes at least two hours to execute a delivery to a customer and even that is not enough. There are apps which have to be installed on multiple phones in the family and all of this takes time and resources.
To start growing volumes, we will have to have a reasonable mix in Pack 1 and 2 because otherwise, we will saturate at a price point which will not be able to sustain high volumesRajesh Jejurika
In big dealerships, the delivery momentum is 'way more than what we have the bandwidth' to give a really good experience to the customer. 'So, we have actually decided to slow down the pace of deliveries through April and May to make sure that we are not compromising on customer experience,' said Jejurikar.
Also Read: Mahindra's EV biz turns EBITDA positive; profitability still a long road ahead
New learnings
The M&M team was categorical that it had to carry out a lot of learnings before delivering the first order of vehicles. This meant missing out on customer dates which, in turn, led to them pressurising dealers for quick deliveries of vehicles that were not completely updated.
'We put a stop to that process and started missing dates to customers. There was a lot of learning that we got through that but even as customers are driving vehicles, there are learnings coming on, things that we need to improve and we will keep updating the product,' he elaborated.
Using software updates smartly to enhance customer experience is really 'what we would want to do' on an ongoing basis. For instance, there will be updates on Apple Car play on all vehicles. 'We are continuously working on feedback and will try to keep updating the product, but fundamentally we have a set of very happy customers,' said Jejurikar.
The design story is actually really beginning to play out because the product has an amazing presence and the more vehicles come on the road, the more it is going to create desirability and aspirational valueRajesh Jejurikar
The
BE 6 and XEV 9e
are doing precisely what they were intended to in terms of creating an aspirational value at accessible prices for a segment that was to be driven by design. 'The design story is actually really beginning to play out because the product has an amazing presence and the more vehicles come on the road, the more it is going to create desirability and aspirational value,' he said.
Also Read: Mahindra seeks CCI nod to acquire majority stake in SML Isuzu
Great experience
The confidence in their success also stems from the fact that some of the features installed are 'not even available in top end luxury cars' in terms of the kind of music, auto park assist and so on. And finally, the EV driving experience, the quietness of the vehicle, the refinement, 'all of that makes for a very good experience'.
From M&M's point of view, the other advantage is that it is not setting up a separate factory to do this and is leveraging existing manufacturing assets. This benefit also extends to the dealer network where there is viability by way of additional throughput without disproportionate additional investment.
We have actually decided to slow down the pace of deliveries through April and May to make sure that we are not compromising on customer experienceRajesh Jejurikar
According to Jejurikar, it was not going to be easy for any global player to come and create a network of 300 outlets overnight at the kind of price points that they come in with. 'We are able to reach the smallest towns because we have a well-established dealer network there and get volumes,' he added. However, when it comes to a Tier 2/3 region, 'you can't create at that price point which is going to be viable on an ongoing basis'.
The booking momentum for the two EVs continues to be very steady and strong. The company wanted to wait a little bit longer to see how production ramp up was stabilising and with greater confidence now in daily production rate, will soon be putting out committed delivery dates to customers.
Clarity on waiting time
'There is a little bit of uncertainty amongst people who had booked because we haven't given dates, but the average waiting time is going to be about four months as an average right now,' said Jejurikar. Interestingly, a lion's share of customers buying these EVs are non-Mahindra owners and a 'very different' target group that is coming in.
Booking trends show a huge tilt towards the Pack 3 top end though e the management is confident that the mix will hopefully start changing. While enquiries are 'good' on Pack 1 and Pack 2, they are not getting converted into bookings since people want to see the vehicles first.
For some period of time, a large chunk of the volumes sold will have a mix 'similar to this' through the April-June quarter since only Pack 3 vehicles are being retailed. 'To start growing volumes, we will have to have a reasonable mix in Pack 1 and 2 because otherwise, we will saturate at a price point which will not be able to sustain high volumes,' said Jejurikar.
There is a lot of product complexity and we are learning new technologies as we ramp up and so are our suppliers. So, we have to be very cautious in the way we ramp up productionRajesh Jejurikar
Simply put, this means that M&M we will have to start getting at least 25per cent -30per cent of its volumes from Pack 1 and 2. There is a very large segment of people who want 79 kWh in lower packs which has been 'very different' from M&M's assumption about 79 kWh for the top end while everything else would be 59 kWh.
Also Read: A failed deal plan for the Scorpio, and a failed attempt that helped change M&M fortunes
Range is everything
'There is a segment of people for whom range is really important and they will value this over many of the other features that we are offering. So, we will have to re-variant, and create some new variants which are 79 kWh with lesser other tech so that consumers get the 450 km, 500 km and 500 km plus range which we are promising,' he explained.
Prior to their launch, M&M had skewed capacity 'much more' to BE 6 rather than XEV 9e but the mix now is 60:40 in favour of the latter. The battery pack is identical between the two products and whether 79 kWh or 59 kWh, it is mutually interchangeable. Jejurikar said the company is now following a supply chain process where it has identified what is unique and common between all the packs.
'We are not ordering by variants now but by exclusive parts versus common parts and following a process by which we are building inventory on these exclusive parts,' he added. In the process, there can be variability and these common parts will get consumed irrespective of the pack produced.
Also Read:
M&M to launch new vehicle platform; plans greenfield plant
Outpacing industry growth
While the growth outlook for the automobile industry this year has been forecast at barely 2per cent , M&M believes that it will do a lot better. This optimism is based on the fact that it will have a 12-month for Thar Roxx which was not present for six months of last fiscal.
Likewise, XUV3XO will have a good 12 months too unlike last year. 'When we did not have 3XO, so we did not sell XUV300 in that period of time either because we have phased it out. So, these are two factors when we think about growth,' said Jejurikar. Beyond this, a lot of the EV volume will be 'additional incremental' without cannibalisation.
'We have also seen that our three-door is on a very strong momentum and it has not slowed down with Roxx coming. They are just appealing to two totally different segments. Putting all of this together in our best wisdom, we believe that we will do better than the market,' he signed off.
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