“30 per cent of Altroz sales will be from the CNG variant,” says Tata Passenger Vehicles MD Shailesh Chandra

Sirish Chandran (SC): You mentioned that there is a story to the Altroz iCNG, what is that story?

Shailesh Chandra (ShC): It has to start with electric only. So, you are aware of Gen.1, Gen.2, and Gen.3, right? Gen.3 is a pure EV and then Gen.1 is a conversion, then Gen. 2 is basically modifying the ICE architecture to accommodate more batteries. So you have to change the entire floor to bring those orthogonal spaces where you can put the battery packs. So as this discussion was happening, I said why don't we have a holistic approach to this where we consider all powertrains. Because if we are going for such a big change and we are investing in it, then let us see all the powertrains that can be. This is where it came out that theoretically the cylinders can be split into smaller cylinders on the floor and you release the entire boot space, which is a big compromise today. Now that was an idea at that time, and as we were doing the Gen.2 architecture and all the investments that we were making on tools, we thought let’s do it for CNG also. That is where the idea came and instead of multiple cylinders that we had thought, eventually, we settled for two cylinders. That is how it originated.

SC: Is the boot space the biggest barrier for somebody to adopt a CNG car?

ShC: I would say yes, because people would like to do intercity travel as well, but currently you have absolutely nothing left in the boot. And also let's take Altroz as a segment. This is an urban customer who has good taste in terms of refinement levels of a vehicle, the kind of features you get, and what they consume is very different from a normal mass hatchback. So aesthetics are very important. That's why you can't give an Altroz with a cylinder, as, if you open the boot and you are seeing an aesthetically bad-looking cylinder, most of them will never even consider it as an option. So therefore in such segments, it was very important. Otherwise, the only compromise in CNG is you don't get a boot space. For example, today if CNG is selling about 30,000-35,000 vehicles a month, there would be an additional 15,000 to 20,000 customers who might want to buy a CNG but would not have bought it only because of the limited boot space. Because despite having a good range of 200km plus the petrol capacity that you have, you will not be able to use it. And again, you don't want to be seen with a roof carrier.

SC: The other aspect is the lines outside CNG pumps, everybody sees taxis and etc lined up outside. How does the customer deal with that? Is there any thought behind this?

ShC: We have seen that pumps have separated the personal cars and taxi queues, and also we are seeing that every year there are additional CNG stations opening which is bringing down the rush. So two years back you would have said that there are only 1500 to 2000 stations, today they are 5500 stations. Three, four years down the line it will be ten or eleven thousand. And the Government is also pushing this a lot, in terms of pushing eco-friendly vehicles. So I think it should not be a problem anymore.

AM: There is also the question of the cost of CNG and the regulation around it, how petrol is dependent on international markets.

ShC: It is correct, but whenever the CNG prices have gone up, diesel and petrol have also gone up, so people only see the relative benefit. And what we have seen in this whole period of last year is that they are taking a longer-term view as well. The prices increased by Rs 10 or something, but overall the PV industry grew by 25 to 26 per cent whereas the CNG industry went up by 52 per cent. So about the question of price impacting the volumes, sales remain stable at 30,000-35,000 units. So I think customers are taking a more long-term view, as you will still have a benefit after years versus the other alternatives. And these fluctuations are part and parcel, it happens in petrol also. Also, it's not that CNG will go up more than petrol, it will always be the last to go up, and now with the Kirit Parikh report, it came down by Rs 10. So in the long-term, the government is also going to support it as it is also practical.

SC: You are also focusing a lot on making sure that customers get everything on the Altroz iCNG. It's not like customers get a strip-down variant.

ShC: It comes from the segment. Altroz as a segment, is a premium hatch and the customers are very sophisticated. They are buying this car for the aesthetics, styling, and feature set that we are giving. So when you say that you are taking away all the compromises, then it should be like any other powertrain. So features like a sunroof, air purifier, and wireless charging should also be given.

SC: How do you position this vis-a-vis your diesel? Because your diesel also gives great running cost and it also gives more performance.

ShC: There's a different customer for diesel who go for performance. For Altroz iCNG, the preference on the top would be the operating cost. Today diesel buyers are mostly people who buy for the thrill that you get in low-end torque. And also for many people, once they have used diesel, there's a certain inertia in them to move to something else. So Altroz is definitely at the bottom level of say when diesel goes away and CNG will take up because the typical trend we are seeing is that wherever diesel has exited a segment, CNG has gone up.

AM: So do you see this as a transition, like the diesel engine has to be discontinued in the future?

ShC: I trust this is the last emission norm where diesel stays, I think it will not be able to survive. So with every emission norm change, diesel is moving to the next higher segment or is getting cornered if I may use that word. But for high-end SUVs, it is still very relevant. And where is the growth? There. Hatches, let's take for example, the volumes have not dropped actually, it has just remained stable, but SUVs are skyrocketing. So the entire growth is coming from SUVs. So therefore I would say diesel has a life still left. The only thing is that merit-wise diesel should work, but there are many players who would have diesel exited. Generally, you will always try to sell your product and create fear in the mind of the customers saying diesel will be banned and why are you wasting your money on that. But I think some diesel customers who are well-informed don’t become a part of this.

SC: A pointed question, why no automatic with the iCNG?

ShC: It is a good question. It's a matter of time before it comes. It's about prioritisation. There are so many developments that we are doing, it's more about what comes first. But there's no reason why iCNG will not get an automatic.

SC: Talking about the general Altroz line, you showed the Altroz Racer at the Expo, Is that coming? And any timeframe?

ShC: Yes, possibly this financial year. If not, this calendar year.

AM: You mentioned the sales of CNG cars going up from 35,000. What are your forecasts for the Altroz iCNG and the rest of the line? 

ShC: I feel like when we launch the iCNG, people will see this as an additional CNG car which has come into the market. So, there will be a journey of awareness creation that there is a product in the market which has a boot space also. And so the trend will be seeing a growth like in Nexon EV. When we launched the product, we were selling 300 units, then we started selling 2500, 3000. So this (Altroz iCNG) will also have that because this is a unique product in the market. We sell Tiago EV which is like 3500 units right now. This is when there is a charging infrastructure and a mindset issue on electric vehicles. This (CNG) is a ready-made market. There is no issue of range anxiety. There is an infra issue but there is a petrol tank. So as the awareness grows that there is a product of this kind in the market, those people who are not considering buying CNG because of this reason will also start coming. So you will see an evolution. But by default, I think 30 per cent of penetration for the Altroz sales should be CNG.

SC: Is Altroz EV on its way?

ShC: I have already said in my past interviews that Altroz EV will come. I have also said Punch EV is also coming. What I am not saying is when it is going to get launched. But both these products are going to come in their EV form. And because of the discussions that we had about these two products while they were being developed for EV about creating more spaces, it means that they will come with a reasonable range as well.

SC: Your fuel strategy is basically agnostic. You are also pushing diesel, petrol and now CNG.

ShC: We follow the evolution and where we do the hard work is where we see the end state of the industry, which is electrification. But we will continue till there is a demand and there is a customer looking for diesel in the market.

SC: What is your Horizon?

ShC: As I said, in every segment, with every emission norm change, it might become unviable from a customer economics perspective. That is when we will decide to exit. When I know I can’t deliver what a customer is wanting, I will exit. But when I am already invested in it and my value proposition is still strong, why would I exit?

SC: How is the EV business looking for Tata Motors? 

ShC: It is growing strong. Last year we grew by nearly two and a half times. The industry has also grown from 21,000 to 60,000. And in the last two to three months, I am seeing the monthly rate has gone up to about 9000. So you can extrapolate that this industry is now moving closer towards 1.3-1.5 lakh units.

SC: Having more competitors in this EV segment. Is it actually a benefit to Tata Motors?

ShC: So in the last three-four months there were so many products which got launched and before that, we were selling about 3500-4000 units per month. Now, for the last three months, we are selling 6500 plus per month. The answer is there. Because people will eventually go for models which are there on the road, tested and matured.

AM: So what are the near-term challenges for EVs?

ShC: Near-term challenge and what is going to decide in the long-term is the charging infra. I think there are going to be many products. Customer acceptance is also coming very fast, product acceptance and EV technology acceptance have come. The only worry remains for the charging infrastructure. As this keeps evolving, you will see the growth coming alongside.

SC: About the component shortages and semiconductor shortages? Has that all been addressed?

ShC: To a great extent, yes. But this is a segment which is continuing to grow, in multiples not in percentages. So every month, there is a fresh plan for a fresh set of coordination. So it's an upward journey. So in the ICE world, I can clearly say that we don't see a major problem. Maybe it's a continuous rump of things, so you will always be on your toes. But if we are delivering 6500 units per month, it shows that we have worked on the supply side.

SC: So the demand is all there now, it’s all for you to cater to it?

ShC: We did not have those customers who are buying the Tiago EV when we were just selling the Nexon EV. Many people are not comfortable just buying a Nexon EV because they want a bigger car, so Harrier EV will be there. All the Nexon EV buyers would have already done about four years and would be looking for an upgrade. So as we introduce, there will be now upgraders also who will start coming. Tiago EV will itself upgrade. So it will create churn for the Nexon EV itself. So we are creating a portfolio in a manner that as these customers are growing four years old, we are giving them a part to upgrade. That is how the whole sequence has been designed. Every new model will create a new segment and it will allow upgradation.

AM: A few months ago there was this news about finding lithium mines. How does a manufacturer react to something like this?

ShC: First, we are not getting into the cell business because a cell manufacturer has to start thinking of how they are going to source the ROM deals. How much relevant it would be, and what is the quality of the raw material that you are getting. All those things have to be assessed. But very encouraging news, I would say. And another cell company is going to invest in it from Tata group, not Tata Motors.

SC: With the Altroz CNG, will you also be looking at fleet markets?

ShC: We don’t want to be a fleet. We have consciously decided to have one product in the electric vehicle segment. The government wanted to drive up the fleet segment, and we saw it as a responsibility to do that, so we had a version specifically for that. Apart from that we don't have any intention. We are happy with our personal bias. And I have to also ensure that a product, which has been bought by a customer, I am meeting their expectations. They are important.

SC: Are you happy with the way the Altroz has been doing right now in terms of numbers?

ShC: No, it should have been doing much more than this. I think it was missing certain features and I'm sure it's going to get those features. Of course, there will always be times you might be getting into a catch-up situation. But you do that by bringing some exciting intervention along with those features, like the Red Dark. If we bring Altroz Racer, we might address some more features there.