Time for India to Set up Manufacturing Facilities including EVs: Maxson Lewis

These days, the entire world is looking for an option to China. Today, there is a mindset that if someone were to say I am getting the same product from China against from somewhere else, I will go for somewhere else. It is the most fantastic time for India to set up manufacturing facilities in India, especially around EV. This is an opportunity which comes to us, it’s a matter of how we react to it and take it from there, believes Maxson Lewis, Managing Director, Magenta Power, a pioneer in the electric vehicle (EV) charging infrastructure space in India. In a candid chat with Manu Tayal, Associate Editor, Saur Energy International, Lewis shared his views on various topics including how his company handle Covid-19 situation, possible ways to remain positive in such situations, the scope for EV and energy storage in India, expectations from the government, new orders, future strategy etc. Here’re the excerpts from that exclusive interview published in the Saur Energy International Magazine’s April 2020 edition:

Q. For Magenta Power, how are the things going on amid Covid-19 crisis? How do you prepare yourself?

Actually, we planned for this quite in advance. In February itself we were prepared for a lockdown after analyzing the situation globally. In fact, we had started something called as a Covid-19 preparedness program and by mid February, we had mandated all our team members, to carry all the laptops and other work elements back home irrespective of whether we are going to work from home or not. So that preparedness, be it in the people’s working system, be it the technology to make that possible. So, when the government announced lockdown, it did not come as a surprise for us. I will be lying if I say no impact, there has been an impact. Right now 70 percent of the operations continued, however, 30 percent which is the onsite work is totally shut down. So yes we have an impact, but at the same time we have good news as well, that we have recently signed our business’ biggest contract.

Q. Suggest some measures, how this shut down period can be utilized in a positive way?

No doubt! There is a global negativity in the market. We all know that we have to pay some cost due to this pandemic for example – people have lost money, manufacturing stopped etc. But this is the time to think what next positively. And this is where comes my pitch for the same traditional automobile industry, let’s say the pandemic hasn’t happened. It would continue and focus only on petrol, diesel engines, and try to come out with just better parts in the segment and gone ahead, despite the downfall, etc.

Now in this scenario, the entire system has crashed. So the same auto industry, which never thought about electric vehicles (EVs) can today think that whether I can choose to go back to the same petrol and diesel vehicles, or I can transition to a newer technology, because anyway my money is lost. So, I have to start afresh. Now, this is a call that all of the auto industries will have to take. Today is a great time to rebuild the entire supply chain, add more petrol and diesel vehicles, is lot more difficult because there are 20,000 parts. But in EVs there are 2,000 parts. So, the supply chain impact is a lot lesser in EV if I want to restart the business all over as compared to the traditional auto business. So, I call it a point of reflection today, for the entire auto industry. Also, there should be a clarion call from the automotive giants towards it, and everyone will follow that like Tata already did.

Q. India’s renewable energy, as well as EV market, is quiet import dependent from countries like China. Is localisation the need of the hour? How much time it will take?

These days, the entire world is looking for an option to China. Today, there is a mindset that if someone were to say I am getting a same product from China against from somewhere else, I will go for somewhere else. It is the most fantastic time for India to set up manufacturing facilities in India, especially around EV. This is an opportunity which comes to us, it’s a matter of how we react to it and take it from there. We can continue to be seen crying about the past and about the money which has been collapsed, or we can be seen as seeing this as an opportunity for a technology transition from ICE to EVs and a functional transition is going from a consumer base to a manufacturing hub. I won’t say it’s the need of the hour, I’d say it’s a choice that we have; we can decide to make positive output from it.

Q. How much time will it take to think about localisation?

Coming up with an EV is much faster as compared to a normal ICE engine. There’s an example of start-ups with very limited measures, they are able to build an entire EV. So it will be easier for the automotive giants also to do it. Today, if we use out this call and if everyone starts to work towards it, so within 6 months or lesser, we can actually position ourselves very strongly in this. And this is a position we should not lose.

Q. Will there be a need for some capital infusion also to make this change happen?

Yes it will, but the same capital infusion will also be required to be restarting the supply chain on petrol and diesel as well. I can’t say that from tomorrow onwards to start manufacturing because the entire production line has shut down, the ports are closed, whatever components had to come they have shut down, so even from a shutdown to restart there is a need of capital infusion. So to infuse that capital in a different position, that’s all the feeling that I have. And that’s an opportunity. If the automotive large giants, like Tata has already done, don’t do it today, the same thing will happen what’s happened in China, you will have a lot of new companies who will come and do it.

Q. As government is already promoting to make India as global energy storage hub, despite missed the bus for solar. How is the road ahead?

Earlier the government’s focus was on the Energy Storage based Systems (ESS) for solar or even for any normal power generation. But if we talk about EVs there’s lot of opportunity for ESS, as in EVs, 50 percent of it is battery. More focus on EVs, will solve another big problem of battery storage for power. This is where we need a consolidated view, and a focus towards EVs allows us to also move the same batteries to ESS which is storage systems for power. The only difficulty is that we are dependent on China for our batteries or for our cells. If we can focus on developing an opportunity in the energy storage space, we need not to focus on lithium ion systems only. We have other storage systems as well like other chemical based storage systems, or other potential energy based storage systems etc. There’s a scope for lot of development in that space. One of the challenges i.e. cost of our storages have already started to taper down, so cost parity is coming through. Now it’s more about how we look at it from a technology perspective. The challenge mainly is we have to change our typical conservative approach of – go to China, pick up storage, place it in the ecosystem, and develop a solution around it.

Q. In your view what steps should the government take post lockdown to boost manufacturing?

This is a bigger question. At this time, we are going through something called as supply shock, not a demand shock. Means there will be a demand for everything and as soon as the lockdown is over, people’s consumption will suddenly spike, and then will taper off, come back to normal. But supply won’t be there including manufacturing as part of it. So, at that time government need to infuse capital into the ecosystem; make paperwork simpler; and ease business norms which allow people to take a little bit more risk and help in ‘Ease of doing Business’. Most importantly, various government agencies shouldn’t come and say “You all missed these compliances in April or May” because everyone has missed the compliances for whatever reasons – be it GST compliance, this and that. Though government has announced that there is going to be an offset, but it has to be followed in spirit. Otherwise, the entire industry will have to work backward for the last 2 months and then look forward. Also, at this point in time our focus should be on driving economy ahead. And I totally agree with the government, it has done a fantastic job in putting all the processes, banking and others in operation. Leverage that, so now push people towards moving ahead on picking up new business ideas.

Q. What are your plans to overcome the situation and to bring back the business on track again?

During lockdown, the idea is not to pick up money, rather to pick up business, with no compromise but on the same terms. Currently, we are investing in our processes and training, and increasing team size. Once lockdown is over, we plan to invest in awareness programs for people about investing in EVs not just because of cost but for environmental perspective as well. Right now we are investing in both building capability and capacity. Our priority will be going to execute our process and we don’t want to invest even one minute in defining the process, etc. We want to be out in the market. Secondly, our product development and capacity building is happening right now. We are planning accordingly that if the lockdown is out from the same date, how we can be the most efficient player in the market.

Q. Are there any new orders inline or in hand which are waiting for lockdown over? What is the plan?

Yes, we received recently our business’ biggest contract from Airport Authority of India (AAI) – Mumbai, plus we have a backlog of orders right now which we need to fulfil from an installations services perspective, so we are planning for that. More importantly, our investor discussions have suddenly become a lot more engaging because they also have time right now. So, for future perspective there are 3 things which are focus areas right now i.e. backlog of business, new businesses and investors.

Q. How do you see the market will react after the lockdown ends? How much time the industry will require to recover from it?

It will require minimum 6 months to recover because 100 percent lifting of the lockdown will not happen immediately it will be partial. I believe it will go slowly in phases. So, minimum recovery will take next couple of months from an economic perspective, for it to get down to the normal way of work. It also depends on how the government is reacting or how it will allow private companies to react on it.