TII gears up for EV re-entry; to focus on e-tractors, 3-wheelers, heavy CVs

The group is learning from an unsuccessful foray into e-scooters by focusing on electric tractors, three-wheelers and heavy commercial vehicles

Almost seven years before the release of Baahubali: The Beginning, actor Tamannaah became one of the country’s first brand ambassadors of an electric scooter in November 2008. It was her emerging popularity in the Telugu and Tamil movie industries that prompted BSA Motors (a unit of Tube Investments of India, TII, from the Murugappa Group) to rope in Tamannaah for its foray into electric vehicles or EVs.
 
Being the makers of iconic bicycle brands such as BSA and Hercules, EVs were a new terrain for TII. At that time, the company had launched five models of e-scooters — Smile, Diva, Street Rider, Roamer and Roamer Plus — within a price range of Rs 28,000 to Rs 30,000. For several reasons including low speeds, the lack of long-lasting batteries and lower consumer interest, the company had to exit the market in the first half of the last decade. Sales stood at around 14,000 units in 2009-10 and dipped to 6,000 units in 2011-12.
 
Now, a decade later, TII is getting ready for an EV re-entry through a fully-owned subsidiary, TI Clean Mobility (TCM), created in early 2022, by launching three-wheelers and tractors. “In the 1980s, Murugappa Group had applied for a two-wheeler licence for a moped kind of product. They did not get it then. It has been in the company’s bucket list ever since. That’s why they entered EV scooters in 2000s, I think that was probably wrong timing for the foray and the commitment to make the investment was probably not there because that was immediately after the global financial crisis,” said Ranganathan V, a former E&Y official and an expert in family businesses.
 
Ranganathan added that now the technology for battery and charging is more developed, plus there is a better demand for EVs.
 
This time, the company is better prepared than in 2008, industry experts suggest. More importantly, the company is looking to build synergies within the group with this venture.
 
In what was seen as its initial step towards moving to the EV space, the group company Carborundum Universal Ltd had acquired lithium ion battery technology from the Indian Space Research Organisation a couple of years ago. Though the group is tight-lipped, the move is expected to help TCM ventures in the long run.
 
“There are other synergies as well in the case of tractors. Murugappa Group already has an established agriculture segment and they are very big players in fertilisers and pesticides (through Coromandel Fertilisers). So, tractors come as a natural extension of its farming business,” Ranganathan added.
 
In January 2022, the group acquired Cellestial E-Mobility, a Hyderabad-based start-up that designs and manufactures e-tractors, for Rs 161 crore. Cellestial had unveiled the country’s first prototype of an electric tractor in March 2020, claiming to be having the capability to cover 75 km on a single charge. The advantages that the Cellestial acquisition brings include swappable battery, regenerative brakes, power inversion, charging from residential AC outlet, fast charging and lower total cost of ownership compared to current ICE tractors. Electric tractors will come under the brand Cellestial Egati. The commercial launch of tractors is also expected soon. Two variants of electric tractors are being developed to address different power requirements.
 
Meanwhile, the group is planning a September launch for e-three-wheeler products under the brand Montra Electric. The initial range of three-wheelers is likely to feature three variants in the passenger segment, three variants in cargo and e-rickshaw segments. The name Montra was chosen as the company already has electric bicycles under the same name. The group wants to carry forward this brand name and legacy in the EV space.
 
The first EV facility for three-wheelers has been set up at Ambattur and tractors are initially expected to be manufactured at Bengaluru. The three-wheeler unit will be coming up with an initial capacity of 75,000 units per year. In the three-wheeler segment, the company will be investing around Rs 200 crore. Arun Murugappan, executive chairman of TII, said recently that the electric three-wheeler market will touch $1.7 billion (around $800 million now) by 2025, which is why the company is betting big on the segment.
 
Initially, TCM will have distribution centres at around 40 locations across the country, rising to 100 by the end of this year. Compared to other players, TCM also has an advantage of making use of the group’s established supply chain of 3,500 direct dealer points for bicycles and 190 exclusive retail outlets under the brand “Track & Trail”. TII has a market share of around 25 per cent in India’s bicycle market.
 
Adding to its footprint in the EV segment, TCM in July entered into a definitive agreement with electric heavy commercial vehicle company, IPLTech Electric to acquire a 65 per cent stake in that company for Rs 246 crore. IPLTech is India’s first company to manufacture electric heavy commercial vehicles under the brand-name Rhino 5536. Another important sign of better preparedness this time is that the group has already entered strategic partnerships to source components from domestic players and is in talks for semiconductor supplies.
 
By opting for less crowded segments of the EV market, TII may be betting on a bigger first mover advantage. The question is whether it will be second time lucky.
 

The Business Cycle

• 1949: Murugappa Group founds TI Cycles, with Tube Investments, UK
• 1951: First Hercules rolled out
• 1960: Makes one millionth TI bicycle
• 1980: BSA SLR comes to the market
• 1983: Launches BSA Champ, first kids bike
• 2008: Launches electric scooters
• 2011: Crosses revenue of Rs 1,000 crore and volumes of 4 million for the first time
• 2022: Starts separate subsidiary for EV business. Plans launch of first electric three-wheeler and electric tractors