A year after it went on sale, the e-Chetak has managed to do a Tesla in the electric (e)-two wheeler space, says Rajiv Bajaj, managing director at Bajaj Auto, pointing out that the model has been accepted really well. “We have got all kinds of buyers, including very affluent ones, who have never owned a two-wheeler waiting to buy the model,†says Bajaj adding that besides other things including the performance, the classic styling and features, the branding strategy has worked really well.
The differentiated branding and an absence of an explicit association with brand Bajaj at all possible points — product, communication and retail, have really helped. “We wanted Chetak to be identified with electric,†he says. Encouraged by the acceptance, the company plans to increase the ex-showroom price of the model to Rs 150,000, which is Rs 25,000 higher than the current price when the bookings re-open in a few months.
Bajaj concedes there is long way to go. And for a reason: Bajaj has yet to capitalise on the euphoria the brand has generated. It has managed to sell just 1,000 units and has yet to deliver to 1,500 customers who booked the model. The vehicle went on sale in January 2020. Barely a month after the launch, the outbreak of Covid-19 threw a spanner in the works, throttling the supply of key aggregates.
As a result, the company’s plans of a pan-India roll-out went astray and even after 12 months, it only sells in Pune and Bengaluru. Due to the shortage of semi conductors, December 2020 turned out to be a zero-production month for Chetak, forcing the company to put off ramp-up plans by six months. It plans to re-open bookings in FY22 and roll out the scooter in 23 cities in the September quarter. After a year. Bajaj plans to export. There is lot of interest for the model in several markets but it can’t do it unless it has the “rhythm going in domestic market,†says Bajaj.
To be sure, the company also cannot afford to lose sight of the growing competition from Ather that has been upping the ante with its reach. Earlier this month, it entered Mumbai—closer to Bajaj’s home turf, with an experience centre. It also launched the special edition of its flagship 450X.
“They (Bajaj) could be late to the party, if they don’t act fast,†said an analyst adding that Ather’s popularity too has been growing leaps and bounce. It has expanded its presence from an initial 9 cities in 2020 to 24 at present.
If all goes well on the supply front, Bajaj plans to reach 500 units a month and then double it to 1000 units. But even when the volumes reach 2000 units per month, the company will still lose money on each unit it sells. But Bajaj has no qualms and says the company has a very clear, well defined roadmap to profitability for the Chetak.
“Whether its new product or market, it takes time,†says Bajaj citing an instance of its flagship Pulsar which wasn’t profitable initially but it is now the pillar of profitability. Similarly, when Bajaj started exports to Nigeria in 2003, it was losing $150 per motorcycle. In fact, exports to Africa as a whole were a loss but now a margin driver. “Hitting an Ebitda (earnings before interests, tax, depreciation and ammortization) of 20 per cent wouldn’t have been possible without that,†he says.
India sold a total of 156,000 electric vehicles in 2020, 20 per cent higher than what it sold a year ago. Of this close to 78 per cent of them were e-two wheelers. The higher amenability for electrification coupled with the demand incentives offered by the government, has made the segment attractive for the manufacturers. Consulting KPMG expects e-two wheelers to account for 25-30 percent of the total two wheeler sales by 2030.
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