Why Micromax Making Electric Vehicles Might Not Be a Sound Idea

Micromax plans to enter the Indian electric vehicle segment but analysts aren’t sure if it’ll work.

India-based mobile and consumer electronics brand Micromax has reportedly shown interest in entering the electric vehicle market. No, we’re not kidding. In a recent ET report, one of the company’s executives was quoted saying Micromax is looking into electric vehicles.

While he did admit that it was too early to comment on products and a launch time frame, the company’s interest is primarily centered around two- and three-wheeler electric vehicles. But will a brand like Micromax, which has heavily borne the brunt of an aggressive product push by China-based brands like Xiaomi, Vivo and OnePlus, manage to enter this space?

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We spoke to an industry expert to get his point of view and unsurprisingly, he believes that Micromax might not be making the right choice by entering the electric vehicle (EV) space.

Here is a brand, known for making phones, which has lost its position in the market (not even in the top five now). For it to foray into a space that’s got established auto giants like Hero and Lohia Motors is never going to be easy. And Faisal Kawoosa, Lead Analyst at CMR, who’s following Micromax for many years, concurs.

They are entering into the wrong area. Divesting from core business is right, but switching to EV, where you have to face the auto industry, will be a challenge. How will you compete with brands like Lohia, Hero, who have a better understanding and deeper strength? 

Faisal Kawoosa, Head - New Initiatives, CyberMedia Research

The ET report claims that Micromax has already sent its prototypes to the government for approval, but Faisal and other experts we spoke to aren’t sure if Micromax, as a brand, has the clout to succeed in this domain.

People have their know-how in the segment. Why is someone entering the space without knowing the market. This means some kind of de-focusing from their primary business is likely.

Faisal Kawoosa, Head - New Initiatives, CyberMedia Research

Despite the apprehension, some people believe that Micromax might have been tempted by the relatively unorganised nature of the electric vehicle space.

The Society of Indian Automobile Manufacturers (SIAM) has proposed to put 40 percent electric vehicles on the road by 2030, with a plan to go fully electric by 2047.

A few attendees The Quint spoke to at a recent EV Expo in the country, said that the two-wheelers on display lacked originality, as they all had similar capabilities and low on the design factor. Can we trust a brand like Micromax (mostly importing its devices from China) to find a footing for itself with a quality product?

Indian brands didn’t know technology. They took help from the suppliers, that is from China and sold the products with their sticker. 

Faisal Kawoosa, Head - New Initiatives, CyberMedia Research

According to the last reported industry research quoted by the media, merely 25,000 electric vehicles were sold till 2016. Hard to see that number rising between then and 2018.

Micromax’s focus on two-wheelers and three-wheelers could also have also been prompted after the government suggested tax incentives for those manufacturing electric vehicles with local content.

Less than one percent of India’s total vehicle sales constitutes of electric vehicles. 

Another report claims that over 95 percent of EVs in India are low-speed electric scooters with maximum speeds as high as 25Km/hr.

There’s nothing wrong in Micromax eyeing this space, but what about the 40 million phone users they have on board? Faisal feels that instead of entering a highly specialised sector like EVs, the company could have tried its luck in the smart speaker segment.

Smart speakers is an interesting space to look at. Gaming is also another space that’s not been looked at by Indian brands. Everybody cannot afford consoles like PlayStation and XBox after all.   

Faisal Kawoosa, Head - New Initiatives, CyberMedia Research

He might have a point there, but let’s assume Micromax knows what it’s doing with its electric vehicle plans and gives it a serious push.