Dana India To Expand Capacity At Pune Plant, Country Head Says
Dana Inc, a US-based auto-components maker, plans to make more EV parts in India, for the world, country head Gajanan Gandhe says.
The Indian arm of Dana Inc., a US-based auto-component maker, will manufacture more parts in India for the global electric-vehicle market.
With the expansion, the existing plant in Pune making EV drivetrains will see a significant increase in capacity. The company has 18 facilities in India, including joint ventures.
Dana India, the maker of axles, drive shafts, motors, and inverters, has been shortlisted for incentives under the government's production-linked incentive scheme for auto parts. The company's country head, Gajanan Gandhe, spoke to BQ Prime about investment in India, expectations from the Indian EV market, localisation of parts and government tenders on the sidelines of the E-mobility India Forum held last month in New Delhi.
Dana India Country Head Gajanan Gandhe.
You said the company's plant in Pune is running at a very high capacity right now and you might be looking to expand soon. Are you looking for any new locations for the new plant?
Probably not, because we would probably expand in the same region of Pune. The capacity will be increased significantly in tandem with the rising demand for electric drivetrain components.
How are you looking at the entire market right now? It’s a nascent industry, and a lot of OEMs are now showing interest. What might be the size of the industry in five years?
Honestly, the problem most component makers are facing is that nobody is able to guarantee any volumes. So everybody talks about high volumes, but we know that at the end of the day, all of that is not going to happen.
We have to be very careful in selecting our customers and understand the projections that they're giving us. We try and figure out if they are realistic or not. A lot of companies that want to invest in India are hesitant because they do not find that scale at this point.
We have gone ahead and invested because of our export requirements. That gives us the scale, so we don't necessarily feel that we are driven by the domestic market . Those looking to enter India will look at the domestic market, which is non-existent except for two- and three-wheelers and possibly SCVs and LCVs.
So, we made strategic investments in companies like Switch Mobility Pvt. Ltd., which we know are already in business and are connected to Ashok Leyland Ltd., so we can learn from their experience. They will allow us to have some level of operational predictability. We have gone ahead and taken this step and invested. So, as a result, we have been able to generate a lot of market share in the bus segment. Almost 80–90% of the bus segment has our product.
And that's only because we took that first step of making in India. Today, we are more than 65-70% localized in that particular segment. For the two- and three-wheeler and the low-voltage segments, too, we have manufacturing and product capability. You could bring it to India very quickly, and that allowed us to penetrate the Indian market while at the same time supporting our global market.
For predictability and visibility of orders, the government is coming up with tenders for electric buses.
Yes, but look at the performance. They say 10,000 and do 3,000. Now, they're talking about 50,000 buses. Currently, there are only three to four thousand buses on the road. So, when is that 50,000 bus going to happen? Is it five years? Is it 10 years? Accordingly, our investment would be
A tender is just a promise to do something. What actually happens is more important. The bottom line is that it has to be a good proposition for both the manufacturer of the EV and the suppliers of components.
How do you tackle this challenge of visibility of orders?
We do a lot of assessment of the risk involved. For example, in (the above said) government orders, there are considerations related to policy. There are a lot of steps and interactions between different participants, whether it's finance or the industry. We try and understand whether those are happening on time. If EESL decides to do something but finance does not support it, then that may not happen.
So we have to track all that and understand whether the future projections that have been given are realistic. We first spend time on that before we invest. And that's what everybody is doing. Everybody talks about it, but only a few people are on the ground, which includes some local players and us.
A lot of two-and three-wheeler companies are cropping up in India. Any new companies that have shown interest in your products?
Yes, quite a few of them. We are supporting a few two-and three-wheelers. There are already some vehicles on the road from companies like Piaggio, which use our products. Most of the golf carts or the airport carts that are electric are powered by our products.
Last year, you said you were looking to enter the passenger vehicle business. Any updates there?
No, we do not see sufficient scale there at this point of time. We just don't think that the amount of electrification that will happen in passenger vehicles will justify manufacturing for that segment immediately in the near future. Maybe that will change. So clearly, there is not much of an opportunity for third parties, but as that grows and we see that changing, we will definitely consider it.
At this point, I don't see it happening in the next three to four years.
Is it just the problem of financing or are there other problems preventing large-scale adoption of electric buses at the current juncture?
There are multiple problems. One is the charging infrastructure, where people have to invest a lot, like the bus STUs have to invest in their own charging infrastructure. Second, the subsidy part, which they have to collect from the government, whether it comes on time or not. Third is the rate at which they sell, the operating costs, which are becoming more and more competitive. It is coming down, like in solar modules, and it's having a lot of impact on the ability to supply at a profit.