Bosch will invest ₹1,700 crore in the next three years in India as it hedges its opportunities in both electric, diesel vehicles and also transitions into a technology company by focussing on Internet of Things (IoT) and Artificial Intelligence (AI).
The German tech major, which built its empire by selling auto components, is now betting on shifting its focus on technologies like AI and IoT as it sees the consumer shift towards that direction.
“Here in India, the transformation of Bosch into a leading IoT company is especially evident and we have been investing heavily to drive this forward,” said Volkmar Denner, Chairman of the Board of Management, Bosch Group, who is visiting India after four years.
Denner’s message pivoted around the company’s future bets regarding the above mentioned technologies, and at the same time, continuing to have an eye on legacy areas.
“Main growth for the company comes from opportunities in diesel technology, electromobility, connected mobility and the government’s initiatives for connected manufacturing and connected cities,” said Denner.
In line with this change, the Adugodi plant in Bengaluru is being revamped from a manufacturing facility into a technology hub with investments of ₹370 crore in the last three years and more than eight lakh electric vehicles (EVs) on the road worldwide contain Bosch components.
Simultaneously, Bosch set up an AI centre in Bengaluru, and a Connected Mobility Solutions division in India too, with an intent to shape the mobility of the future from a technology and standards perspective.
The German major’s India arm saw its mobility solutions registering a 5.9 per cent growth, domestic business grew 8.6 per cent (higher than industry average of 7 per cent) and business sectors beyond mobility solutions such as security systems, energy and building solutions posted 16.8 per cent growth.
Also, as India plans to implement BS-VI from April 2020, adoption of electromobility solutions is bound to increase, which are tailwinds for companies like Bosch.
“We believe that the Internal Combustion Engine will continue to be the mainstream solution for freight and commercial vehicles and our new solutions will not cause diesel engines to become more expensive,” said Denner, adding that it will co-exist with electric and hybrid technologies.
While the government’s effort to transition only into electric vehicles by 2030, lack of norms for EVs in areas such as performance, safety, charging points, amongst others have put companies such as Tesla to hold back their India plans.
“We believe in the electric future but we need an adequate transfer period timeline. If this shift happens faster, it will be a problem,” said Denner.
Recently, a Brookings India put out a paper pointing out the implications for the electricity grid in case of a large-scale EV transition. While generation capacity at a national level may be present, many bottlenecks will be local, especially at the feeder or distribution transformer level, the paper said.
There are broader ecosystem issues that need further study, including grid-signalling (including time-of-day pricing for electricity), valuing pollution reduction, charging infrastructure and finances.
More than half the retail cost of petrol is taxes, which would need to be covered via other means if we move to EVs. It is unlikely one can (or should) tax electricity at the same rate, it added.
Denner believes that uptake of EV adoption in India will get kick-started by fleet operators.