For Anand Mahindra, it was a series of Eureka moments that came as he chatted with his two millennial-era daughters. “They made it clear to me they never intended to learn to drive. They never intended to own a car. And even if they did ever drive, they would rent a car to drive,” he says.
This was clearly not great news for the chairman of the $19-billion tractors-to-automobiles, trucks and two-wheeler group. But it chimed with what he and senior Mahindra Group executives had already begun realising: the Age of Disruption was hurtling towards them and they needed to react swiftly.
And it wasn’t only about automobiles. Gazing not too far into the future threw up visions of driverless tractors that ploughed fields by night as farmers slept and cities where buses had been edged off the roads by Uber-style hired cars and use-and-drop two-wheelers.
Seeing the writing
Mahindra and his team recognise there are incontestable reasons why automobiles are losing favour in the world’s great metropolises. He says: “We collectively realised if you’re driving fewer than 15,000 km annually — if you take the total ownership cost — it’s difficult to justify owning a car. Secondly, in large urban areas, policymakers have concerns about clustered pollution.”
But it isn’t only about anti-automobile policymakers. The Mahindra Group’s studying time-squeezed millennials to understand the future and what will replace individual car ownership. Says Mahindra: “What really hit me is the reason my kids preferred not to drive was because of the time it freed up. Having an extra half-hour to look at your phone is extremely valuable.”
And the way to deliver time-saving transport, in Mahindra’s view, is ride-sharing which comes in two forms. His company’s testing out both. Firstly, there’s ride-hailing which is about using taxi services such as Uber and Ola. Secondly, he says, there’s ride-sharing which is largely about use-and-drop cars and two-wheelers.
Inextricably linked with ride-sharing are electric vehicles which are gearing up to accelerate along the world’s highways. Mahindra’s fond of reminding people that he was an early votary of electric vehicles and, back in the 1990s, had teamed up with the Delhi government to introduce the Bijlee, a three-wheel battery-operated vehicle. The Bijlee was perhaps an idea before its time. In 2010 Mahindra also bought Reva Electric Vehicles and last year rebranded it Mahindra Electric. Mahindra Electric makes about 400 vehicles a month — from the e2oPlus hatch to electric vans and an e-rickshaw — and is poised to ramp up to 5,000 soon.
Mahindra was also one of the early teams to get into Formula E (electric car) racing. This year Formula E’s putting on an extra burst of speed with new entrants Mercedes and Porsche driving up to the starting line.
Mahindra’s ticking every box to ensure his company comes out in front in the automobile world of the future. In Nagpur, it’s tied up with Ola and the Maharashtra government and put a fleet of 100 Mahindra e2o electric taxis on the road. The scheme’s still at a relatively nascent stage. But says Mahindra: “Nagpur’s doing well and the drivers enjoy the car but utilisation needs to improve.” Since electric vehicles cost very little to run, high utilisation is key to recouping investments for fleet-users.
Global reach
Cross the globe to San Francisco where Mahindra’s involved in a very different urban transport experiment. Last year, California-based Mahindra GenZe, which makes electric scooters, teamed up with Scoot Networks, a company hoping to revolutionise urban transportation in the US.
Mahindra Partners, the Mahindra Group’s $900-million private-equity arm, has invested in Scoot, and about 600 GenZe 2.0 scooters, developed and manufactured at the Mahindra North American Technical Center in Michigan, are zipping around San Francisco streets as part of Scoot’s fleet. Scoot has also just launched an electric automobile service using a Chinese-designed car. Crucially, the car has a swappable battery that takes under a minute to change.
The insights from Scoot’s efforts to revamp urban transportation have been huge. For a start, Mahindra’s convinced that two-wheelers will zoom ahead in the coming years. “Everyone’s focusing on four-wheelers, but electric two- and three-wheelers will proliferate more rapidly,” he predicts. As part of its preparations for a two-wheel future, in 2015 the group bought a 51 per cent stake in Peugeot Motorcycles, which has a range of scooters and mopeds and a three-wheeler. Mahindra believes two-wheelers will change the face of city roads, especially in European cities. “The number of buses will go down dramatically,” he forecasts, adding: “I hope India will follow the trend of sharing two- and three-wheelers very quickly.”
Still, it will be changes in the four-wheel vehicle market that the group needs to ready for most. Mahindra’s under no illusions about the brutal transformation about to overtake the industry. For now, the greatest threat is ride-sharing. Says Mahindra: “It doesn’t take a rocket scientist to understand if you have people sharing assets, how on earth can the car industry grow as fast as it would have without ride-sharing?”
He reckons by 2025 the automobile industry will divide into two. At the lower end, the car will be “more commodity-like” used by fleets or as shared transport. At another extreme, there’ll still be people for whom the car will remain a desirable object. And that’s where Mahindra believes his company has a strong head-start because it’s always focused primarily on SUVs. “We've always known SUVs were where people were going to go,” he says. Mahindra’s stake in Italian design company Pininfarina will help it to put classy SUVs on the road.
Tractors for hire
What about the Driverless Age that may be just round the corner? That could happen soon in areas like city centres in the West. But in India, driverless cars look to be some years away. Says Mahindra: “The data to make a reliable, autonomous car in India will take longer because of the chaotic nature of our roads.”
Autonomous vehicles, though, will arrive more quickly in the farming sector where the group’s looking to introduce all manner of technology. The Mahindras have also an agriculture version of ride-sharing in the form of Trringo which offers tractors for hire.
It was Bill Gates who once wisely remarked: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” Still, Anand Mahindra reckons an electric future is near at hand. He says: “I’ll go out on a limb and say in a short period of time, as battery prices and electric car prices decline, you’ll see an irreversible shift to electric cars.” And that could be the beginning of the Second Automobile Age.