Ashok Leyland Ltd updates
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Electric bus manufacturer Switch Mobility has launched plans to take on China’s dominant groups by ramping up production in its Indian and UK markets to reduce costs and expand in continental Europe.
The company also aims to extend its manufacturing from electric buses to vans as its owners consider pumping more investment into the group to build new vehicles and strike up partnerships.
In particular, newly appointed chief executive Andy Palmer, ex-boss of Aston Martin, has set his sights on challenging China’s sector leaders such as Yutong and BYD.
“Why is China dominant? Because it has a huge domestic industry and the help of Chinese subsidies,” Palmer told the Financial Times.
“India has a huge domestic industry that allows economies of scale and helps the rest of your business. As EVs start to accelerate in India, we’ll experience the same benefit.”
Switch combined its UK operations with the electric vehicle assets of Ashok Leyland, India’s biggest producer of buses, in April to in effect become the EV arm of its owner after changing its name from Optare in December. Ashok is the flagship of parent company the Hinduja Group.
Switch aims to achieve economies of scale through common platforms at its Leeds plant in the UK and manufacturing sites across India. At the same time, it will draw on the bus design expertise in the UK and commercial light vehicle knowledge in India.
The company also wants to expand its manufacturing footprint and sales beyond its twin hubs in the UK and India into mainland Europe as it hopes to take advantage of an expanding market, which is estimated to grow to $70bn excluding China by 2030.
Ashok, which is valued at $5.2bn, has invested $130m into Switch.
Dana, a US supplier of drivetrain systems, also announced on Friday a $18m investment for about 1 per cent in Switch, meaning the group is valued at $1.8bn.
The Hinduja family indicated on Wednesday they would possibly invest a further $150m-$200m in the unit over the next few years — financed by external debt and equity — to expand the electric transport unit.
Dheeraj Hinduja, chair of Ashok Leyland, said that the UK would probably be on the receiving end of investments in R&D and manufacturing in a post-Brexit boost for industry.
“There will be a lot of investment from Switch in the UK and Indian market. I look forward to disclosing more about that,” he said. “The UK is going to have a significant share in that success.”
However, the company faces an uphill task in weaning itself off of Chinese battery technology. It sources batteries from an Austrian supplier and the Indian subsidiary of a US firm but they buy cells from South Korea and China.
Switch has already made 280 electric buses that have clocked up 26m miles and has orders for 2,000 electric vans. But that pales in comparison with China’s Yutong Bus, the world’s largest producer, which sold 15,300 low-emission buses globally last year.
Palmer is hoping to reboot his management career after a mixed tenure at Aston Martin, where he revived it from near bankruptcy in 2014 but led it to a stock market float that went sour four years later. As an executive at Nissan he helped launch the Leaf, the Japanese group’s first electric car.
The past year and a half has been tough for bus manufacturers. Order books have run dry because operators shied away from ordering diesel vehicles but did not have the confidence to order expensive electric replacements after Covid-19 hit their balance sheets.