With the CV industry also set to move away from diesel, this new player bets on LNG in a green-only business strategy, ET Auto

<p>BEM sources the powertrain for its trucks from Iveco Group firm FPT (Fiat Powertrain). Iveco is also a minority stake holder in BEM.</p>
BEM sources the powertrain for its trucks from Iveco Group firm FPT (Fiat Powertrain). Iveco is also a minority stake holder in BEM.

New Delhi: The energy mix is set to change significantly across the automotive industry. The transformation in the commercial vehicle (CV) industry will be the most significant as it is still a diesel-dominated segment. LNG is poised to be a key green fuel option in the coming years, and that’s the technology basket where Blue Energy Motors (BEM) is putting all its eggs in.

The Mumbai-based CV maker, which completed a year of operations last month, and the first-mover in the LNG truck market, and the only one currently in the segment, is eyeing a turnover of around USD 800 million by 2026-27. BEM’s CEO Anirudh Bhuwalka expects to achieve that figure if Blue Energy Motors meets its target of producing 10,000 trucks annually in the same period.

Ten thousand is also the installed annual production capacity at BEM’s plant in Chakan, near Pune. The company has sold over 250 trucks in its first year, according to Bhuwalka. As it enters the second year of operation, it claims its order book is full with more than 1500 trucks to be delivered over the next 12 months.

The first year’s figure was achieved with some strong convincing. “The perceived risks when we started out were very high. Will LNG be available? Will the supply chain support? Will customers adopt? Will the truck deliver a demonstrable performance? Will it deliver the pollution advantage? “, Bhuwalka told ETAuto. .

BEM sources the powertrain for its trucks from Iveco Group firm FPT (Fiat Powertrain). Iveco is also a minority stake holder in BEM.

With a cumulative distance of 3.3 million km clocked by the LNG trucks, Bhuwalka has a strong argument in favour of the new fuel technology. “You will get this understanding that LNG to diesel the delta is only 10%, in terms of pollution. We beg to completely differ and we will demonstrate it by facts that the delta between LNG to diesel on CO2 alone is 40%. In Nox, it is 91%. In PM, it is 90%.,” he said.

Challenges on the path

LNG being a cleaner form of gas than CNG, experts believe it can play a good role in the decarbonisation of transportation. However, rising gas prices leading to a shrinking price gap with diesel could impact the adoption rate of LNG trucks. The lack of LNG infrastructure is another hurdle.

Very limited availability is another hurdle. Currently, there are only 5 LNG dispensing stations in India. Blue Energy Motors, which has a direct-to-customer sales model, plans to grow its company-owned service network in tandem with the LNG dispensing network. The current crop of trucks do duty in a radius of about 600-1000 km from an LNG station. Bhuwalka expects the LNG network to grow well enough to allow his trucks to travel cross country in 12 to 24 months.

An LNG truck uses the same internal combustion engine technology, but the cryogenic tank required to store LNG is very expensive. According to a technology expert, it could cost up to INR 10 lakh for a 400-500 litre tank. That also adds to the price difference between a diesel and an LNG truck.

The better fuel efficiency than diesel, with LNG having a higher calorific value than diesel, is a positive though. Bhuwalka claims his trucks, equipped with a 1000 litre tank each, can travel 1200-1400 km in one tankful, and are achieving over 30% better in terms of fuel efficiency than an equivalent diesel truck.

“The development (of Blue Energy Motors) is certainly a positive one, and in an industry wherein word of mouth is the biggest marketing, if these trucks live up to their promise, it could kick start adoption as users would embrace anything that helps improve profits per ton per km,” says Ashim Sharma, Senior Partner & Group Head – Business Performance Improvement, NRI Consulting & Solutions India.

Delivering the promises will be very crucial as acquiring an LNG truck is a much pricier proposition than buying an equivalent diesel truck. A BEM 55-tonner costs INR 62 lakh, which is around INR 25 lakh more than a diesel 55-tonner.

New technology, new business strategy

Commercial vehicles business is not new to Bhuwalka. He had earlier formed and led Asia Motor Works, a maker of diesel heavy duty trucks, which couldn’t sustain due to financial challenges. Unlike the earlier venture, Blue Energy Motors is modelled differently, and the difference is not in terms of fuel technology alone.

“What has happened is that now, when you look at green mobility, with the advent of technology, which has come in terms of telematics, 4g networks, artificial intelligence, machine learning, you’re able to convert your product into a smart truck. Historically speaking, trucks were dumb machines,” Bhuwalka said.

He adds that his trucks can collect 120 data points at 1/100th of a second, enabling to capture driver behaviour, engine performance, overall vehicle performance, at the backend allowing the team to help increase uptime, improve fleet performance and give advisory services to the customers on how they can optimise their fleet to maximise their return on investment.

Apart from new technology, Bhuwalka has also adopted a different approach of being asset light. This is also because times have changed, and disruptions, mainly technological, are on the rise. “The new business models that we are building are capex light, very flexible, highly variable, and highly scalable,” he said. One example he cites is the ‘smart factory’ model adopted.

A warehouse of around 100,000 sq. is good enough to build a factory like the one in Pune within 3-4 months, according to Bhuwalka.

EVs next, followed by Hydrogen trucks

As more and more organisations opt for cleaner transportation options, BEM plans to have multiple technology options in its portfolio. “You cannot bet on one technology and hope to win. You have to be technology ready across the board and let the market decide how it’s going to work. People who are agile and can do this fast,, without too much cost, will definitely have an edge over the competition,” Bhuwalka said.

As the trucking industry is set to see new energy options, with the Government also promoting them, BEM plans to enter the EV space within a year or so. It will be followed by trucks with another emerging technology, hydrogen.

And, Bhuwalka says, the focus will remain on heavy duty trucks, a segment that contributes to around 20% of the Indian truck market. BEM currently has a 46-tonner and a 55-tonner in its portfolio.

  • Published On Oct 21, 2023 at 11:42 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETAuto App

  • Get Realtime updates
  • Save your favourite articles

Scan to download App

Source link