CNG (compressed natural gas) is an alternative fuel for vehicles that is made by compressing natural gas to less than 1% of its original volume. It is a cleaner-burning fuel compared to gasoline and diesel, producing lower emissions of particulate matter, carbon monoxide, and nitrogen oxides.
CNG is typically stored in high-pressure tanks on vehicles and is used in internal combustion engines that have been modified or designed specifically for CNG fuel. The process of converting a vehicle to run on CNG involves installing a fuel storage tank, fuel lines, and other components to handle the high-pressure fuel supply.
Recently, in an interview on CNBC TV8, Rajiv Bajaj spoke about the CNG strategy of the Bajaj Auto Group.
In September Bajaj had hinted to us that they were working on a CNG motorcycle.
What is the current status of CNG plan?
Because there have been reports that you have been testing it and could possibly be launched next year, could you give us a sense of the CNG plants?
“It’s no secret that we are working on a CNG two-wheeler and apparently the prototype of the motorcycle has been spotted. I haven’t seen those details, so I’m not going to comment on that.
We are in very early stages of the game, so what I’m prepared to say today is that this is not something we are about to launch this year or something like that, but I’m prepared to say that within the calendar year 2025. Which means within the next two years we would certainly hope of launching this motorcycle, and let me tell you why, primarily, a CNG two-wheeler doesn’t exist in the world today to the best of my knowledge.
Unless you know there is some jugard stuff happening somewhere, as there is in India, people also use retro-fit CNG onto their scooters and motorcycles. and there are very good reasons for this.
Rajiv Bajaj spoke about four top reasons on CNG
The first three have to do with emissions and hence with your health and my health let’s start with carbon dioxide CO2 which as we know is very important for global warming now when we made the Prototype and compared the CNG motorcycle with the IC motorcycle, petrol motorcycle There is almost 50% reduction in CO2.
Next carbon monoxide which we know is very hazardous for health there is a 75% reduction in carbon monoxide and finally in terms of non-methane hydrocarbons you know obviously with CNG that is almost zero so in fact there is a 90% reduction and in terms of the operating cost which is of course more important for the aam-admi(common man) customer.
If I may call him(common-man) than the emission consideration for Better or Worse There is almost a 50 to 65% reduction in the operating cost in terms of the fuel bill you know so it’s effectively like saying petrol instead of 110 rupees a liter is suddenly going to become 50 rupees a liter and I think the proof of the pudding is in what has happened in the three-wheeler industry for example of course CNG’s become very popular even with cars and buses.
So it is right to speculate quickly to confirm that you’re working towards a commercial launch in the 2025 calendar year for the CNG motorcycle?
Rajiv Bajaj replied “Yeah I said before the end of the 2025 calendar year.
What do Market studies really reveal Bajaj Auto must be doing Market studies?
What is the demand for a CNG motorcycle in the market because people have traditionally bought petrol motorcycles now there are customers moving towards electric vehicles?
Let’s take reference of the three-wheeler Market which is as close as we can get to the two wheeler market right now. You may be surprised to know that with the government’s initiative in rapidly expanding the CNG pipeline in recent years, that’s one wonderful thing.
I would say the government has done as far as the Auto industry is concerned today almost 60% of the three-wheeler industry has moved to CNG you know with the commensurate benefits as we just spoke for the environment and also for the operating cost for the driver and for the customers you know so and within the Bajaj portfolio and we just finished saying how well Bajaj has been doing with its three-wheelers .
You know 70% of what we sell today you know passenger and cargo put together is CNG so that’s one data point as far as the two wheeler industry is concerned or let’s take just the motorcycle industry because that’s what we are working on.
In COVID industry used to be about a million a month now it is between 800 and 900,000 so we have still not come back to the pre COVID levels and I’ll come back to this point in a second . If you were to apply 70% to that that would be a huge number but I’m saying even if 10-20% people would consider CNG you’re talking of a very large number of motorcycles you’re talking of probably 200,000 motorcycles every month at a 20% conversion but here I must make two important points.
That our industry and two wheelers in this country has really suffered in recent times not so much you know because of the Covid lockdown not so much because of commodity price increases not so much because of the chips and ship shortage as it has for the fact that it is over regulated and overtaxed you know by overregulation.
I draw your attention to the fact that I have been saying this for last three four years now and I believe I’ve heard Venu sir say this I’ve heard Bhargav sir say this that you know in terms of the regulations brought in for emission safety and insurance it has pushed up the cost of an average motorcycle by about 35%.
Today, our safety norms in terms of mandating ABS or Emission Norms in terms of BS6 put us squarely on par with European Norms now that’s good I mean if you want to Benchmark the best in the world and be there no problem you know I mean we have the technology to do it we are a global player but then we must also understand that there is a huge commercial implication of that on what is essentially.
The vehicle of the aam-admi(Common man) for his daily commute and to earn his daily livelihood and that brings me to the point of this being a heavily overtaxed Market. You know the third biggest two wheeler Market in the world after China and India is typically Brazil.
You would be surprised to know perhaps that just as our GST is 28% it is only 9.25% in Brazil you know the next biggest Market is Indonesia it is only 11% in Indonesia in Philippines which is you know as rich or poor a market as ours it is only 12% in Malaysia and in Vietnam it is only 10% and in Thailand we all love Thailand you know so in Thailand it’s only 7% so very clearly the aam-admi(common man) in India is being made to pay on an average I would say about 15% more in taxation terms than his counterpart in all of these economies.
I think that what is very important is that when new technology is introduced whether for safety or emission or say in this case CNG at the same time we need to relook at the GST structure if we want industry to grow if we want India to continue to be a Powerhouse of two wheelers in the world and if you want employment to grow.
Asking for a reduction in GST simplification of regulatory costs as well, coming back to the importance of CNG motorcycles for your portfolio, how much are you investing currently in having a CNG portfolio in the two- wheeler segment?
I don’t know what investment we will make. I think it’s too early to answer these questions. Right now we are focused on getting the product right.
How would it contribute to your revenues is the kind of portfolio mix that you’re looking at?
How many CNG products would you like to have and what would be the sales mix that you’re working towards?
Well in terms of revenues again as I said it’s too early for that but I would put it like this that if we can have 20% penetration in through CNG two wheelers let’s say in a couple of years after they are introduced and that points to say 200,000 units a month or thereabouts and you know typically in this space we have 40% market share so let’s say arbitrarily we will have you know share of 80,000 Vehicles a month which is a million Vehicles a year multiply that by a price which is likely to be around a lakh of rupees let’s say so it points to a potential Revenue stream of 10,000 crores a year.
But I would say this is all blue in the sky at this stage it is not easy to package a large CNG cylinder in a two wheeler especially in a motorcycle which has no space actually unlike a scooter Under the Sea so there’s a reason why there doesn’t exist a CNG two wheeler in the world as of now.
In a three-wheeler or in a car or a bus that challenge doesn’t exist so again we have to first get the product right and then we will know better about the cost and price and potential volumes and revenues.
On the CNG front there have been reports that you would like to probably bring this in the 150 cc bringing it in pulsar would that be your aspiration?
Obviously I’m not enough of a rookie to give you a straight answer to that but I will say this that I believe that with new technologies you know whether it’s electric or CNG it is important that it is not just the technology.
The product may be new but it should also be the position or the brand that is new and that is why for example when we have brought the chetak back after 15 years of you know bearing it so to speak we have brought it back in a pure electric avatar and a lot of people tell me that you know side by side why not also have a IC engine and I just think it will take the charm away from it you know imagine a gasoline Tesla standing next to a EV Tesla.
I mean it just sounds like a very corrupt thought so in the same way my first instinct would be to say that if we are going to introduce the world’s first CNG motorcycle hopefully you know TVs are not going to beat us to it .
I would like to think that we will create a new position with a new brand rather than leverage one of our existing Brands.
Also Read: Bajaj Revolutionizes Commuting: Unveiling India’s First CNG Bike in June 2024
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