The announcement by Maruti Suzuki —the country’s largest vehicle manufacturer — that it will stop manufacturing diesel vehicles from April 1, 2020 pretty much marks the end of the road for the diesel mill in India. Mahindra & Mahindra, which too has a strong exposure to the diesel platform, is working on plans to start offering petrol engine options across its entire range, except the Bolero. Tata Motors, another manufacturer hedged heavily in favour of diesel currently, is learnt to have decided against offering the diesel option in its flagship Tiago hatchback and Tigor sedan after April 2020.
What is prompting the move away from diesel?
The Indian carbuyer’s romance with diesel powertrains lasted nearly a decade. In 2012-13, diesel cars accounted for 48% of passenger vehicle sales in the country. The main reason was the sharply lower price of diesel as compared to petrol — a yawning Rs 25 per litre at its peak. This changed when the decontrol of fuel prices started in late 2014. The price difference has since come down to under Rs 6.5 per litre — the closest the two fuels have been in price since 1991. Consequently, diesel cars accounted for just about 22% of overall passenger vehicle sales in 2018-19, less than half the share they had five years ago.
The main reason behind Maruti Suzuki’s announcement, however, is not the fuel price differential, but the new emission norms that will come into effect on April 1, 2020 — less than a year from now. The prohibitively high cost of upgrading diesel engines to meet the new BS-VI emission norms is why leading carmakers have pulled the plug on their diesel options. The economics of the conversion does not make it worthwhile to continue with the diesel option after the transition to BS-VI. The difference in the price of a petrol and a diesel car, now around Rs 1 lakh on average, could go up to Rs 2.5 lakh. Also, the sentiment for diesel is not good in the wake of the Volkswagen emissions scandal, making it extra uncertain if customers would want to pay the big premium.
What changes do the BS norms entail?
The BS — Bharat Stage — emission standards are norms instituted by the government to regulate the output of air pollutants from internal combustion engine equipment, including motor vehicles. India has been following European (Euro) emission norms, although with a time lag of five years.
India introduced emission norms first in 1991, and tightened them in 1996, when most vehicle manufacturers had to incorporate technology upgrades such as catalytic converters to cut exhaust emissions. Fuel specifications based on environmental considerations were notified first in April 1996, to be implemented by 2000, and incorporated in BIS 2000 standards. Following the landmark Supreme Court order of April 1999, the Centre notified Bharat Stage-I (BIS 2000) and Bharat Stage-II norms, broadly equivalent to Euro I and Euro II respectively. BS-II was for the National Capital Region and other metros; BS-I for the rest of India.
From April 2005, in line with the Auto Fuel Policy of 2003, BS-III and BS-II fuel quality norms came into existence for 13 major cities, and for the rest of the country respectively. From April 2010, BS-IV and BS-III norms were put in place in 13 major cities and the rest of India respectively.
As per the Policy roadmap, BS-V and BS-VI norms were to be implemented from April 1, 2022, and April 1, 2024 respectively. But in November 2015, the Road Transport Ministry issued a draft notification advancing the implementation of BS-V norms for new four-wheel vehicle models to April 1, 2019, and for existing models to April 1, 2020. The corresponding dates for BS-VI norms were brought forward to April 1, 2021, and April 1, 2022, respectively. Soon afterward, however, Road Transport Minister Nitin Gadkari announced that the government had decided to leapfrog to BS-VI from April 1, 2020, skipping BS-V all together.
What did this change in the schedule entail?
With the BS-VI norms scheduled to be implemented from April 1, 2020, three years after BS-IV was implemented in 2017, a practical problem is that while it took as many as seven years for the entire country to shift from BS-III to BS-IV, the attempt this time is to entirely bypass one stage — BS-V — in less than half that time. This makes the switch to BS-VI that much more difficult for both oil companies and automobile makers.
The decision to leapfrog directly from BS-IV to BS-VI is what carmakers cite as the reason for the unviability of diesel. While petrol vehicles would also need upgrades to transition, these are limited to catalysts and electronic control upgrades. For diesel vehicles, the upgrades are more complicated and entail higher costs, apart from the technical difficulties in managing the changes. Carmakers would have to put three pieces of equipment — a DPF (diesel particulate filter), an SCR (selective catalytic reduction) system, and an LNT (Lean NOx trap) — to meet stringent BS-VI norms, all at the same time. This is vital to curb both PM (particulate matter) and NOx (nitrogen oxides) emissions as mandated under the BS-VI norms. Ideally, the technologies should be introduced in series, and then synergised. A step-by-step transition would have been easier; now, the entire cost will have to be borne in one go, alongside the operational difficulties of managing the transition.
What kind of complications can arise?
Carmakers say there are technical constraints in carrying out design changes that will include adapting the three critical components — DPF, SCR and LNT — to conditions specific to Indian driving, where running speeds are much lower than in Europe or the United States. The auto industry argues that the huge improvements in vehicular technology since 2000 have had little impact in India due to driving, road and ambient conditions. The technology that will be used in future BS-VI vehicles, though, will have considerable impact, they claim. So, technically, if the BS-V and BS-VI stages were to be implemented one after the other, diesel cars would have to be fitted with a DPF in the BS-V stage, and with the SCR in the BS-VI state. Now both of these have to be incorporated simultaneously, alongside the LNT.
DPFs have specific problems in the Indian context, and would have to be optimised for these conditions. Low driving speeds would make it difficult to achieve temperatures of 600 degrees Celsius required to burn the soot in DPF, but equipment manufacturers would have to work at temperatures of around 400 degrees C. Usually, diesel is injected to increase temperatures, but excess fuel in the compartment can cause a fire. The integrity of the vehicle too, has to be considered — this would require validation tests over 6-7 lakh km, which may take up to four years.
The optimisation and fitment of the DPFs and the SCR module, carmakers say, could take an estimated three-four years. At every stage, the technology is increasingly more complex. To attain the specified super low emissions, all reactions have to be precise, and controlled by microprocessors. Since BS-V is to be skipped entirely, both DPF and SCR would need to be fitted together for testing, which, auto firms say, would make it extremely difficult to detect which of the technologies is at fault in case of errors in the system. Even if these were to be managed, a heavy cost would be involved, which would push up the price of diesel vehicles, and widen the price gap with the petrols.
So, for carmakers, skipping the diesel value chain at this point makes more sense.
Alongside the constraints faced by carmakers, there are also question marks regarding the ability of the oil companies to manage the transition, given that the full transition to BS-IV took from 2010 to April 2017 because refiners were unable to produce the superior fuel in required quantities.