Here's an in-depth look at the current policies for electric vehicles and their future roadmap in the country

Ever since Tesla has braved to face the wall built by gas car manufacturers, the world’s perspective on what an electric car could be and do has changed dramatically. Tesla has single-handedly trumped the erroneous belief that electric cars aren’t capable of going mainstream. With cars that offer more safety, power, technology and next-to-none emissions, Tesla has really changed the game. Just to paint a clearer picture on how much Tesla has grown, as of today, Tesla has a higher market cap than big-weights like Ford, General Motors, Nissan and Honda! Tesla’s growth story has also propelled (more like compelled) many gas-only car manufacturers into the electric vehicle industry. And now with an increase in popularity and viability of these electric cars, countries worldwide seem to push their production for a sustainable future.

India is expected to become the third largest automobile industry in the world by 2020.

The automobile industry in India is one of the largest in the world and is also expected to become the third largest in the world by 2020. India had an annual production of more than 24 million vehicles in FY 2016-17. And with a rise in disposable incomes, this number is only expected to head upwards.

Electric Vehicles in India

Electric Vehicles have been in India for quite some time now. The REVA has been singularly grappling consumers in believing that electric is the way ahead. But for obvious reasons, the boxy REVA hasn’t been too successful in having consumers adopt the environment-friendlier car. And for the most part, the consumer’s aren’t to be blamed for being so averse to electric cars. Lack of choice, charging infrastructure and high costs amongst a lot of other problems still plague the owners of an electric vehicle.

Like it has always been, when the private players haven’t been too optimistic about investing in a risky avenue, the government has stepped in to bring about a change in the Indian automobile Industry. So what’s in the pipeline?

NEMMP 2013

It all started in 2013 when the government launched the National Electric Mobility Mission Plan (NEMMP) to revamp the electric vehicle segment in India. But just as the Gartner’s Hype Cycle hypothesises, the launch of the NEMMP plan proved to be pretty counter-productive. In line with the Hype Cycle, expectations were at its peak before the plan was launched and then it soon fell. The fall in sales and shutting down of two EV factories was an evidence to this. The failure in creating a positive impact was because of the withdrawal of the 2010 subsidy scheme delays in the release of new NEMMP subsidy schemes. Although it’s important to know that the Hype Cycle also mentions that expectations will soon pick up as the technology matures.

FAME 2014

In July of 2014, NDA formulated a ₹14,000 Cr incentive plan1 under NEMMP to meet proposed targets. The plan, better known as FAME [Faster Adoption & Manufacturing of (Hybrid &) Electric Vehicles in India], aimed at incentivising all vehicle segments (i.e. 2 Wheeler, 3 Wheeler, Passenger 4 Wheeler Vehicle, Light Commercial Vehicle and Buses) to incorporate hybrid and electric technologies. The discount amount given would be approx. one-third of the difference between the price of the EV and a comparable gasoline vehicle. An estimated expenditure budget of ₹795 Crore was set for this.

A 14,000 Cr incentive plan has been laid under NEMMP to meet proposed targets.

Although the subsidy offered wasn’t that substantial. The lower limits for these subsidies were in the neighbourhood of just ₹1800 for a 2W and ₹11000 2 for a 4W. Also the targets that are outlaid by NEMMP as a whole seem to be a bit unrealistic. With the current target of deploying 48 lakh 2W and 15 lakh 4W by 2020, the present allocation of ₹14,000 Crore will not be sufficient to achieve the sales targets identified in the plan.

SIAM

Even SIAM (Society of India Automobile Manufacturers), the country’s apex lobby body has also released a roadmap on how India can achieve electric mobility while stating that a multi-pronged segment and customer-specific policy will be needed. But contrary to what NITI Aayog and the Government think, SIAM thinks it will only be in 2047 that India will be able to achieve full electric mobility. By 2030, SIAM expects that India will only be able to achieve full electric mobility for intra-city public transport buses. And only 40% of overall commercial vehicle sales will be Electric vehicles, while a good 20% will be taken up by hybrid and other alternate fuels powered vehicles3. SIAM has also proposed a 5% GST cut and a one-time income tax deduction of 30% of vehicle price for non-financed buyers.

NBEM & NCEM 2017

In April of 2017, six years after it was approved, the centre finally constituted NBEM (National Board for Electric Mobility) & NCEM (National Council for Electric Mobility) to promote electric mobility in India. The NBEM will formulate short-term and long-term plans to achieve the mission program on electric mobility. It will also propose policies and a framework for encouraging manufacturing of electric vehicles. Of all, the most important function that it will serve is to recommend collaborations and tie-ups for technology acquisitions, obtaining technical expertise and facilitate possible agreements with other global R&D centres to help the domestic industry grow.

A shift from gas vehicles to electric vehicles is a process that’s more arduous than one might think. So why are we exactly calling for such a change? While some reasons are pretty obvious, others might not come to your find at first. Let’s have a look at them:

Creation of a domestic battery market that could be worth $300B4

Batteries form an indispensable part of an EV. They are the heart of these vehicles since it solely provides the energy that’s required to propel the vehicle. NITI Aayog, very rightly, thinks that this is the perfect opportunity for battery manufacturers to go big in India.

India can be home to a $300 billion battery market by 2030!

The think tank laid estimates that a mass conversion to electric vehicles would make the battery industry worth $300 billion by 2030. To put that into perspective, this is around 40% of the global battery demand. Battery accounts upto about 1/3rd of the cost of an EV’s total purchase prices, reducing battery costs through rapidly scaling battery production and standardizing battery components could be key to long-term success in the vision of having only electric cars in the future

Energy Security

The cars that run on our roads today, are powered by oil that is majorly imported by India. These oil imports billed upto $64 billion in the year 2015-16 and is expected to grow 12.5% y-o-y5. A switch to Electric Vehicles will bring about a change in the energy requirement scenario. Also, apart from just reducing imports of crude oil, a switch to renewable sources of energy will assist India in energy security with lower reliance of fossil fuels in the future.

Reduction in Pollution

Diesel vehicles have been notorious for contributing to air pollution. Headlines about cities being covered in smog have not been uncommon in these last few years. And a lack of regulation in emission norms, until recently, have also let manufacturers not take heed of emission control. And obviously, with a switch to EVs, we will save an iota of greenhouse gas emissions. One more added advantage in adopting EVs is that they don’t make a sound apart from the sound they make from tires and air.

Potential exporter of Electric Vehicles in the future

Nitin Gadkari, the current minister for Road Transport and Highways, thinks that India could be the largest exporter of electric vehicles in the world by 2030. Although to attain such a title, India would have to maintain high quality and invest in R&D of new technology to help establish dominance in the Global market. With an increase in demand for global vehicles worldwide, India could do wonders if its supply matches demand quantity and quality.

But let’s just put it out there. This plan in whole, is a bit too ambitious, or at least that’s what it seems now. It’s definitely not going to be cake-work. There are various roadblocks that we will face before the dawn of the day when EVs only will roam the roads of India.

Battery Technology

Currently, lead acid and lithium-ion battery technology is being used in India. 2Ws like the Hero e-bikes use lead acid ones while the 4Ws like the Mahindra e2O use lithium-ion ones. The best battery technology, that delivers high power and energy, uses lithium. And as it turns out to be, India is scarce in lithium and is a net importer. If India really wants to dominate the world in the EV Market, it has to invest substantial amounts for R&D in alternative battery technologies that are more efficient and powerful than existing technologies.

Range Anxiety

The Mahindra e2O (earlier models known as Reva), the oldest EV in India, can only drive you around 110km on a full charge. This is a point of worry and a deal-breaker for most prospective buyers. An average hatchback comparable to the e2O can on an average have a range of anywhere between 400 to 500-550. The thought that one’s car might leave you stranded in the middle of nowhere is a scary one for sure. As long as manufacturers don’t work on developing battery technologies, EV adoption will be hindered by skepticism of range.

Charging Infrastructure

Charging infrastructure is another reason that’s driving away (pun intended) consumers from getting an EV as their daily commute. Just to give you an idea on how grave this problem is, let me just ask you a question. How many charging stations have you seen in person? For a person who travels the length and breadth of the city, I still haven’t been able to see a single one. Also, charging an EV in one’s own garage is only a luxury that could be dreamt about by most of the population. The government has to set up additional power generation and distribution infrastructure. And wait, did I mention that some areas of India still battle with issues of infrequent and insufficient power supply. Even when these problems are addressed, there’s another problem that has to be solved. Where EVs take anywhere between an hour to 8 hours to charge, a normal gas car can be refueled in less than 5 minutes.

Cost of EVs

Add the load of shelling out more money with the above problems and EVs become that much less attractive. This is especially the case for 4Ws since they need additional battery back-up for longer ranges. In spite of incentives, the price is still not attractive enough to entice the layman. Even reselling is a problem since these EVs don’t fetch higher prices due to battery replacement issues that increase the Total Cost of Ownership (TCO) in the long run.

How has the automobile industry leaders reacted to this scenario?

Tata Motors is one of the first companies to gear into production of electric vehicles after the government announced their plans. Tata Motors was recently in news when the first batch of the Tata Tigor Electric rolled out as a part of the order of 10,000 by EESL (Energy Efficient Services Ltd). With a successful production of the first batch, a commercial launch is on cards too. A Tata Nano Electric was also seen pilot-testing in India recently. Ola is planning to add these 400 of these Nanos to their cab fleet to reduce their carbon footprint.

Japanese big-weights Toyota and Suzuki have joined hands to introduce electric vehicles in India. The Memorandum of Understanding states that Suzuki will produce EVs for the Indian market and supply to Toyota too whereas Toyota will provide technical support.

Industry pioneer (after they acquired Reva in 2010), Mahindra & Mahindra is all set to launch 3 performance electric vehicles by 2019-20. These 3 cars will be far superior in terms of performance of existing vehicles. The most powerful amongst the 3 will have a top speed of 190 kmph, 0-100 kmph in 8 seconds and a range of 300km.

With Volvo having an aim of selling a million electric vehicles all over the world by 2025, it’s imperative to focus on the Indian market to achieve the target. Hence, Volvo has decided to roll out only hybrid and electric cars in India post 2019. It is also the only luxury car company to reveal plans to introduce electric cars within a certain time line.

Thinking a little different from the lot, Honda, has plans to set up a lithium ion battery manufacturing unit in India. With a rise in EVs in the future it only makes sense for a car manufacturer to have their own battery manufacturing plant to bring down costs considerably. Honda will next identify which EVs they’ll make locally.

But where most of the companies think that EVs are the way forward, Mercedes India MD & CEO Roland Folger thinks otherwise. According to him, by 2040 the whole world will be driving hydrogen cars. Further, he added, with a rush towards EVs we are foreclosing options for better technologies for the future generations. He was also skeptical about the government’s ability to invest hundreds of billions of dollars into setting up charging infrastructure and associated costs.

Critics have also expressed their opinions that the nationwide EVs plan is neither economically nor technologically feasible and is based more on impulse than sound planning strategy or technology.

A lot depends on how effectively the government manages its plans and policies to pull India into an EV only future.

TL; DR

Government has decided to put all their eggs in one basket by pushing an EV only future. EVs are much more cost-efficient, safer to drive, environment-friendly and have low maintenance. At the same time, technology in India available now is not sufficient to make EVs that can compete with their polluting competitors in terms of power and performance. In spite of considerable efforts by private vehicle manufacturers an EV only future is pretty much reliant on how the Government chalks out policies and helps in infrastructure development. A systematic and sustainable action plan is essential to create an environment conducive for manufacturing and usage.

References:

1. Fame India Scheme – PIB

2. Reviewing India’s National Mission on Electric Vehicles – CSTEP

3. Electric vehicles drive: SIAM for 5% GST, I-T deduction for individual buyers – ToI

4. Govt’s electric vehicle campaign can create $300 billion domestic battery market: NITI Aayog

5. India’s crude oil import bill expected to rise by 12.5 per cent to $72 billion current fiscal