Electric car sales cannot revive the struggling industry in the immediate future. But the benefits of electric vehicles are too good to ignore.
Over the past few weeks, the interest level around EVs (Electric vehicles) has suddenly increased in the country, thanks to the recent budget announcement by the finance minister about promoting electric mobility, by reducing GST for EVs to 5 per cent and allowing income tax benefits for EV buyers.While these sops must be lauded, there are limited options for electric car buyers, unlike with regular petrol/diesel vehicles or internal combustion engine cars or ICE cars, where the options are aplenty. The automotive industry is reeling under pressure, with ICE car sales at 18-year lows. The industry’s woes are compounded with the need for BS VI emission compliance for ICE cars.
Electric car sales cannot revive the struggling industry in the immediate future. But the benefits of electric vehicles are too good to ignore. EVs help in curbing pollution in our cities and towns through reduced carbon dioxide emissions. Also, electric mobility can help reduce India’s oil import dependency. Currently India imports 84 per cent of its oil demand. A NITI Aayog report indicates that by 2030 India can save 474 million tonnes of oil if 30 per cent of private cars, 70 per cent of commercial cars, 40 per cent of buses and 80 per cent of two and three-wheelers become electric.
Global EV scenario
Globally, EV prices are at least 50 per cent higher than those of ICE cars, and the price is expected to fall to ICE car levels over the next 3-5 years. The battery is the most important component of EVs. A Bloomberg report states that the cost per kwh (kilowatt hour) was over $1,000 in 2010 and it is expected to go below $100 by 2024. Research reports indicate that EVs will become cheaper compared to ICE cars once the cost per kwh goes below $125.
The European Union is leading the way in electric mobility adoption with new policies and regulations. Norway is widely seen as a pioneer in the EV market, with over 20 per cent of new cars sold being electric. The government offers subsidies, toll fee waiver and special parking to aid EV adoption. The UK’s Road to Zero strategy is aimed at removing ICE vehicles by 2040. The US EV market is expanding rapidly and is expected to add over 4 lakh electric cars this year.A recent report suggests that the world’s EV sector growth is healthy, and by 2025 the global market will be worth $570 billion, with China leading with a market share of 60 per cent.
India’s EV journey
Electric cars have been around in India since 2001, but only over the past few years have we seen the government’s active involvement with policy changes. Since 2017, the government has made a strong pitch for electric vehicle deployment in India through initiatives such as FAME (Faster Adoption and Manufacturing of E-vehicles), FAME-2, Green Mobility Fund and Make in India. In a bold move, the government is pushing for sale of EVs only after 2030.
As per The Society of Manufacturers of Electric Vehicles (SMEV), there are more than 4 lakh electric two-wheelers and a few thousand electric cars on Indian roads. With several new electric cars and two-wheelers planned to be launched in the coming months, adoption should improve. However, there are significant challenges.
Challenges and opportunities
A recent report indicates that 2.1 crore two-wheelers were sold last year, and electric scooters’ share was less than one lakh. While over 3 lakh cars were sold in FY19, less than 10,000 electric cars were sold. Despite zero road tax in several states and government subsidy to the manufacturers, the high price is a deterrent. But then it is a great opportunity for companies to innovate and bring the prices down. The battery is the costliest component of EVs and India is dependent on China and other countries for both the technology and the supply of lithium for manufacturing batteries.
It is an opportunity for the government to task the premier technical institutes, such as IISC and the IITs, to come up with innovative battery storage/alternative technologies. Innovation in reducing cost and improving charging speed for the mass market are the need of the hour.The next challenge is about range anxiety, a term used to indicate an electric car driver’s worry that the battery will run out of power before a suitable charging point is reached.Newer cars are expected to hit the Indian market with a 300-400 km range with a fully charged battery. This is much better than the 100-km range cars currently in the market.
Range anxiety is all the more serious as public charging infrastructure is almost non-existent at present. Even with the infrastructure, it would take 45 minutes to several hours to charge a car, depending on the technology used for charging batteries. While people are used to instant refuelling with ICE vehicles, the time taken for charging will be a dampener.There is a possible opportunity for companies to create innovative replaceable/detachable batteries. This will significantly reduce range anxiety and would make it convenient for the car and two-wheeler users.
Standardisation of the charging infrastructure would play a pivotal role. The government and the industry should strive for indigenous technology using solar power for developing a robust charging infrastructure. India’s electricity infrastructure needs significant improvement to cater to increasing demand. Sustainable electricity generation through mini/micro and nano grids can be the way out.
Disruption in the job market can be another big challenge. Sample this: The number of moving parts in a normal ICE car would be over 2,000, while an EV counterpart would just have 20 odd moving parts. The fewer the moving parts, the lesser the need for maintenance. This could affect the established petrol/diesel-based automobile industry ecosystem, which includes service centres, spare parts manufacturers etc.
The present automobile ecosystem has provided jobs to over 5 lakh people in the organised sector and several lakhs of unorganised jobs. The government would do well to create a 5-10-year road map that would allow for a gradual move towards creating a strong EV ecosystem. Also, the government and industry should embark on reskilling the existing workforce. For India to emerge as a global electric mobility leader, a robust ecosystem involving government, industry and academia must be created, with a charter to drive road map implementation and spur innovation.