Bright or Bleak: Can India really become EV friendly one day?

 

The unexpected new normal in India….

From work from home to online restaurants to online shopping, all these have become the ‘new normals’ of our daily lives, but can the idea of ‘Electric Vehicle’ become another new normal in India?

The Indian automotive industry ranks the 5th largest in the world and is expected to be the 3rd largest by 2030. Electric Vehicle is not a new concept but is catching many eyes since the inception of the COVID pandemic as people have become more conscious towards the environment. At the same time, India is having a vast domestic market that can’t rely on conventional models of fuel-intensive mobility or unsustainable means like petrol and diesel. According to a recent study, by 2022 most consumers in India would consider buying an electric vehicle. This in itself is much evident of the trend which is likely to trigger the growth of the EV segment in the country. For eg., Tesla recently launched its Model 3 which is fully electric and has gained considerable traction across global markets including the U.S. and China. Tesla intruding in India will lead to an increase in the competitiveness within the segment and make EVs more accessible to people. Also, earlier only global manufacturers used to rule the automobile landscape, now there is a changed picture as numerous Indian automakers are exploring the space.

Currently, EVs represent less than 1% of the total vehicle sales in India but according to the Society of Manufacturers of Electric Vehicles (SMEV) it can become 5% a few years down the line. According to various auto experts, India is an ideal place for eco-friendly mobility since it has plenty of renewable energy resources and the availability of skilled manpower in the technology and manufacturing sectors.

 

The new players exploring the extremes….

In February 2021, Ather Energy, which is India’s first intelligence EV manufacturer moved its US$86.5 million factories from Bengaluru to Hosur and it is said to have an annual production capacity of 0.11 million two-wheelers. Whereas in March 2021, Ola Electric also announced setting up the electric scooter plant in Hosur which aims to produce 2 million units a year.

Many positive developments have taken place to empower the e-vehicle sector like the expansion of charging infrastructure. The government has taken the initiative to set up AC charging points to aim to bring down the cost of setting up EV charging infrastructure. It generally allows up to 3kW of power to be drawn to charge electric two-wheelers and three-wheelers and the target price of ₹3,500 per unit which is less than half of what the charging units currently available for electric two and three-wheelers cost.

The supportive policies and the government…

It will not be wrong if I say that the incumbent govt is EV friendly, it had brought many policies that have accelerated the growth and eased the development of the EV industry.

·       The Federal Policy: FAME India

NEMMP, a central govt policy initially launched in 2013 during the UPA era unfortunately couldn’t yield results. This was followed by the relaunching of the policy in 2015 in two parts; FAME Phase 1 and FAME Phase 2. The former aimed to promote the manufacture of EV’ and has emphasized four aspects – demand creation, technology platform, pilot projects, and charging infrastructure. Whereas the latter was packaged scheme of 3 years that mainly focused on the upfront incentive on the purchase of EV’s and meeting the requirements of the charging infrastructure.

·       National Mission on Transformative Mobility and Battery Storage

The program is a 5-year plan aiming at a staged manufacturing program in order to support large-scale and world-class integrated batteries and also localizing the production across the EV value chain.

·       The ‘service’ concept

According to the Ministry of Power, the charging of EVs’ will be considered as a service, so operating an EV charging station will not require any license.

·       The ‘green license’ approach

With another initiative, the Ministry of Road, transport, and highways announced the issue of a green license plate for both commercials as well as private battery-operated vehicles. Also, all the battery-operated or E-vehicles will be exempted from the commercial permit.

·       PLI: The Global Champion Scheme

In order to make India a global manufacturing hub, the central govt on Dec 1, 2020, rolled out the PLI scheme in the auto sector. According to this subsidy scheme, the manufacturers will get a cashback of 2%-12% on their incremental sale revenue or incremental export revenue i.e. the higher the revenue, the higher the cashback.

·       Switch Delhi Campaign

On February 4, Delhi CM launched a campaign called Switch Delhi Campaign which aimed at creating awareness about the benefits of EVs’. According to the Delhi govt; more than 6,000 electric vehicles have been purchased since the launch of the campaign.

 

Future challenges

It is much obvious that the future of EVs’ is bright in India due to the changed consumer behavior, supportive govt policies and new players delving into the space, but it is important to highlight the challenges that the country is facing in order to make a pro EV friendly India.

·       Higher dependence on imports

Though many domestic manufacturers are delving deep into the EV space, still have a huge amount of dependency on foreign countries for batteries and other components of EV, thus involving huge costs.

·       Lower Mileage

Being a young industry, there is a need for extensive research and development. As of today, EVs’ are not cost-competitive for the common man when compared to ICE vehicles.

·       Limited options

The EV space is new both for the buyers and the sellers, therefore not many options are available from the point of view of consumers. There is a crying need for investing in the industry in order to make it more competitive that would ultimately lead to an increase in further demand.

·       Higher costs

Since the technology involved in EVs’ is advanced than the normal ICE vehicles, so it becomes a little expensive for the consumers to choose them over the normal petrol/diesel vehicles. In order to increase the demand, it becomes imperative to make it cost-competitive.

 

EVs’: A changed global picture

While global car sales took a pandemic-related hit last year, EVs) bucked the trend. The EV registration across the globe took a massive upsurge in 2020, according to the IEA and this is set to continue over the next decade. Here are 5 highlights about the market from the agency’s ‘First Global Electric Vehicle Outlook’ report.

·       There were 11 million registered electric vehicles on the road in 2020 of which 10 million were electric cars. The total number of electric cars, buses, vans and trucks is expected to rise to 145 million i.e. 7% of road transportation by the end of the decade.

·       In 2020, the electric car registrations took a massive upsurge of 41%, despite a 16% drop in overall car sales across the world. Europe overtook China, there were sales of 3 million and 1.4 million of registrations i.e. almost double whereas reached to a low of just 1.2 million.

·       There are some European countries that increased the buying incentives and incorporated the promotion of EVs into their post-pandemic economic recovery plans. Similarly, China also has its New Energy Vehicle (NEV) subsidy scheme which will be rolled out in 2022.

·       WEF recently initiated The Global Battery Alliance (GBA) which is a collaboration of 70 public-private organizations across manufacturing, public service, and civil society that was established to address this issue by working to bring sustainability to the battery value chain.

 

Note: So now I can say, ‘the world is soon to become EV friendly’.