Do EVs make sense in India?
Vikram Nagarkar, SCR?
Supervisory Analyst I Writer I Sustainability professional - Published on Forbes and Yahoo Finance
Without a doubt, there's a lot to love about EVs (including ludicrous mode), but they're probably not the messiahs they're made out to be - at least in the Indian context. Similarly, the focus on scaling up the Indian EV ecosystem seems premature - well-intentioned but misplaced.
A rational approach to emission cuts should start where it hurts the most - India’s coal-laden energy mix. Using dirty energy to fuel clean tech merely shifts carbon emissions upstream to power producers, and in most cases drives higher carbon emissions than internal combustion engines (ICEs). Data suggests that EVs that are not powered by renewable energy are probably doing more harm than good. Simply put, India doesn’t appear to be primed for EVs, yet*.
Why are we discussing this?
Of the cumulative ~4.14mn EVs sold in India, 1.75mn units were sold in FY24 alone (details in the following table), up 40% vs FY23, and in his address to OEMs on 10 September, India’s Minister for Road Transport and Highways, Nitin Gadkari, forecast annual sales of 10mn units by 2030. Some sources pit this figure even higher.
Clearly, EVs are going to create a significant and growing footprint in India’s energy and emissions landscapes. Let’s look at some of the dynamics at play.
India is becoming a renewable-energy (capacity) juggernaut
India has made giant strides over the last decade. Since 2014, solar power capacity has grown 30x from 2.8GW to 87.2GW, and wind power capacity has gone from 21GW to 47GW, up 124%. Today, non-fossil fuel sources account for over 45% of India's installed energy generation capacity, at 203GW, marking a 165% jump since 2014. India now has the fourth-highest renewable energy capacity in the world and aims to more than double its capacity to 500GW by 2030. Clearly, it is well on its way to meeting its target of a 50% mix of renewables installed capacity.
But, there's a gaping hole in energy output
For the first time since the 1960s, the share of coal in India's total power generation capacity fell below 50%. This was widely reported (and celebrated) in the media. I myself was thrilled at the progress until it dawned on me that this is just capacity and not actual output.
If you look at the output figures, there's a big gap between capacity and output, explained - at least in part - by the intermittence of solar and wind energy, both of which cannot be generated round the clock non-stop. And guess what fills that gap - yup, coal. Coal generates close to 73% of India's energy. These are the official figures. In developing economies, the actual figures tend to be higher.
Which brings us to our EV conundrum
Given this backdrop, the question is - do EVs still serve the purpose (saving the planet) if they're fuelled by energy from coal? Coal has the highest carbon intensity among commonly used fuels, and per the US Energy Protection Agency, it emits 93-114 kgs of carbon dioxide (CO2) per Metric Million British Thermal Unit (MMBtu; energy, in simple terms) vs about 70 kgs in case of petrol (motor gasoline in the US).
Now, some may argue that EVs are being fuelled by a mix of sources and not just coal, which is true. However, the bottom line is that EVs are stoking additional demand for energy, irrespective of the fuel. And if you look at the incremental energy generation in 2023-24 vs the previous year, what's filling the gap is, essentially, more coal.
Sure, renewables have grown too, but coal has surged the most in absolute terms, also raising its share of generation from 73% in 2022-23 to ~75% in 2023-24, which suggests an increasing reliance on coal to meet incremental energy demand.
Another source of data for carbon emissions from energy production around the world also confirms that India's related emissions have in fact risen.
Yet another argument is that EV charging stations are likely to increasingly be powered by renewables. However, barring when recharging in transit, one would imagine that most people charge their EVs at home overnight before heading out (range anxiety), which brings us back to the same coal-dominated energy grid.
领英推荐
The ICE vs EV trade-off and resulting emissions - let's do the math
Calculating the trade-offs between petrol/gasoline and coal (ICEs and coal-fed EVs) at a national level is complex and entails accounting for a plethora of factors, like the fuel needed to transport petrol to fuel stations via diesel trucks, the fuel consumed by end users, tailpipe emissions from internal combustion engines (ICEs), and the relative fuel and thermal efficiencies of ICEs and EVs, to name a few factors.
For those unfamiliar with thermal efficiency, in simple terms, only a fraction of the fuel in ICEs is used to propel you forward (or back). The rest is lost, most of it in the form of heat. Thermal efficiency is the quantum of energy that's actually converted to propulsion after such energy losses.
A study by Yale Climate Connections in the US context tackles this complexity by using a simple proxy. Per the study, ICEs have a thermal efficiency of 16-25% vs 87-91% for EVs, which would translate into ~30% energy saving vs ICEs, even if the grid were to be entirely fuelled by coal, in spite of the low ~33% thermal efficiency of coal plants (their methodology is below).
The study (as of Aug 2022) takes the total gasoline consumption in the US (8.9mn barrels per day), assumes a thermal efficiency of 20% for ICEs, implying only 20% (20% of 8.9mn = 1.8mn barrels) is actually used to propel them. Given the ~90% thermal efficiency of EVs, it concludes that EVs would only need the energy equivalent of 2mn barrels per day. It then plugs in the thermal efficiency of coal plants (33%) and concludes the above (~30% energy saving vs ICEs). This is probably the simplest approach to an otherwise very complex computation - it's a great proxy.
However, energy savings and emissions are two different things. Assuming Yale's conclusion as the base, and considering the carbon intensities of coal and petrol/gasoline, there would be no major difference in terms of emissions.
The Indian context
What's more, Yale's math only considers the thermal efficiency of ICEs vs EVs but fails to acknowledge that all ICEs are not equal. For instance, two wheelers make up ~75% of the Indian automotive market and are - on average - 2-3x as efficient as four wheelers.
Further, India's four wheeler market, having emerged from the Maruti Suzuki era, has far fewer battle-tank like fuel-guzzling trucks and SUVs vs the US and is still dominated by efficiency-focused Japanese and South Korean compact to mid-sized cars.
The Indian automotive market as a whole is still largely rooted in the "kitna deti hai? (how fuel efficient is it?)" mindset and an inherent cost consciousness.
Net-net, the energy savings (ICEs vs coal-fed EVs) in India are bound to be way less than Yale's estimate of 30% for the US, implying that ICEs in India might still have lower carbon emissions than coal-fed EVs.
What now? Here's a three-pronged approach
First things first - fix the energy mix (garbage in, garbage out)
Would government expenditure on installing EV charging stations and subsidizing EVs be better spent on ramping up renewable-energy capacity and curbing our reliance on coal? yes! If coal is going to meet incremental energy demand, even more so. Prioritizing EVs makes more sense once you've fixed your energy mix.
Further, from a consumer's perspective, there's no denying that EVs are still more expensive than their comparable ICE counterparts. The best example is the Tata Nexon - same brand, same shape and size, same car, just different powertrains...but ICE variants start as low as INR 8 lacs, while the cheapest available EV variant is priced at INR 14.5 lacs, ~80% higher. Delaying the EV transition could enable access to cheaper EVs, with battery prices (~40% of EV price) set to fall with each passing year, and more advanced EV technology. And with a better energy mix, they would actually have a lower carbon footprint, too.
EV enthusiast? Do it right
Some EV owners charge their vehicles using rooftop solar installations, for which subsidies are currently on offer in the country, or any other form of renewable energy. Such owners deserve a special mention and a pat on the back. If this is the modus operandi, an EV definitely makes sense, at least from an attributable-emissions perspective.
Hybrids - the best of both worlds?
In a rather shocking move in 2020, Maruti Suzuki, the four-wheeler market leader in India (~41% market share) pulled the plug on its diesel engines (~30% of its sales at the time) at the risk of losing market share. And despite frequent criticism, it has steered clear of EVs so far, choosing instead to launch hybrids in collaboration with Toyota (also not a big fan of EVs).
Reportedly, Maruti Suzuki's hybrids produce 26-30% lower CO2 and manage 36-46% higher fuel efficiency vs their petrol counterparts. For now, Hybrid EVs, a combination of ICEs and electric powertrains, which don't rely on the grid and are instead charged by regenerative braking and the internal combustion engine, seem to be the ideal choice in the Indian scenario, at least until the energy mix changes for the better.
*Footnote: To be clear, this analysis looks at EVs purely from a day-to-day energy consumption/emissions perspective and doesn’t consider the impact of mining for the requisite raw materials, manufacturing EVs or the broader EV supply chain.
Disclaimer: Everything presented here is purely based on data from the author's research and does not represent the views of any other entity or organisation. None of this is to be construed as investment advice or advice of any other kind. The conclusions drawn (including around financial or environmental viability or outcomes) may not apply in all circumstances, and the author may not be held liable for such divergences.
Senior Financial Analyst at Google
5 个月Very well written Vikram, it’s still a distant dream.. as a consumer, it might make me feel good to contribute to greater good by using an EV but there’s still infrastructure limitations that will negate the benefit
Highly experienced ESG training, implementation and QEHS excellence professional in India.
5 个月Excellent well researched article dear Vikram. All the best. The day all EVs in the world will be charged by RE, we shall celebrate.
Senior Manager/Principal Analyst - Equity Research - Europe - Healthcare / Households / Hotel, Catering & Leisure (Gaming-Gambling)
5 个月Fantastic read Vikram. Vert comprehensively written. Just a point around the energy mix change over the last two years. Needs to be looked at with respect to the capital intensity of renewables (high) vs coal (low) and the interest rate environment. In a world of higher interest rates, the move to greater capital efficiency (O&G, Coal) shouldn’t surprise. I would be worried/surprised if the mix isn’t changing over the longer term though. Thx!
Very well written Vikram Nagarkar, SCR? Just one point in favor of EVs would be the place of emissions. EVs will reduce the emissions in highly polluted cities of India. Agreed that coal plants are the worst offenders when it comes to emissions, and India needs to get the mix well below 50% soon.
Envint | C-Cube | Driving Sustainable Change | TERI SAS | DTU | Environmental & Economics Enthusiast
5 个月Definitely worth a read. The data and figures from various sources clubbed together made complete sense and brought a new perspective on EVs for the case study of India. Thanks for sharing such valuable information, Vikram! If not EVs, then what substitutes should the nation go for? I would like to know your take on it