Is India Ready For EV Ecosystem?
According to a report by World Economic Forum, Six of the world’s 10 most polluted cities are in India. The menace of air pollution is fast becoming the biggest health risk in India causing more fatalities than ever. As per a report by State of Global Air 2020 by the U.S.-based Health Effects Institute “Long-term exposure to outdoor and household air pollution contributed to over 1.67 million annual deaths from stroke, heart attack, diabetes, lung cancer, chronic lung diseases and neonatal diseases in India in 2019”. As the world is inching towards deteriorating health of the planet earth, there has been a conscious shift to switch towards alternatives that are environment friendly. One such shift is being seen in the recent times in the automobile sector with investments being done on Electric Vehicle Sector. While degrading planet health caused majorly by vehicular pollution definitely commands a need for an alternate mobility solutions; an EV ecosystem, the question to ask is, if the country is ready for such a makeover. Does the need pave way to readiness?
What is EV?
An article in Business Standard defines EV as “An electric vehicle (EV) is one that operates on an electric motor, instead of an internal-combustion engine that generates power by burning a mix of fuel and gases. Therefore, such as vehicle is seen as a possible replacement for current-generation automobile, in order to address the issue of rising pollution, global warming, depleting natural resources, etc.”
Compared to internal combustion engine (ICE) vehicles, electric vehicles (EVs) are quieter, have no exhaust emissions, and lower emissions overall which make them a cleaner alternative for environment conscious consumer base.
Why EVs are gaining rising interest in India and worldwide?
Apart from being an apt mobility alternative to curb pollution, there are many aspects of Electric Vehicles that earn numerous brownie points and gain preference amongst Indian youth. Here are few major benefits of Electric Vehicles one can enjoy while being part of a transformative journey in the automobile sector:
a. Low maintenance costs:
Electric Vehicles are quite simple structurally requiring few mechanical parts as compared to Internal Combustion Engine Vehicles. Having a simple structure makes its maintenance easy and low-cost too. There are no oil changes or spark plugs to take care of in Electric Vehicles which makes the vehicle maintenance friendly.
b. Silent:
As there is no engine under the hood, EVs is capable of functioning silently. It is, in fact, so silent that it may not be safe for pedestrians as they may not get even the slightest of hint of a fast approaching Electric Vehicle without the rumbles-mumbles of usual engine vehicles. To solve this, many EVs come with artificial sounds to indicate their presence on the road.
c. Low running cost:
One of the main advantages of electric cars is they're extremely cheap to run when compare to petrol or diesel. Electric Vehicles are also immune to the consistently fluctuating fuel prices.
d. Government Incentive:
The Government of India has been extremely encouraging in the adoption of electric vehicles in the Indian market by incentivizing the deployment of electric vehicles in various parts of India. Several state governments have realized the potential of EVs and have introduced policies to encourage the EV market. In fact, on India, the first concrete decision to incentivize electric vehicles was taken in 2010. According to Rs 95-crore scheme approved by the Ministry of New and Renewable Energy (MNRE), the government announced a financial incentive for manufacturers for electric vehicles sold in India. Also, an additional income tax deduction of ?1.5 lakh on the interest paid on loans taken to purchase electric vehicles are being introduced by the Government to encourage people to buy electric vehicles.
The past failings
A few years ago, Electric Vehicles was an exciting idea whose time had not yet come. The mileage fanatic Indian population had been so intrinsically conditioned to prefer petrol, diesel or gas-driven cars that the adoption rate of electric vehicles in the minds of Indian consumers had been quite slower; owing mostly to slow pick up, slow speed, and non-availability of electric charging centers.
A report by the Society of Manufacturers of Electric Vehicles suggests that only 22,000 units of EVs were sold in India by March 2016, of which 2,000 were four-wheelers. Ola’s ambitious Electric Vehicle project in Nagpur faced a major roadblock with Ola drivers wanting to return their electric cars and switch back to petrol or diesel variants because of high operating expenses and long wait times at charging stations.
This clearly shows that due to more reasons than one electric vehicles had received quite a tepid response in the past. Having said that, in the recent past things seem to have changed to a much generous response from the audience. One reason could be the continual focus on the need to protect our environment, reducing ones global footprint, lead a sustainable living and also the need to balance the fuel economy.
What does the EV-scape look like in the current scenario?
In one word, it looks positive.
From the government policy and regulatory framework point of view, things are looking up for Electric Vehicles in the Indian market – especially the two wheelers. The government of India is pushing the movement (quite literally) by introducing initiatives for commercial deployment of electric vehicles. Niti Aayog proposes to push for full conversion to EVs from internal combustion engine (ICE) three-wheelers by 2023, and two-wheelers (for engines with or below 150 cc capacity) by 2025. A proposal drafted by the same entity also suggests that India could slash its oil import bills by as much as $40 billion by 2030 if electric vehicles were widely adopted – this is one of the major reasons why Government Of India is accelerating the momentum of Electric Vehicle Market in India. In fact, the government plans to offer $4.6 billion in incentives to companies setting up advanced battery manufacturing facilities.
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A report published on Inc42.com written by Shanthi S mentions “The government-backed Energy Efficiency Services Ltd (EESL) has issued tenders for 20K EVs to be deployed across the country for government use. With this the government aims an EV sales penetration of 30% for private cars, 70% for commercial cars, 40% for buses, and 80% for two- and three-wheelers by 2030.”
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A report by IESA (India Energy Storage Alliance) states that “the EV market in India has gained significant momentum after the implementation of FAME India scheme. The total EV sales in 2018 hit 365,920 Units and expected to grow at a CAGR of 36% till 2026. The EV battery market in India is estimated to be US$ 520 Million in 2018 and forecasted to grow at a CAGR of 30% till 2026. The total MWh addition in 2018 hit 4.75 GWh and expected to grow till 28.0 GWh by 2026.”
Encouraged by the government’s push many startups and big brands in the mobility sector are working towards new and sustainable models of an electric vehicle to tap into a steaming market.
Tata Motors recently unveiled Nexon in the electric version. Mahindra offers a range in Mahindra E2o, Mahindra eAlfa Mini, Mahindra eSupro, Mahindra Treo, and Mahindra eVerito. Then there is startups like Tork Motors backed by Ratan Tata himself. Ola Electric recently raised $14.8 Mn from South Korean automobile maker Hyundai and its affiliate Kia Motor to build India specific EVs.
All these initiatives clearly show that the country is heavily leaning towards electric mobility in the nearing future.
Challenges:
Charging Infrastructure:
It appears that to meet the charging requirement for 20 Lakh electric cars, India needs about 4 Lakh charging stations installed by 2026 (Source: Inc42Plus). Due to inadequate charging stations, there is a long waiting line for the ones available which is again a pain point for customers. To accelerate the Electric Vehicle revolution in the country, it is pertinent to have an adequate and strong charging infrastructure. Things however are changing at a faster pace with more and more charging stations being sanctioned in the country. Recently, it was announced that Power PSUs' joint venture EESL plans to install at least 500 more electric vehicles (EV) charging stations in the country during fiscal 2020-21.
Inadequate Electricity:
Electric Vehicles means more dependence on Electricity. In a country that is still plagued by an overstressed grid, thereby amounts to more pressure on the power sector. Even though the country needs to shift to electric mobility architecture, is our power sector ready for such consumption levels of electricity.
Covid Slowdown
When Covid 19 brought the whole world to a screeching halt, it also slowed down the electric mobility revolution in the country with focus directed to a more crucial and high-priority agenda. Hence, Kirney states that “due to prioritized spending in other sectors, the government may also have a reduced ability to provide long-term financial assistance to boost EV adoption and charging infrastructure.”
Insufficient Battery Infrastructure
Battery is the major protagonist in the Electric Mobility ecosystem. As much as the country is gearing up for electric transportation system, we are still lagging behind when it comes to battery manufacturing. Having said that, lagging behind doesn’t mean it is not moving. For India is all set to welcome its first lithium refinery in Gujarat, in a bid to have easy access to raw materials (like lithium) required to make batteries.
Apart from these challenges, we are also still fighting consumer perception about EV’s practicality, functionality, travel range etc.
All in all, one cannot really foresee the automobile sector without having electric vehicles zooming right into the future. Whatever are the challenges gripping the industry, steps are being taken to solve them and enhance accessibility. Going by the rapidly changing landscape and the burgeoning climate crisis in the country, India is not just in need of Electric Mobility but also ready for it.