The electric vehicle market is set to grow in a big way due to the ambitious plans and initiatives of the government. The government has taken many steps to incentivise and promote the deployment of electric vehicles and public charging infrastructure to achieve significant electrification by 2030. India aims to reduce its excessive oil imports and curb pollution levels across cities in the coming years. Electric vehicles (EV) will play an important role in achieving this target.
The Indian EV market is at a nascent stage, comprising of only 1% of the total automobile sales today. About 95% of the market — some 25,000 units at the end of 2016-17 — is dominated by two and three-wheelers. Electric cars accounted for less than 8% of total sales, according to the Society of Manufacturers of Electric Vehicles.
A study conducted by the group showed that 4,330 EVs were sold in Gujarat, 2,846 in West Bengal, 2,467 in Uttar Pradesh and 2,388 in Rajasthan during the fiscal year.
The EV market is set to see the entry of a flurry of new players of foreign and domestic origin in the two and three-wheeler segments. Chinese firms such as BYD Auto will supply electric buses to some state transport firms. Mahindra has a first-to-the market advantage in four-wheeler segment.
The company plans to make 60,000 electric vehicles annually starting 2020. The Indian unit of South Korea’s Hyundai Motor is expected to launch its EV in 2019; Maruti Suzuki will enter the market by 2020; Tata Motors introduced Tata Tigor EV this year.
In 2012, the National Electric Mobility Mission Plan (NEMMP) 2020 was established, under which an incentive scheme, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME), was launched in 2015 to reduce the cost of hybrid and electric vehicles and to encourage their penetration in the market.
The FAME scheme offers a subsidy on the retail price of passenger cars. These subsidies range from Rs 11,000-24,000 for ‘mild’ hybrids, from Rs 59,000-71,000 for ‘strong’ hybrids, and from Rs 60,000- 1,34,000 for EVs. Subsidies are also available for two-wheelers, three-wheelers, light-commercial vehicles and buses.
The FAME subsidy is not the only incentive mechanism that impacts the market for hybrid and electric vehicles. The Centre and some states, such as Delhi, provide tax incentives that treat hybrid and EVs preferentially over conventional technologies.
The absence of an EV supply chain in the country demands an urgent investment in R&D and local manufacturing capabilities. The transformation from internal combustion engine (ICE) vehicles to EVs has significant implications for the existing automotive industry supply chain.
Less complex
The advancement in EVs will lead to profound changes across the automotive value chain, including technology, manufacturing systems, distribution and after-market service and support. EVs are less complex to manufacture as compared to ICE vehicles, with far fewer moving components.
The battery cost constitutes more than 50% of the value of the vehicle itself. This will result in a weakening of the control for OEMs. With new technologies emerging in the battery segment, OEMs need to heavily invest and promote indigenous R&D to keep up with the demand for cost effectiveness and better operating ranges for EVs.
The government aims to have at least 15% of the vehicles on its roads to be electric in the coming five years. This will be one of the main steps taken in the direction of reducing pollution and keeping a check on crude oil imports. The EV market is growing worldwide, fuelled by stricter environmental measures, technology improvements and cost reduction in energy storage. India has on its hands a golden opportunity to make a remarkable impact towards a sustainable future. With over three million passenger cars sold in the last fiscal, the Indian passenger car segment is expected to scale new heights in the near future.
As per a survey conducted in Bengaluru, 87% of vehicle owners were ready to buy electric vehicles if that would help to reduce pollution. However, key concerns continue to be regarding cost and maintenance of these vehicles. Range anxiety is a key factor against the adoption of electric vehicles. A series of backflips on policies and a non-existent charging infrastructure are big challenges in increasing the market penetration.
India is completely dependent on imports for nearly all of the critical minerals that go into manufacturing batteries. Strategic sourcing of critical minerals would be key to enabling manufacturing competitiveness in EVs.
Electric vehicles are a great opportunity for the industry, academia and the regulatory authorities to collaborate for a sustainable future. The best thing is that we have only scratched the surface so far and there’s more to come in the future.
(The writer is Founder-CEO, Log 9 materials)
