India’s domestic automobile industry kick-started during the British Raj in 1942 when Hindustan Motors first introduced the 4-wheeler to Indian roads. However, the industry picked up pace only after the liberalization period in 1991. The Narasimha Rao government (in office 1991-1996) came down heavily on this sector and pushed for many changes such as the adoption of Compressed Natural Gas (CNG) in commercial & public transport vehicles across India, emission norms, and other similar legislations.
But the question before us is, even after 100+ years of Internal Combustion (IC) engines, are Electric Vehicles (EVs) here to stay? Are we ready for the tectonic shift? The brief answer is that electric vehicles are already here and demand for EVs and EV amenities will only skyrocket in the next decade.
The future of transportation is clean and sustainable. India is making significant strides towards a green mobility market and we will see clean alternatives on Indian roads shortly. According to a report by Economic Times, 90% of car owners in India are ready to switch to an EV, but this report does not factor in vehicle cost. The first EV car launched by Hyundai was “Kona”, costing 24 lakhs, Delhi Ex-showroom. At the same price, a person can buy 4 Maruti Suzuki’s Swift Desire, which is the best-selling car in India according to Statista. In a price-sensitive market such as India, EV manufacturers will have to overcome the obstacle of high costs involved in buying the green alternative.
EVs will put the brakes on tailpipe emissions and also reduce India’s dependency on oil imports. Last year, NITI Aayog, which spearheads Narendra Modi’s EV initiative, proposed a ban on the production of 2 wheelers under 150cc by 2025 and 3 wheelers by 2023. This proposal became a pain point for the sector, which was already in hot water. Nitin Gadkari, Minister of Road Transport and Highways relaxed these norms after India Inc had vehemently lobbied against the government’s plan.
The union cabinet has approved the National Mission on Transformative Mobility and Battery Storage, which is thought of as a positive boost and aligns with the Modi Government’s vision for “Atmanirbhar Bharat”. This mission encourages setting up the large scale, export-competitive integrated batteries and cell manufacturing Giga plants in our homeland through a Phased Manufacturing Program (PMP), empowering comprehensive expansion of battery storage, a notable contributor to EV costs.
The World Economic Forum (WEF) and Ola Electric, (India’s homegrown taxi company Ola’s electric arm) pointed out that the country’s automobile industry is the fastest-growing market globally but only makes up 0.5% of the global EV market chart. The national agenda is to rub shoulders with China, Japan, and the US to ramp up manufacturing and sales of commercial and passenger electric vehicles. Sources close to the media have said that India’s demanding tender of 10,000 vehicles floated by Energy Efficiency Services Limited (EESL), heading India’s Electric dream, is now on the verge of getting scaled down to a third of its capacity or even worse, getting scrapped!
What started as a lucrative venture of going all-electric is now slowly degenerating part by part. The question asked is- Is India’s EV dream within reach, or are we building a castle in the air?
Charging Grid Infrastructure
Even though 90% of Indian drivers are ready to switch, there is another major obstacle: charging pumps. There are only 650 charging pumps as compared to 331,000+ in China (2018 data). But as of 2019, India has doubled the charging stations, and the figure now stands at 1332. Nirmala Sitharaman, Finance minister, did not mention “Electric Vehicles” even once in the 2019 annual budget speech, raising eyebrows regarding the government’s commitment towards the green dream. Later, to address this issue, the central government permitted setting up 2600 EV charging stations for various companies.
The electric vehicle industry will follow a J-curve in the next decade, as the market is expected to grow at a CAGR of 43.13% in the same period. Finland is leading the charge to go all-electric; France and Britain have ambitious plans to completely shift to EVs by 2040, and India is still catching up. EESL, supported massively by the $450 million funding from the Global Environment Facility (GEP), is trying to involve innovative technology to develop EVs so that India avoids a major disruption as it works its way towards an “all-electric future” by 2030.
A showdown between States and Centre
To make this dream come true, all state governments must be on the same page as the central government. To help the center, 10 states and union territories came forward and published a draft of policies that align with the demographic realities of each region.
Delhi witnesses air pollution issues and is a high-employment hub, therefore, its policy targeted the components of electric vehicles and also aimed to create jobs for battery swapping operators.
Karnataka, which has the start-up hub Bengaluru as its capital aims to become the EV manufacturing hub. It also plans to invest in research and development for battery manufacturing. Kerala is focusing on electric trains and electric busses. Tamil Nadu has given tax exemptions for manufacturing and land subsidies and separate parking spaces for EVs in commercial hubs.
Every state has a novel approach to solving their problems and has given enough incentives to bring in investments. Only time will tell which state will lead to becoming an EV hub.
COVID-19 Effect on EV
The coronavirus pandemic has affected all sectors in India, and the EV market has also been hit by supply chain disruptions. The US, which is the most affected region because of coronavirus, will be the worst hit compared to other nations. Electric Vehicle sales are already down by 44% in China and could see a bigger slump as car manufacturing companies are packing up and looking for a new home. India is also battling with coronavirus, but it can become the next destination for car manufacturers who are looking for a new base given its robust culture and perks for foreign investments.