Electric Mobility: Is India on full charge? - Suresh Rangarajan
Guest Column: Suresh Rangarajan, an analytical and performance-driven professional, shares his insights on the global automotive industry
Published - Oct 17, 2019 5:23 PM Updated: Oct 17, 2019 5:23 PM
The global automotive industry is on the verge of disruption and this is being led by four technology-driven trends—electrification, shared mobility, connectivity and autonomous. These trends will shift markets and revenue pools, change mobility behaviour and build new avenues for competition and cooperation.
India’s EV ambition
The Indian automotive industry has already started to experience these effects. Out of the four trends, electrification is of importance and might significantly impact auto OEMs and auto component manufacturers. India has big plans for Electric Vehicles (EV) and its technologies and has great expectations of achieving high level of penetration in e-mobility by 2030. The reason is not surprising; the alarming levels of the rising pollution indices and the colossal dollars the country must pay for annual crude oil imports. If India successfully manages to achieve this target by 2030, it could save about 1 Giga Tonne of emissions.
The story so far
In the Indian context, any discourse around EV cannot be disjointed from pollution and its impact, dependence on oil imports and the dire need to have more renewable sources of energy. The automotive industry could benefit by viewing it not as a threat, but an opportunity. The good news is that policy makers are seriously considering it. However, till date there has been very little penetration as EVs today are undergoing a typical vicious cycle of high cost, low demand, low supply. This must translate into a virtuous cycle of low cost, high demand, high supply.
There is a need to create an integrated policy to nurture this technology. An eco-system approach is what will help achieve India’s progress on electric mobility. Thanks to FAME I in 2015 and FAME II in 2019, there has been some success in creating an initial but nascent market.
Barriers to going electric
Every major auto OEM already present or entering India is getting into the act of either testing or planning to launch their own EVs within next few years. While each of them understands the significance of the mass market prospects for EVs, they are hopeful that the policy push from the Government will translate into concrete steps eventually making EVs attractive even for buyers in the lower price segments.
But, there are challenges. Besides the primary concerns of range anxiety (kms on a single charge) and the lack of a charging infrastructure, some of the key factors are -
EVs worldwide constitute a small niche and are all loaded on the top of the premium price segment and remain dependent on incentives. Adoption in India will also be heavily dependent on Government incentives.
However, there is an alternate view that while demand incentives can help in the short term but, in the next five-six years with the expected reduction in battery prices and the simultaneous increase in cost of ICE (internal combustion engine) vehicles due to stringent emission regulations could help EVs offer an inherent operating cost benefit and make them sustainable even in the absence of incentives.
Cost of the battery
Currently, the cost of the battery and power electronics constitute almost two-thirds of the cost of an EV. The most widely used battery materials today are nickel-metal hydride (NiMH) and Lithium Ion (LiON). Multiple factors like demand-supply gaps, uneconomically low volumes etc lead to the high cost of manufacturing EVs. Today, an EV’s battery, power electronics and motors can together cost as much as six to seven times that of an IC engine affecting the ex-showroom price.
New battery manufacturing capacities are coming up in India and the localisation push will help lower the costs of EVs just like it does in the case of IC engine cars. Experts feel that the economic size of a battery manufacturing plant is upwards of 8GWh. So, clearly localisation benefits can be accrued only in the long term and with a meaningful penetration and volumes for EVs.
The biggest hurdle for buyers looking to go electric is the current high price of EVs. For a buyer who is hesitant to choose a hybrid in favour of the equivalent ICE-only car, the nearly 3x price tag of an EV is too much of an entry barrier. The industry view is that the price multiple between ICE cars and similarly positioned EV can’t be more than 1.2x to 1.3x.
But lower-end cars will tend to be more expensive because of the higher cost of the technology spread over a lower price level. Unfortunately, price sensitivity is also higher amongst buyers in the lower price segment. And the cost-of-ownership issue will further affect long term viability of EVs.
The EV space will also turn out to be like the proverbial ‘chicken and egg’ situation. So, the charging infrastructure will take its time coming, as will the production capacities for batteries. E-mobility might seem a distant dream for the Indian government but if they really want the mission to be accomplished, it’s going to be a collective effort of every individual or organization significant to the country. Besides the end-users or customers, three key stakeholders could play an integral role in India’s transition towards EVs - the Government, the power, fuel, and charging infrastructure companies and the automotive industry.
In the new future, e-mobility in India would be inevitable and undoubtedly, an integrated policy on future of mobility with a focus on zero emission mobility is the call of the hour. However, such a policy should also consider financial health of the industry, revenue to the government and employment opportunities to millions and millions.
The author is Suresh Rangarajan, an analytical and performance driven professional, with extensive experience in public relations and corporate communication. He actively follows the automotive sector.
Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.comFor more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube