Electric vehicle (EV) industry has seen a drastic change over the last decade. India, however, lags considerably in terms of EV penetration, compared to other larger markets but there is a huge scope to work on the number of models, charging infrastructure, developing vendor ecosystem and providing financial incentives. India is the largest 2W and 3W market globally and amongst the top five in commercial vehicles (CV) and passenger cars segment but has a negligible share in EVs. Electric Vehicles are the latest automotive trend and all developed and developing nations are switching to EVs from conventional internal combustion engine (ICE) vehicles.
EV technology is attracting eyeballs worldwide to reduce the dependency on fossil fuels and achieve the global goal of zero-carbon emission and sustainable development. At the recently concluded COP26, India has pledged to reduce its carbon emissions to net-zero by the year 2070. India has set a goal to achieve EV sales accounting for 30% of private cars, 70% of commercial vehicles, and 80% of two and three-wheelers by the year 2030. In a country like India that is still heavily dependent on coal, we need to take stringent steps to achieve its ambitious targets.
According to recent research by Accelerated e-Mobility Revolution for India’s Transportation (e-amrit) portal in India, only 7,96,000 Electric vehicles have been registered till December 2021, and the installation of 1,800 charging stations on public places. It shows that the country has a long way to go to achieve the recommended ratio. The growth of sales has seen a growth of 133% from FY 2015 to FY 2020, when compared to sales of conventional ICE vehicles, the numbers seem insignificant.
The adoption rate of EVs in India is moving sluggishly primarily because the EVs are not priced at par with ICE vehicles and come at a premium. It impacts the purchase decision of buyers, more so in the lower-end car segment. The rising cost of batteries leads to the high price of EVs. These batteries are being imported from countries such as China, Japan, and Australia with the import-cost tag, which makes EVs unaffordable as compared to their ICE counterparts.
The government needs to focus on building a supply chain by manufacturing batteries domestically and bringing down the cost of EVs in India. We should be more focused on attracting foreign battery manufacturers as well as domestic players to set up local production facilities. It will help to lower the cost of batteries and EVs, improving the cost competitiveness.
Some Indian state-run companies endeavour to purchase and hold mining assets overseas. Mines of minerals such as lithium and cobalt are used for manufacturing batteries for EVs. A few months back, many lead-acid battery manufacturers have set up a technology hub in Andhra Pradesh to develop lithium-ion cells and plan to start manufacturing lithium-ion batteries locally.
With the roll-out of FAME II, the Department of Heavy Industries allocated Rs 1,000 crore for setting up electric vehicle charging infrastructure in India. The Ministry of Power has clarified that setting up public EV charging stations does not need a license under the Electricity Act, 2003 to transmit, distribute or trade. EVCIs are to be set up for promoting Charging Infrastructure for Electric Vehicles. The government should make private charging at residence or offices permissible; a public EV charging station will be given electricity connection on a priority basis by the concerned power distribution company (DISCOM); the public EV charging station can now obtain electricity from any generation company through open access channels and all the concern of EV users who face difficulty in finding EVCIs during long-distance travel can be addressed to facilitate the establishment of EVCIs and to boost EV sales.
We should be more focused on incentivizing the investors to set up EVCI by providing differential tariff rates in the country. The Delhi Government has through its EV policy stipulated to maintain a special tariff rate for EV charging. Under this policy, they will follow business models to set up public EV charging stations, either directly, or indirectly under a license, franchise or public-private partnership model. Recently, the Government of Karnataka, involved a Special Purpose Vehicles (SPV) set up to foster the installation of EVCIs in Bengaluru. These models should include private sector involvement by way of public-private partnership. This will help in the procurement of land, electricity supply while the private entity could provide for the necessary infrastructure and tech driven data.
To streamline the process of procuring environmental, labour, electrical, and other such clearances through a combined application, States should facilitate the creation of a ‘Single-Window’ which would act as a one pit-stop. It helps to provide aid in reducing the time taken to process applications for the installation and operation of EVCIs on a state-level.
Many state governments provide concessions and exemptions on the supply end, like capital investment subsidies. One of the capital subsidies provided by Andhra Pradesh is a subsidy of 25% (twenty-five percent) of the charging infrastructure or equipment cost for the first 100 private charging stations, with the maximum subsidy of Rs. 10, 00,000. It can be enhanced in terms of value and time.
The scope of India’s EV market growth depends on the availability of capital for original equipment manufacturers, manufacturers of batteries as well as improvements in the infrastructure and diversified options for consumers. Adoption of Electric vehicles in India will also require an estimated annual battery capacity of 158 GWh by FY 2030, which provides huge investment opportunities. To support the growth of EVs in India, apart from the demand incentives offered to buyers and to reduce the cost of EVs and batteries, we need to create awareness among people about the benefits of EVs over ICE vehicles.
In a recently announced budget, the government has taken many initiatives such as the battery swapping policy which will benefit electric commercial vehicle makers and auto component players considerably. The government has announced to invest in new infrastructure projects and the focus on the rural economy will also have a vital impact on the automotive sector but once again the impact will not be enough to change the overall business sentiment. This new policy on battery swapping will help in wide scale adoption of batteries as a service. It will help to reduce upfront ownership costs of electric vehicles and link that cost to vehicle running. As the cost of running electric vehicles is cheaper, the running cost with battery service will be more economical than usage of ICE based vehicles. It will help to create opportunities for several new startups. In cities, Zero emission zones will help to bring prominence to electric vehicles and to provide incentive to purchase electric vehicles to be able to use those zones.
The government has been rolling out incentives to boost market demand in priority segments like electric two wheelers, and localizing production of key components like ACC battery storage as well as electric vehicles and various components related to the auto sector through respective Production-Linked Incentive (PLI) schemes. Besides, several Indian states have passed EV policies intending to attract industry investments and make EV adoption a more viable proposition for the consumer market. India is promoting renewable energy capacity and that has been a subject of praise globally. This huge shift will lead to greater incentivisation of EV producers and users. Also, formulation and rollout of more stringent statutes aimed at the adoption of EVs will also give a big push to electric mobility.
The author is the Founder & CEO of eBikeGo India’s largest smart electric two-wheeler mobility platform.