To reduce the oil import bill, curb pollution and meet emission targets, India aims to achieve 100 percent electromobility by 2020. Right from technology to finance and all the way to infrastructure the industry will have to overcome many challenges to reach the high point.
In 2010, Chetan Maini (now Vice Chairman of Sun Mobility), had to sell his electric vehicle (EV), Reva - India’s first EV - to Mahindra and Mahindra (M&M) due to lackluster demand and viability challenges. Little could he have imagined that after seven years, India would be turning to complete electromobility by 2030.
India aims to have an all-electric car fleet by 2030 with an aim to lower the fuel import bill and running cost of vehicles. The government is aggressively trying to push sales and production of electric vehicles in the country through schemes such as FAME India (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) programme. Recently, Energy Efficiency Services Ltd (EESL) said it will procure 10,000 electric cars and awarded contracts to Tata Motors and M&M for the phase-one roll-out of EVs.
EVs are less complicated than internal combustion engine (ICE) vehicles that run on fossil fuels. In EVs, the conventional drivetrain-the engine, gear box and the axle-is substituted with electro-transmission system. Though it sounds simple, the actual implementation is a tough call as the technology developed in another continent cannot be adopted in India without trial-and-error experiments, which take a long time.
In the last two years, the auto industry has been at the receiving end due to judiciary interventions and policy flip-flops. Rising pollution concerns led to the judiciary banning certain types of diesel vehicles and the government imposing a green cess. At the same time, the government forced year 2020 as the deadline for the automakers to leapfrog directly from BS IV to BS VI emission norms.
Apart from the technological challenges, the shift to BS VI is estimated to cost over Rs 60,000 crore to the industry. The automobile industry began its journey towards BS VI in earnest by investing in resources such as technology, training and manpower. Barely had the industry chalked out its roadmap for BS VI transition, that ministers in the Union Government started airing the government’s intention to take India on a complete electromobility track by 2030, without putting forth a clear strategy or a roadmap.
“ [The] Industry has already invested heavily for BS VI development in petrol and diesel technologies. With 100 percent e-mobility, financial impact on the industry will be huge. This impact has to be addressed,” observes Rashmi Urdhwareshe, Director, Automotive Research Association of India (ARAI).
From high-cost batteries to lack of charging infrastructure, from consumer reluctance to missing electric vehicle manufacturing ecosystem, the path towards complete EVs regime is filled with pitfalls.
When Europe decided to shift towards e-vehicles, it put forth a 20-year roadmap with every little detail around standardisation of charging, subsidies and technology clearly spelt out. While automakers in India have welcomed the intention of the government to move towards EV, they are seeking a policy stating clear milestones and extent of electrification. The industry believes the government (and its various ministries and departments) will have to closely work with all the stakeholders to determine the shape of the EV policy for the country and evolve a roadmap.
In June 2017, the cabinet secretariat shifted the electric vehicles programme to Niti Aayog from the department of heavy industries, as most ministries wanted to have a say in the high-profile mission. The moving of FAME India programme to government’s Niti Aayog is expected to help synchronise efforts of the different departments of the government to move towards an all-electric fleet by 2030. Probably this is the first step towards having a uniform policy framework for EV. So is 100 per cent EV goal by 2030 a feasible task?
“It’s an aspirational goal. Lot of factors like technology, infrastructure, consumer concerns and industry ecosystem will have to be addressed. Demand catalyst will be necessary in order to accelerate the market. However, the direction towards battery electric vehicle is clearly set,” says Kavan Mukhtyar, Leader - Automotive, PwC India.
Urdhwareshe agrees that government has set in a very ambitious target. “It appears feasible only in the case of small vehicles (two-three wheelers and cars) and also mass transportation vehicles (buses and taxis) plying in urban areas/metros. For rural transportation, intercity buses, goods transportation, etc separate challenges have to be overcome therefore a mixed solution should be devised. The policy should further be supported by strong action plan. Such a plan should be developed in consultation with all stakeholders,” she adds.
The first EV was shown at an industrial fair in Germany some 125 years ago. But the invention never caught the attention of automakers as the battery was bulky and the cost was too high. Today, though the size may have reduced (thanks to lithium-ion battery), the main challenge before EV manufacturers still is the high cost of battery - the storage device that powers the motor and runs the vehicle. At present lithium-ion battery is not manufactured in India and, therefore, the country has to depend on imports from Japan or China. If India wants to become a global player in electric vehicles technology market (just like ICE market), the country will have to set up large lithium-ion batteries manufacturing plants.
Companies like Suzuki Motors are taking initiatives in this direction. It has a global partnership pact with Toyota Motors for EV technology and has started work on lithium-ion battery plant in Gujarat in association with Toshiba and Denso.
Lithium-ion is an expensive, yet sensitive device and requires cooling. Today the battery’s exorbitant cost makes small vehicles highly inviable economically for mass adoption of EV. The real transition to electric mobility will happen, only when battery cost will become reasonable.
While batteries are an important piece of the EV play, the effectiveness of electromobility will depend on the integration of battery, motor and controllers into the vehicle. So the vehicle development cycle has to be managed properly and collaboratively. “Key challenges (for India to become 100 percent e-vehicle nation by 2030) would be multi-fold! Some of them are setting in charging infrastructure across the length and breadth of this vast country, bringing down the cost of EVs on a long term basis, developing an ecosystem, including indigenous manufacturing of key components, lightweight materials, batteries, etc,” says Urdhwareshe.
Today, car buyers have limited options of EVs in India - just one EV maker, Mahindra Electric, offering three passenger vehicle models. No wonder, EV buyers in India are a small community with just 7,000 electric car owners. “Availability of wide choice of models is a challenge. Auto OEMs will need to launch a range of EV models that have equal or better performance features of an ICE vehicle,” observes Mukhtyar.
EV technology has come a long way in developmental cycle in the country. For example, while Reva use to take nine hours for a full recharge, Mahindra e2oPlus (with a lithium-ion battery) takes just five hours and has a range of 120 km (compared to Reva’s 80 km). If developments keep pace with the customer’s requirements and aspirations, EV should become more acceptable to consumer.
“Consumers have concerns about adopting new EV technology, range anxiety, concerns regarding resale value, service and repair. Higher price compared to ICE vehicles is also a concern. However, this can be addressed as volumes for battery electric vehicles go up,” opines Mukhtyar.
Speaking to one of the leading dailies recently, Daniele Schillaci, Executive Vice President of the Japan-based Nissan Motor Co, said that by 2025, the cost of traditional engine car and electric vehicle car will be almost the same. If this happens, EVs will witness a strong growth in sales in the country.
Lack of charging infrastructure is another important missing link in the EV development puzzle. At present, India reportedly has only 500 charging points. According to exports, at just 30 per cent EV penetration level, Delhi itself will require 300,000 charging points. So it is a daunting task. “Huge investment is required to set up the battery charging infrastructure around the country,” points out Mukhtyar of PwC India.
Some companies are taking initiatives to set up infrastructure for charging EVs. Tata Power, which launched electric vehicle charging infrastructure in Mumbai in August 2017, aims to build a network to make it easier for people to adopt to EVs and be future ready. Tata Power has taken the initiative of providing smart charging infrastructure along with Mass-Tech Controls.
Sajjan Jindal’s JSW Group has also announced an ambitious Rs 4,000 crore EV project. JSW Energy plans to launch its first electric car by 2020 and set up energy storage & charging infrastructure. Similarly, Sun Mobility, a joint venture between Chetan Maini’s Virya Mobility and Sun New Energy Systems, is focusing on batteries and charging solutions for buses, three-wheelers and two-wheelers. Even PSUs are entering the fray. Indian Oil Corp Ltd (IOC) and Hindustan Petroleum Corp Ltd (HPCL) along with BHEL, Power Grid Corp and NTPC, etc are looking to set up charging stations and to manufacture and retail lithium-ion batteries. In future, these companies may target government offices, smart cities and other public spaces to set up charging stations. For setting up electric vehicles charging stations, the government also has plans to create electric distribution company and set up a regulatory framework for the same.
Creating country-wide reliable charging infrastructure will require patient investment in the initial years. For this, the Central government will have to work in tandem with state governments and municipal corporations. If the end goal of EVs is to fight pollution, then the power used to charge these vehicles should also come from renewable sources such as solar or wind.
Over 10,000 component makers are actively supporting the growth of the Rs 4.5 lakh crore automobile industry, which contributes over 7 per cent to India’s GDP and half of manufacturing GDP. The shift to EV can have a disruptive effect on the auto component industry.
ICE and EV engines have very different powertrains and little in common. While in conventional ICE car over 3,000 moving parts are used, EV requires just about 30 parts. Obviously, the technological shift from ICE to electric motor-driven vehicles demands different types of components and new vendor base. The component manufacturers, who make drivetrain components, will have issues and have to work to adapt themselves to electromobility components. Success of EV industry in India will depend on how quickly the vendors are able to adjust to new reality.
“Technology suitable for India specific duty-cycle operations will have to be developed. It can be done within the available time, provided the component suppliers also gear up for scaling up for pan-India operations. Raw material import and manufacturing technology import will have to be facilitated,” says Rashmi Urdhwareshe of ARAI.
Some auto component makers are taking steps to address the market of EVs. Sona BLW, which already supplies components for EVs, is exploring opportunities in components for motors, a new area for the company. It has developed axles for e-autorickshaws and plans to launch drive trains for e-rickshaws.
Similarly, Sandhar Technologies, which makes components like locks, mirrors, wheels, handles and other plastic parts, has tied up with three MNCs from Korea and Japan to manufacture components for EVs. The company expects to start manufacturing these components soon.
Electrification will lead to disruption not just in auto components sector, but also in dealers and maintenance workshops segments. Today, the number of people employed in maintenance workshops is in millions. Experts estimate that the maintenance cost of an EV is expected to be one per cent of the maintenance cost of an ICE automobile.
“Establishing repair and maintenance skills and infrastructure for advance controls for effective deployment of EVs in all sectors will be a challenge in achieving the goal of 100 per cent electromobility by 2030,” points out Urdhwareshe.
Impact will not be limited to just automotive supply chain, but will affect sectors like oil and gas, power, batteries, mining and natural resources (as demand for materials like lithium and cobalt will spike) and construction (integrating charging stations is part of the plan).
In the EV sector in India, things are heating up with companies drawing up plans to roll out EVs in the market. Mahindra Group, which already has its e-vehicles on the Indian road, has stitched up an alliance with Ford Motor. Tata Motors, which recently won contract to supply e-cars from EESL, will start making electric version of its compact sedan Tigor at its Sanand plant in Gujarat. The company expects the EESL orders to help it accelerate its efforts to offer full range of electric vehicles to the Indian consumers. It is also reportedly working on electric version of Nano. Similarly, Korean carmaker Hyundai plans to start assembly of its EVs in India as early as 2019. Amidst all these developments, the moot question is: will Indian auto industry be ready by 2030? “Technology is developing rapidly and in itself it won’t be a constraint. However, the key challenge will be to make technology viable in the value conscious Indian market. We expect higher adoption in the taxi fleets and commercial application with higher per km usage. Since the cost of operation of battery electric vehicles is significantly lower than ICE - users with high usage levels will find e-mobility financially feasible,” says Kavan Mukhtyar of PwC India.
Worried about rising pollution from fossil fuel-powered vehicles, governments across the world are pushing the EV envelopes with China taking the lead. China, which sold just 1,672 electric buses in 2013, sold 115,700 electric buses in 2016 - a fifth of all buses sold. India has just begun its journey towards e-mobility and will have to take rapid strides if it wants to achieve the 100 percent EV goal by 2030.
We expect higher adoption in the taxi fleets and commercial application with higher per km usage. Since the cost of operation of battery electric vehicles is significantly lower than ICE - users with high usage levels will find e-mobility financially feasible.
- Kavan Mukhtyar, Leader - Automotive, PwC India
Technology suitable for India-specific duty-cycle operations will have to be developed. It can be done within the available time, provided the component suppliers also gear up for scaling up for pan-India operations. Raw material import and manufacturing technology import will have to be facilitated.
- Rashmi Urdhwareshe, Director, ARAI