India is not a market where investors place mega bets — at least not initially, and definitely not in the automobile sector, which has seen about as many quiet exits as it has seen high-profile entries of global marques.

It may have grown into the world’s fourth largest market over the past 40 years after Japanese carmaker Suzuki first dipped its toes into the Indian car market, followed shortly after by Yamaha and Kawasaki in the two-wheeler space, but the growth has been incremental. Those who did take the plunge with large initial capacities, like GM, ended up ruing the fact later.

Which is why the ₹2,400 crore punt by Ola Electric Mobility to set up what, if things go according to plan, will eventually become the world’s largest two-wheeler manufacturing facility in two years’ time, churning out an electric scooter every two seconds, or one crore scooters a year, is a brave bet.

Even the first phase, which is expected to make 20 lakh scooters a year, is a quantum jump in volumes, given India’s current electric vehicle (EV) volumes. Consider this: In a written reply to a question in the Lok Sabha earlier this week, the Union Minister of State for Heavy Industries Arjun Meghwal said that number of registered electric vehicles sold in India in 2019-20 was just 1,67,041 units.

To be fair, this number may not be a reflection of the actual number. According to auto industry website Autocar India, EV sales in 2019-20 stood at 7.5 lakh units in India. However, 6.3 lakh of this number was accounted for by electric three-wheelers, which mostly ply unregistered and hence are not captured in transport department data.

Almost the entire remaining number — almost 1.2 lakh units — was accounted for by electric two-wheelers, with electric four-wheelers — this includes everything from personal cars to delivery trucks to buses — amounting to some 3,000-odd.

To attempt a scale transformation on the lines of what Ola Electric is attempting to do is, therefore, quite brave. Braver, considering that at the moment, there is not much by way of policy incentives available for the EV industry in India, despite a modified FAME II policy (Faster Adoption and Manufacture of Electric vehicles) in place.

FAME II is not very popular with manufacturers and they were hoping that it would have been amended, or at least have extra sops, like lowering of GST and import duties and enhanced subsidies, none of which actually happened in the Budget.

Despite some initiatives at the State level — Delhi has rolled out the Switch Delhi campaign, which envisages a large network of charging stations, prioritised parking areas for EVs and subsidies for EV buyers among other initiatives — the challenge of taking EVs mainstream remains humongous. Robert Wimmer, director of Energy & Environmental Research at Toyota Motor North America, testifying before the US Senate Energy and Natural Resources Committee earlier his week, summed it up as ensuring adequate refuelling capacity, battery availability, consumer acceptance and affordability.

In a way, Bhavish Aggarwal, Ola Electric’s founder, has flung the gauntlet at India’s policymakers. Instead of waiting for appropriate policies and financial incentives, Aggarwal is hoping that scale play will change the economics, and his removable battery technology — the pack can apparently be removed and charged at home or office using a standard outlet — will circumvent the need to create independent charging infrastructure.

Key impediment

While this concept is yet to be tested, the lack of a proper charging infrastructure is the key impediment to the pathetic EV sales numbers when it comes to larger vehicles in India. In India, buses and large goods vehicles like trucks account for only 3 per cent of of the total number of EVs, economy four-wheelers (cars costing less than ₹10 lakh) 12 per cent of the total number of EVs and premium four-wheelers (cars costing higher than ₹10 lakh) just 2 per cent. Unfortunately, all the technological advances, including new battery chemistries and advancements in fast charging, are available only in this super premium segment.

Without adequate charging infrastructure, therefore, these numbers for other four-wheelers, importantly trucks and buses, are unlikely to change. In fact, globally, one-third of all electric cars sold are sold in just 14 cities around the world which have adequate and well-developed charging infrastructure.

Which brings me to the policy challenge. Ola’s approach, scale play, hoping to convert a significant portion of India’s estimated two-wheeler population of over 3.8 crore into electric vehicles in a short time, offers one path, where policymakers will have little role to play. Like the over one lakh electric e-rickshaws which ply in Delhi — unregistered and unregulated — they will find their own solution. Delhi’s e-rickshaws, for instance, now support a massive parallel economy, which includes “renting” parking space in public spaces (unofficially, of course), and informal recharging networks which often rely on power stolen from main lines. Not that a consumer-led change will be a bad thing. An electric two-wheeler shift will massively change fuel consumption and pollution levels in our cities.

Of course, power demand and disposal challenges for batteries will come up, but these are common to all EVs, which anyway are derided as ‘emission elsewhere’ vehicles by the fossil fuel bunch.

The more sensible approach, given infrastructure and finance constraints, would have been to concentrate on public and shared mobility first. Converting city buses (suburban and metro light rails are already electric) to electric poses a much more handleable infrastructure challenge, with charging facilities needed only in depots. And focussing on shared mobility — taxis and three-wheelers — is also easier, given a more focussed target and a fleet-based approach.

Incentivising this through policy and financial incentives makes for a more ecologically sustainable approach to public mobility. Simply relying on scale players to do the trick, without putting in place infrastructure, policies and protocols related to reuse, recycling and disposal of e-waste, would be courting disaster of a different kind.

There is also another challenge. Electrifying a market the size of India would massively push up the demand for rare earths like lithium, of which China controls a bulk of the supplies.

While lithium is almost infinitely recyclable, the technology to recover and reuse lithium at Ola-esque scales is still largely untested — there are simply not that many large packs around as yet.

Nevertheless, Ola and Aggarwal have already meted out an important lesson for our policymakers. The days of glacial speed decision-making are long past. They have to either speed up their act, or the market will simply leave them behind.

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