Over the past 12 months, the government has been steadfastly advocating a move to phase out petrol and diesel cars completely and transforming the country into an all-electric market by the year 2030.
These ambitions have been formulated as action plans, as opposed to concrete policies. While the industry awaits further clarity on the government’s position on electric vehicles (EVs) regarding availability of charging infrastructure, investment and incentive guidelines, and the role of state governments to support the launch of EVs, nearly all manufacturers that participated in the recent Delhi Auto Expo had at least one electric vehicle on display.
The intended shift to EV would not only help to cut down on fuel bills, reduce emissions, and cut the escalating demand for road infrastructure, but would also change the face of the automotive industry and transform India into the leading electric vehicle market in the region and perhaps the world.
The question remains, however, is India on the right track to becoming an EV hub?
Challenges, and opportunities
With more than half of the automotive suppliers in India based on engine-and-transmission systems, the industry is likely to take a hit. Despite this, strong government support can help transform those companies. However, there are opportunities to counter these potential challenges.
The corresponding consumer market would appear to already be in place, and growing, with 30 per cent of first-time car buyers in India under the age of 30. This is due, in part, not only to rising income levels and easy access to credit, but also to the higher aspirations of the younger generation. Similarly, diesel vehicles continue to fall out of favour with consumers increasingly experimenting with new body styles.
Furthermore, all eyes remain on India to excel in this space, not only due to the strong presence of many of the world’s leading automotive brands, but also the government’s clearly voiced support. With Malaysia announcing recently that it plans to lean on Indian expertise in developing its own auto industry, the latter continues to be a leading force in the region.
Many leading companies are already gearing up for EVs. Maruti Suzuki and Hyundai announced their plans to introduce their first electric vehicles in India by 2020 and 2019, respectively. Suzuki had earlier also announced plans to set up a lithium ion-battery factory. Tata Motors recently delivered the first 250 Tigor vehicles to EESL in Phase 1. Mahindra & Mahindra is ramping up its EV division and is expected to launch electric variants of its popular SUVs – the Scorpio and the XUV 500. However, the risk still falls on the industry in determining the market readiness of electric vehicles.
Infrastructure is crucial
For any major disruption to a long-standing and well-established industry to be successful, a strong and coherent strategy must be implemented. One of the key focus areas will be on setting up electric vehicle charging infrastructure across the country.
While the EV fleet and charging networks across the world have grown concurrently, it has led to the emergence of different charging standards in different regions. Furthermore, every car has a different charging system. In other words, at present, all models of different manufacturers cannot be charged at any station.
Recently, the Committee on Standardization of Protocol for Electric Vehicles (EV) Charging Infrastructure released recommendations entailing specifications for Bharat EV Charger AC-001 and Bharat EV Charger DC-001.
At present, there are very few charging stations in India, which makes long-distance travel almost impossible. Given that more than 80 per cent of car owners in India state that they have only one car for their household, this limitation has always been a big hurdle to accepting EVs.
However, government incentives such as offering subsidised electricity tariffs and promoting public awareness will also go a long way to developing the infrastructure. The recent government initiative to set up EV charging stations at parking lots of railway stations is likely to generate greater interest and acceptability.
Platforms to develop battery cell technologies and pack, innovative software, and telematics — whereby detailed data about the areas in a city that have the most number of EVs at any point in time and the strategic placement of charging points at coffee shops, restaurants, and malls — will go some way in easing the potential hiccups faced by the prospect of charging EVs outside key hub spots.
Increased energy generation
India, as the world’s third-largest energy consumer after the US and China, is working towards building a green economy and there are opportunities for energy and renewable energy firms to leverage on the eventual increased demand for electricity. Perhaps, now is a strategic time to address the increased energy needs hand-in-hand with discussions surrounding the EV sector.
India’s largest power generation utility, NTPC, is currently seeking a pan-India licence to set up charging stations. Similarly, establishing recycling programs for lithium batteries will help to ease the potential burdens experienced once EVs take hold. A shift to renewable energy would also make imminent sense for India.
In order to increase the momentum of electrification development, it is crucial that an innovative and pragmatic approach is adopted to address energy supplies.
Leveraging mobility services
With shared-mobility services bringing an additional disruption to the industry, and as the shift toward EVs gains nation-wide momentum, the potential for mobility services business is huge — possibly as large as the core automotive business itself. In developed countries, mobility services are viewed as a hedge against the trend of more young people moving to cities and abandoning car ownership. But given the deteriorating traffic conditions and rising pollution levels, the trend could manifest in India, as well.
Getting ready via govt support
Notwithstanding short-term incentives such as cash subsidies, lowering road taxes and cutting GST for EVs, other measures such as tax rebates, would help to project a stronger long-term committed strategy.
China has already shown the way on how to support growth in this sector. Besides offering EV owners the second most generous subsidies globally, China has also introduced a preferential vehicle licensing system, whereby EV buyers get their license plates free and with least delay.
Moreover, China is focusing investments into EV charging stations. These measures have culminated in a boom for the industry with sales of electric vehicles and hybrid vehicles up 53 per cent in 2016. If India can look to replicate at least some of these measures, there is no reason why the EV industry would not also respond positively.
India’s automotive industry is undoubtedly headed for an inflection point, where some or all the above trends may converge. What’s crucial along the way is to keep the industry and its customers at the core of all relevant smart mobility plans, to ensure that India stays on the right track to becoming an EV hub.
The writer is Director at JD Power