Clean Tech

Two, three....Go!

M. Ramesh | Updated on: Jan 09, 2022

What is the best way to rapidly roll out electric vehicles in India? Start with the low-hanging fruit — two-wheelers and three-wheelers, says M Ramesh

Now that the government has rung in FAME II, a five-year, $784-million programme to incentivise the roll-out of electric vehicles in the country, one might consider that the EV game has begun in right earnest.

The first phase of ‘Faster Adoption and Manufacture of (Hybrid and) Electric Vehicles in India’ was more like a pilot, with funding of only ₹765 crore, meant initially to be spent over a two-year period, but later extended. As many as 2,18,625 EVs were “supported” by FAME I till July, and by the evidence of the substantially higher funding shovelled into FAME II, it looks like the government has been satisfied with the outcome of phase 1.

The industry heaves a sigh of relief because FAME II will not exclude private cars as was feared. Unlike the conventional automobiles, which is a biggie club, EVs are more democratic — the landscape is littered with moonstruck start-ups, most with nothing more than some loose change and a dream in their pockets. FAME II does not exclude their products; a good signal from the government.

Now that the intent and the wherewithal is available, what is the best way to go about rapidly rolling out EVs in the country?

This question was examined in detail at the ‘India EV Summit, 2018’, organised last week by the market research and consultancy services company, Energy Alternatives India (EAI), in Chennai. The conference threw up one key message: pluck the low hanging fruits first — the two- and three-wheelers (2W and 3W). “The gap between what the Indian market needs and what EVs can currently provide is the least for 2W and 3W,” says Narasimham Santhanam of EAI, which has produced a White Paper on electric vehicles.

 

EV chart
 

 

Fanciful as they are, EVs are also disconcerting. You talk EV, you think of Lithium-ion batteries of which India imports about 8 million a month, and you think of a huge network of charging stations. These charging stations are believed to be critical because their existence is the antidote to “range anxiety”, a term that refers to the vehicle owner’s worry about what the deuce to do if the battery drains out in the middle of a journey.

Furthermore, charging itself is a pain, as it takes hours. Add to all these the higher cost of EVs and you have a formidable hump on the roll-out road.

However, as many speakers at the Summit noted, none of these holds for 2W and 3W. With these vehicles, you could hit the road running.

Pachayappa Baladhandayuthapani (Bala), CTO at the Coimbatore-based electric 2W manufacturer, Ampere Vehicles, says that while Lithium-ion batteries are great as they pack more power, 2W/3W can run just fine on the conventional lead-acid batteries, they can be charged at home or at work.

The LA batteries are bulkier than Li-ion, and take more time to charge, but they are cheaper and can be used till such time as the cost of Li-ion batteries comes down and the market is more comfortable with EVs. After all, China has 500 million electric 2W on the roads, and adds 40 million to the number every year; over 90 per cent of them run on LA batteries, and there is no charging infrastructure.

Nor is ‘range anxiety’ a deal breaker because a 2W can run 60 km on a single charge. Ampere has 1,00,000 2W on the roads, nine out of ten of its customers are from rural areas, and there has been no range trouble, says Bala, though some customers keep a spare battery, just in case. And, as Anurag Bhandari, COO of the Auto Division of Electrotherm points out, LA batteries are becoming more efficient too, with the emergence of technologies such as ‘carbon foam’. True, Li-ion batteries boast lower ‘total cost of ownership’ as they pack more power, but in the price-sensitive Indian market LA batteries-powered 2W and 3W are early harvest crop.

“Definitely, 2W and 3W are low hanging fruits which can be converted faster, and a large number of EV can be brought to Indian roads,” says Ayush Lohia, CEO of Lohia Auto Industries.

Sliding prices

It is a myth that all EVs are costly. There is a glitzy segment — some electric motorbikes sell for upwards of ₹2 lakh. But there are many vehicles that are more down-to-earth. The cheapest 2W from Ampere Vehicles’ stable costs ₹29,000, even with 12 per cent GST.

And, 2W/3W are not all scooters, motorbikes and auto-rickshaws — there are e-cycles, e-rickshaws, indoor mobility vehicles for within-factory use, pedal-assisted vehicles (such as those made by the IIT-Madras incubate, Pi Beam), vehicles designed for delivering cooking gas cylinders and those meant for collecting garbage. Some of these have solar panel tops, and charge as they go.

While such EVs are not overwhelmingly expensive, cost-cutting measures would help this nascent industry nose its way into the market. FAME II, with a ₹5,500-crore budget, is expected to provide some support in terms of subsidies, but some industry captains, such as Bala, want the 12 per cent GST reduced.

But at least as important as subsidies and tax sops is a ‘bulk purchase programme’. The public sector company, Energy Efficiency Services Ltd, which specialises in bulk purchase and retail distribution of energy efficient appliances, recently tendered out for electric cars and has placed orders on Tata Motors and Mahindra & Mahindra for 5,050 and 4950 vehicles, respectively — these vehicles are to be sold or leased to government departments.

Can it do the same for 2W/3W? EESL has the necessary savvy — in the past, the company has implemented programmes for LED bulbs, electric fans, tube lights and agricultural pumps. EESL’s Managing Director, Saurabh Kumar, has told this newspaper that the company has no plans for 2W/3W.

If EESL doesn’t want to do it, then that space yields itself to someone else. Demand aggregation is possible. Take food delivery, for instance. Zomato takes about 3 million orders a month. The logistical services company Zomato owns, Runnr, has over 1,500 delivery boys, and is increasing headcount. And Zomato is but a small fraction of India’s e-commerce.

India is a big market for 2W/3W. In 2017-18, some 20 million 2W and 6,35,000 3W were sold in the country. The message from the EV India Summit is that FAME II can help speed up the process. Fortunately, this is entirely in sync with the current thinking of the government. In February, an inter-ministerial committee for promoting EVs agreed to review suggestions by the Ministry of Road Transport and Highways and NITI Aayog to increase support to 2W under FAME. ‘Electrification’ of this market, as the cliché goes, is something waiting to happen.

Published on August 28, 2018
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