From horses to carts, from bicycles to fuel-run cars; time and again the transportation sector has had massive waves of innovation and transformation change its face. Standing at the cusp of yet another disruption, the industry awaits the EV-olution with open arms. Cited as a game-changer by some, but, a dream too far-fetched by others, the viability of e-mobility solutions continues to raise many eyebrows. Read on as we discover whether this new disruption could really be as feasible as its proponents promise it to be.
OVERVIEW: Electric Vehicles took the world by storm back in 2011, with the introduction of Nissan’s Leaf model. Since then, every leading car manufacturer has stepped into the bandwagon releasing, hoping to get a better footing in the blue oceans. With Tesla being the pioneer of the EV revolution, the list is ever-widening with Hyundai, Chevrolet, Audi, BMW, all trying their hand and coming up with their own models. Amidst concerns around rising global warming, noise pollution and sustainability of fossil fuels, the primary reasons behind this global shift include the no emission-no gas fundamental and lesser maintenance requirements. As per reports, in 2018, the global electric car fleet exceeded 5.1 million, up 2 million from the previous year.
GLOBAL SCENARIO: In order to give a push to the nascent EV industry, today, governments all over the world are taking drastic steps. As per the International Energy Agency, China- the leading market for electric vehicles and also, the home to half of the EVs, plans to sell around 4.6 million EVs by 2020. For this, the government has introduced restrictions on investments in new petrol or diesel vehicle plants. According to the New Energy Vehicle mandate, automakers will have to transfer one-tenth of their capacity to electric vehicle production. Similarly, while Japan has laid down plans to cut greenhouse gas emissions from vehicles by half by 2050, South Korea has offered national subsidies to 57,000 electrified vehicles in 2019. Leading the EV market, Norway boasts of EVs having a 46% share in the total vehicles sold in 2018, followed by Iceland and Sweden. In developed markets like Frankfurt, EVs are allowed free parking spaces and in certain parts of the city, only eco-friendly vehicles are allowed to operate. Apart from this, all across the globe, several measures like fuel economy standards along with incentives for zero- and low-emission vehicles, macroeconomic policy instruments that would help bridge the cost gap between electric and conventional vehicles, are being implemented.
THE INDIAN LANDSCAPE: For a country with limited shared transit options for a booming 1.37 billion population, e-rickshaws especially, have emerged as a vital means of not only transport but also, of living for thousands of illiterates. Today, after 5 years, the EV industry is getting all the push it could possibly gather from the government. Reinstating its promise to the Paris Agreement, the government has set in force a list of measures to phase out IC vehicles by e-vehicles to a major extent by 2030. A recently launched joint venture of PSU’s of the Ministry of Power – Energy Efficiency Services Limited, is currently leading when it comes to the procurement and sale of EVs in India.
POLICIES & TAX REFORMS IN INDIA: India launched the ‘National Electric Mobility Mission Plan (NEMMP) 2020’ in 2013 to bring to the forefront matters like energy security, vehicular pollution and the growth of domestic manufacturing capabilities. The Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme was rolled out under this, which has laid down several incentives for purchasing electric vehicles, with an outlay of ₹10,000 crore. The government recently declared its two-pronged strategy wherein it offers $1.4 billion as subsidies to buyers while imposing a hike on import tariffs to increase the manufacturing of these vehicles by domestic companies. The GST on EVs and their batteries have also been reduced from 12% to 5%, compared to the range of 29-45% for the traditional IC vehicles. Income tax rebates of up to ₹1.5 lakh to customers on interest paid on loans to buy electric vehicles, with a total exemption benefit of ₹2.5 lakh over the whole loan period have also been declared. Customs duty exemption on lithium-ion cells was also announced so as to lower the cost of lithium-ion batteries as these are not yet produced domestically.
Moving on, the Delhi government has given the nod to 1000 Electric buses to be used in Delhi’s public transport system. Karnataka has also shown the green light to the Electric Vehicle and Energy Storage Policy 2017. Last year, the Uttarakhand government declared that manufacturing companies would be provided loans of Rs 10 – 50 crores to build EV’s and their charging infrastructure and no motor tax would be charged for the first lakh EV customers for the initial five years. The Maharashtra government has also decided to exempt EVs from road tax and provide a 15% subsidy to the first lakh EVs registered in the state.
BOTTLENECKS ALONG THE WAY: Undoubtedly, the problems which clean mobility solutions would help India solve, ranging from poor air quality indices to the heavy fossil fuel dependency of the economy, are immense. However, the flip side of the coin reveals a few major bottlenecks that need to be tackled before any plans materialise:
- Lack of charging stations: This poses to be the toughest challenge in terms of service integration in India- setting up of sufficient charging infrastructure. Another problem here is of the huge time which EVs take up to get recharged. Normal charging in itself takes up 6-8 hours, and for fast DC charging, the obstacles are the massive high costs involved and a large amount of renewable energy needed.
- Upfront costs: High costs of EVs are due to the cost of Li-ion cells, the main constituents of the battery packs of EVs, which are imported to India from abroad.
- Lack of renewable energy and grid infrastructure: EVs and their charging infrastructure would require a lot of energy, and if this electricity is produced from burning fossil fuels which itself emits a lot of greenhouse gases, then the whole point of introducing EVs to curb air pollution would get simply defeated. On top of this, when EVs would enter the markets, the already debt-laden electricity distribution companies of India would get an extra burden. This would also negatively affect the pricing of the electricity produced.
- Unfavorable climate: India’s hot climate might heat up the batteries too quickly and drain them, thus, severely impacting the battery life as well as further increasing the need for more and more charging stations.
- Restricted range and speed of EVs.
THE ROAD AHEAD: Finance Minister’s statement about making India ‘a global hub of manufacturing Electric Vehicles’ and the drastic policy measures being implemented has clearly shown the government’s firm intention to make the economy transition completely from ICE vehicles to e-mobility solutions. However, the feasibility of the step at present seems dubious, given that India neither has the much-needed infrastructure nor does it have deep pockets like China to facilitate the development. With thermal power as the mainstay, even more, would be required to run the e-vehicles which ultimately just dents India’s credibility of the emission reduction goals. In a country that is known to be a power deficit, the current plan to have 30% EVs by 2030 seems no better than a sham. With an existing ICE vehicle population of 210 million, it’s hard to see this plan materializing in just one decade. Manufacturers have already infused huge sums of money to recalibrate their vehicles as per the BS-IV standards, and have little incentive to rev up on EVs as of now.
When the liquidity crisis in the shadow banking sector and the rapid decline witnessed by the auto sector get added to the mix, the future seems even bleaker. High upfront costs and lack of profits coupled with poor demand would further dampen the even those automakers willing to put in their funds in this, thus creating a vicious cycle. The government might hope to ramp up things with the subsidies, tax deductions that it offers but clearly, one can’t race past the lack of adequate infrastructure and power supply to support it. India’s transition should begin first of all by shifting to intracity public transport that runs on green fuel and ensuring surplus power generation through eco-friendly modes of energy. Unless such basic deliverables are provided, India’s dream of transforming to the ‘Detroit of Electric Vehicles’ would remain a far cry.
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A highly driven and motivated individual, Aradhana is currently a B.Com undergrad at SRCC. Always on the lookout for being a better version of herself than yesyerday, Aradhana has always found her muse in pen & paper. We leave the rest for her articles to communicate to you about what buzzes around this budding writer’s head!