Bright Prospects for Electric Vehicles Market in India

The Indian economy is one of the fastest growing economies in the world. Owing to industrialisation and urbanisation, the demand for extra power and greater mobility has increased in the country. The new world of energy marked by 3D’s-Decarbonisation, Decentralisation and Digitisation is set to redefine energy and mobility. Electric vehicles (EVs) are a common thread that could augment power research and reserves, boost mobility and reduce pollution levels. Using a clean source of energy, EVs can promote sustainable living conditions. This will be critical in the years ahead as an extra 2.5 billion people are expected to be living in various cities across the globe by 2050.

The impact of these extra numbers on power demand and pollution levels can well be imagined. Efforts to address such a scenario need to be made today because tomorrow will be too late. The Central Government has already grasped the seriousness of this problem. Accordingly, it has announced that all vehicles in India need to be electric by 2030.

Diverse Concerns

While vehicle manufacturers, OEMs and fuel companies are concerned about the ambitious target, it is clear all stakeholders need to up the ante if India is to meet its UN SDG (Sustainable Development Goals) targetby 2030.

Clearly, the long-term opportunities for EVMs (electric vehicle manufacturers) are enormous. The Union Government’s Smart Cities’ mission will also give a fillip to EVs. The Centre has initiated a proposal for establishing EV charging stations every three kilometres in Smart Cities and all cities hosting million-plus populations as well as every 50 km on national highways.

Fiscal incentives and facilitation of faster land acquisition are likely for entities seeking to establish such infrastructure, since charging stations will be critical for the mass adoption of EVs. The land will be provided on long-term lease for those setting up EV charging facilities. Significantly, in April the Power Ministry issued a notification that building charging stations would not need a separate licence under the Electricity Act, 2003.

Analysts estimate that 30,000 slow-charging and 15,000 fast-charging stations need to be established in a phased manner within the next three to five years. At every three kilometres in cities, a minimum of two high-charge points and a fast-charging point are required. As per news reports, PSUs such as NTPC, Power Grid Corporation and Indian Oil could take the lead in opening charging stations at key locations in specific cities. The Government is likely to subsidise the rollout programmes.

The reports add that NTPC will set up such facilities in Maharashtra. Meanwhile, Power Grid has joined hands with L&T Metro Rail (Hyderabad) for building charging infrastructure for EVs and electric three-wheelers in Hyderabad, with charging infrastructure plans for all Metro rail corridors. Encouraged by the potential, automakers Mahindra & Mahindra and Tata Motors, cab aggregators Ola and Uber, start-ups and state-run companies are all apparently keen on establishing charging facilities.                         

Incentivizing Demand                                                                               

Although the above measures can go a long way in encouraging public and private companies to set up charging facilities, this only addresses the supply side. Robust incentives are also required for the demand side, addressing the concerns of customers. To allay cost concerns, the Government could lower taxes, including GST, on EVs.

A constant concern globally is range anxiety, which prevents people from driving EVs due to the fear they could be stranded if the charge runs out on the road. Presently, the country has only 350 EV charging stations for nearly 500,000 vehicles. Charging stations at multiple points in cities and highways can allay such fears.

Another worry is battery technology, which has not kept pace with other developments in EVs and remains relatively costly. Till date, lithium-ion batteries had more than a few issues, including safety. This could now be a thing of the past since solid-state batteries have emerged on the scene. Besides being safer, these batteries come with more than twice the energy density of lithium-ionones.In fact, it is the high cost of batteries that is partially responsible for EVs being pricey. With battery costs expected to drop in the days ahead, EVs could be priced proportionately lower.

Challenges from the manufacturing perspective also need to be considered. With more than 50% of domestic automotive suppliers being into engine-and-transmission systems, these stakeholders will be wary of the cost of shifting to EVs. Like consumers, the Government should extend all support to these companies in making the transition worthwhile for them.

In the interim, the Centre can formulate a well-thought-out strategy anticipating teething troubles in launching EVs. For example, different companies may build charging stations compatible with their own vehicles. Similarly, each car has a unique charging point. Therefore, different cars can only be charged at specific charging stations. This situation could be avoided if innovative solutions are found to ensure common charging infrastructure compatible with cars across all brands.

Once these hurdles are surmounted, India harbours the potential to emerge as a global hub in electric vehicles. As and when this happens, mobility and pollution problems will be well within control.

| Article published on 04/02/2019 by Moulin

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