It seems that Electric Vehicles (EV) as an idea seems to have finally come to India. There are many positive green signals coming from the government and industry as the number of EVs on the road in India have started to increase. Karnataka will be home to Tesla’s factory in India, following announcements by Chief Minister BS Yediyurappa and Union Minister for Road Transport and Highways Nitin Gadkari. Investment sentiment has picked up for the sector with renewed interest by venture capitalists with over US $300 million reportedly invested in companies that deal with EVs and better battery technology this year.
The number of EVs on the road have also been steadily increasing, and in 2019-20, the number of EVs on the road stood at 155,400 growing at around 20 percent year-on-year. Government policies like the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) which provide subsidies for EV production and charging infrastructure are a welcome fillip. Phase II of the scheme has an outlay of INR 10,000 crore ending this year for creating more demand for EVs. The 2019-20 budget announcement for tax subsidies for loans on EVs is again aimed at proliferating new forms of automobiles. Broadly, there is a renewed interest by the public in owning an EV considering high fuel prices in the country, which in turn makes most goods more expensive and contributing to an overall inflation in the country. A recent survey showed that 66 percent of the respondents were willing to go electric and 53 percent of them were strongly willing to purchase an EV.
With these broad signals to the sector, there are, however, some policy issues for decision-makers in government, industry, and academia to consider.
The need to conquer the two-wheeler and three-wheeler market first
Though the FAME-II scheme also aims to bring 7000 electric buses on the road, the fact remains that battery technology has still not advanced enough to handle the loads of passengers on buses. In the United States and the West, companies like Tesla have been leading the charge for EV adoption with their cars. Electric four-wheel (e4Ws) vehicles still have many hurdles to overcome in India because of how the products are designed. Like buses, range tends to decrease with more passengers and weight. Charging times for e4Ws will be prohibitive with more battery packs added. The limited range on these vehicles will make it difficult for them to find use beyond city boundaries.
But for India, with a large population comfortable with using two-wheelers for daily commuting, it makes logical sense to focus on electric two-wheelers (e2Ws) for production. Three-wheelers are an essential part of public transport in India with autorickshaws but they also contribute to significant carbon emissions in cities. A study by The Energy and Resources Institute (TERI) showed that IC engines autorickshaws emitted 1223.89 tonnes of carbon dioxide a day and emitted 3.96 tonnes of nitrogen oxide a day in Bangalore. Further, the fuel efficiency of these autorickshaws are low and 2-stroke engines had an average fuel efficiency of 16.44 kilometres per litre and 4-stroke engines had an average fuel efficiency of 18.44 kilometres per litre. Indeed, Karnataka has the most progressive policy in India when it comes to adoption of EVs and aims for 100 percent move for electric three-wheelers (e3Ws) by 2030. Most e2Ws and e3Ws have a range of around 80–100 kilometres per charge and the economics of EVs might fit in well here.
Therefore, it comes as no surprise that many of the companies who have applied for the FAME-II scheme are e2Ws and e3Ws. Marquee two-wheeler manufacturers in India like Bajaj, TVS, Hero have released their e2W products in the market and now are competing with newer companies like Ather, ReVolt, Okinawa, and Ampere who have a head start against the incumbents. For incumbent manufacturers, these new products might also see success in Southeast Asian countries which also has a thriving two-wheeler and three-wheeler culture and contribute significantly to the nation’s exports.
Invest in research for battery technology and materials sciences
All commercial EVs run on lithium-based batteries and India imports all its lithium needs. Though a reserve of 14,000 tonnes of lithium has been found in Mandya, Karnataka, it will not be enough to keep up with the future demand. Further exploration for lithium reserves in the country will be expensive, not to mention hazardous to humans as lithium is a rare earth metal found with other radioactive elements beryllium, niobium, and tantalum. Australia, Chile, and China are the leading producers of lithium in the world.
China is the leading producer of rare earth elements, and they are crucial for manufacturing semiconductors and other components of EVs. It is, therefore, important from a strategic perspective to stop depending on China for these elements. Australia now has trade pacts with India and the United States to counter dependence on Beijing for critical rare elements.
Lithium extraction is very intensive and harmful to the environment. There is a lot of documentation across the world on the discharges from lithium extraction which seep into water sources and damage natural ecology. Towards more sustainability, India also needs to step up battery recycling capabilities. Though the Indian government has updated its e-waste management policies in 2018, the rules do not cover lithium batteries and its recycling guidelines only apply to lead-acid batteries. The enforcement of these rules is difficult due to poor e-waste generation rates and most reclamation takes place informally. There is US $1 billion opportunity for the private sector to chip in for reclaiming lithium batteries.
It will be prudent for India to invest in research into alternative battery technologies using different metals. Aluminium, sodium, and zinc based batteries have emerged as viable alternatives to lithium ones. Though aluminium batteries may be more advantageous from an Indian perspective. India is the fourth largest producer of aluminium and production has been steadily increasing. Aluminium is also cheaper than lithuim as a metal and cut costs of EVs. Aluminium batteries have shown that that they have more energy density than lithuim batteries which translates to longer range for EVs. This is primarily due to aluminium’s valency of +3 compared to lithium’s +1 and ion exchange is more efficient. There are mainly two types of batteries with this metal—aluminium ion (which are rechargeable) and aluminium air (which are non-rechargeable). Both have challenges with shelf life and more research in materials sciences are needed for better designs. Industry, academia, and government must come forward with an extensive policy to promote alternative batteries for sustainable EVs.
Electric dreams for electric cities
City planners, municipal bodies, local administrative bodies, electricity companies, government, and automotive companies need to build a comprehensive policy document to meet future charging demands EVs. The number of public charging stations in India is very low, with only a few hundreds. Despite the fact that the FAME-II policy gives importance to encourage charging stations, the government and automakers must give serious consideration to invest in battery swapping technology. Charging times for EVs take several hours for a full charge. However, primary, non-rechargeable batteries like aluminium-air batteries offer much higher ranges and capacity, giving them a distinct advantage.
From a user perspective, battery swapping stations can function like fuel stations and change batteries when charge is low and offer greater flexibility for EVs in general. However, there are several practical challenges associated with setting up this system. Batteries must be standardized and made interoperable with all EVs for easy removal and reattachment of battery packs. This will constrain manufacturers when it comes to design and innovations. At swapping stations, EVs will have different levels of degradation of batteries, and it will be difficult for operators to gauge and monitor these levels for a swap. There are going to more interoperability issues with competing operators and making sure that they work on all EVs. Further, the ownership of the battery will shift to the swapping station operator and the prices and the cost of a battery in such a scenario might be comparable to petrol or other fossil fuels. This might discourage users to buy EVs in general and opt for the more familiar internal combustion (IC) vehicles, defeating the larger mandate of cutting carbon emissions.
All the data headaches
To put it bluntly, modern EVs are phones/tablets mounted on a chassis with a giant battery, a motor, some wheels and many sensors collecting data. EVs manufacturers will become more like digital tech companies than traditional automakers. By their very nature, EVs must constantly collect vehicle data about battery charge, discharge, temperature, power, acceleration, top speed, passenger weight, and additional loads through sensors to feed into their battery management software. The electric scooter company Ather mentions that their product has 46 sensors on generating data on various components and assess riding behaviour and patterns. Data collected through these sensors crucial to monitor a battery’s performance and give accurate information to the riders about range. Modern EVs are equipped with GPS for maps services and eSIMs to transmit vehicle data and update various software controlling the vehicle.
With these features baked in, it extends the surveillance capabilities of companies and the state dramatically. Cybersecurity concerns will be amplified as connected vehicles in increase attack surfaces.
Data collected from these vehicles is valuable for the companies and can be used to better their product and build in new functionalities and open businesses. Therefore, there is a reason why Tesla has a higher market capitalization than nine of the largest global car companies combined. Data from their vehicles allows Tesla to build features like their autopilot feature where the vehicle can drive passengers autonomously, a migraine for regulators in the United States with the number of fatalities and accidents. It raises deep questions about algorithm liabilities with autonomous systems and how they can be held accountable. For example, in Uber’s case, the operator who was testing the self-drive feature was held liable for the fatality of a pedestrian crossing the road, and not Uber as a corporation.
Data and driving patterns collected from vehicles can also be linked to motor vehicle insurance. In India, self-drive car rental company Zoomcar equips its vehicles with a camera and driver assistance systems and has partnered with ICICI Lobard for insurance. It is unclear how and whether data collected will be used to adjust insurance premiums, but the ethics of the practice is questionable and has been shown to lead to more algorithm biases.
State surveillance capabilities are massively enhanced with the proliferation of EVs with the use of eSIMs. More EVs on the road will be a blessing to telecom companies who issue eSIMs and open new use cases for the expensive 5G technology infrastructure, however, they are subject regulations from the Telecom Regulatory Authority of India (TRAI). In the current environment, it isn’t hard to imagine a scenario where government can mandate telecom companies to build backdoors into EVs to fulfill the security and lawful interception and monitoring conditions of their license agreements. India also has the ignominious distinction of having the most number of Internet shutdowns in the world. If these shutdowns are extended to eSIMs on EVs, it will impinge on the fundamental right to movement.
A comprehensive personal data protection law will mitigate many of the concerns and only allow companies to collect data that is only necessary, and the state must balance out its security requirements for EVs to make sure that fundamental rights of users are protected.