The new, tightened air quality guidelines released by the World Health Organisation on September 22 put almost all of India in the ‘polluted’ category. This has further highlighted the country’s dire pollution problem and the urgent need for a phaseout of fossil fuels and a push towards clean energy. The WHO also said that “almost 80 pc of deaths related to PM2.5 could be avoided in the world if the current air pollution levels were reduced.” In a bid to reach the carbon emission goals set out by the 2015 Paris Climate Agreement, the Centre and several states are now encouraging production and use of electric vehicles as one way to cut greenhouse gas emissions.
On September 15, the federal government announced a budget of INR 257 billion for providing incentives to automobile and drone manufacturers over a five-year period in order to enhance production of e-vehicles, saying that the scheme would allow India to “leapfrog to environmentally cleaner, electric vehicles and hydrogen fuel cell vehicles,” as well as generate around USD 5.8 billion in new investment and create 750,000 jobs.
In order to qualify for this scheme, new or existing manufacturers have to invest at least USD 34 million in India over the five years, perhaps perfect timing as Tesla, one of the world’s leading electric car companies headed by Elon Musk, announced in the beginning of the year that its cars would finally be available for sale in India.
Auto analysts have welcomed the government move, saying the increased investment and subsequent competition in the industry will benefit the country’s transition towards green energy. Announcing Tesla’s wish to enter the Indian market, Union Minister for Road Transport and Highways and the Minister of Micro, Small and Medium Enterprises Nitin Gadkari said “India is going to become a number 1 manufacturing hub for auto in five years.” Along with the government’s goal that by 2030, 30 pc of all automobiles produced in India would be electric, several states and key players in the industry have expressed the important role of EVs and “green cars” as fundamental in the fight for clean energy.
Maharashtra minister of tourism and environment Aditya Thackeray said the state’s EV Policy 2021 will be “implemented to the fullest,” adding the Maharashtra government was keen to “push electric mobility on a large scale…to help the Race to Zero in carbon emissions from the transport sector.” Thackeray has also said that all vehicles purchased or hired for use by the state government from 2022 would strictly be running on electricity.
Another notable development is an e-rickshaw pilot project in Gujarat’s Kevadia Colony, the site of India’s largest dam, Sardar Sarovar on the Narmada River and which has the world’s tallest statue. The Gujarat government says that this site would become India’s first “e-vehicle only area” with local women trained to operate e-rickshaws.
In addition to Tesla, major car companies such as Ford and Mercedes have also joined in on World EV Day, with Mercedes Benz India announcing that it would make its latest electric car model available at all its dealerships in India, Audi’s plan to release another electric car to India just a month after launching its first and Tata Steel becoming India’s first ever steel producer to deploy electric vehicles for steel transport, citing it as an “endeavour to enable a responsible supply chain.
Sold, but not made in India
Unlike other countries where manufacturing has taken off at a dramatic pace, notably China, some European nations as well as the United States, in India there have been too few e-vehicles produced or sold. And most global brands are currently only tipping their toes in the water to test the Indian market’s appetite for e-vehicles before they make any serious commitments for investments that can easily top USD 1 billion per plant.
So far, the fastest transition has come in the two-wheeler segment where a number of manufacturers have begun producing and selling the vehicles and the acceptance levels are high. Experts attribute this largely to the large price tag that a high-quality e-car would carry.
“It is definitely a positive thing, but for the luxury segment, the kind of vehicles that Audi and Tesla are launching in terms of volume and numbers, is going to take time. The lowest hanging fruit that I see is two-wheeler EVs; the pace that the transition from gasoline-operated to electric is happening has taken both the manufacturer and dealers by surprise. In this segment, the customer shift has also been very rapid,” Nikunj Sanghi, managing director of JS Four Wheel, one of the leading dealers for Hero MotorCorp and Mahindra & Mahindra in Rajasthan, tells Media India Group.
Some of the major players in the country’s two-wheeler market have begun to invest seriously in e-vehicles, but as of now 90 pc of all the e-vehicles sold in India are low-powered and low-speed e-scooters that do not require a driving licence.
Hurdles aplenty
Although the pickup in 2-wheelers as well public transport vehicles like buses or three-wheelers as well as electric-rickshaws, that sold nearly 90,000 last year, signal a clear shift towards e-vehicles in Indian automobile sector, analysts say that lack of a holistic approach as well as poor implementation of policies and confusion over the incentives have prevented the market from accelerating significantly.
In addition, there are other large hurdles like a clear lack of charging infrastructure, high prices, and limited choices, are some of the main barriers to more Indians buying personal EVs.
As a result of this, India was perhaps one of the rare countries in the world where the e-car market actually shrunk last year as compared to the previous year. A report by SMEV (Society of Manufacturers of Electric Vehicles) revealed that EV sales in India during FY20-21 stood at 236,000 as against 295,000 the previous year, a drop of over 20 pc in the year. An overwhelming share of this was two-wheelers as India sold a measly 5900 e-cars in the year.
Many would perhaps try to pass the fall as being due to the pandemic, but almost all other markets have seen a growth, despite the pandemic, especially China. The world’s largest producer of e-vehicles sold 1.3 million e-vehicles in 2020, accounting for 41 pc of all e-vehicles sold all across the world last year.
It is little wonder then that while in China, electric vehicles account for almost 10 pc of annual car sales, in India it makes up less than 0.2 pc.
“Electric passenger cars tend to be much costlier than gasoline-powered vehicles. Also, customers have a ‘range anxiety’ with most e-vehicles, as most people would want to use it to travel cross-country rather than just within a city. Finally, the lack of availability of charging infrastructure across the country is a major concern, and that is why for 4-wheelers it will definitely take time,” Sanghi explains.
Maharashtra minister Thackeray also emphasised the need for charging stations to be made available at petrol pumps and parking lots of housing complexes and single buildings to incite consumer demand of electric vehicles. But there are other barriers as well.
“I think the first thing that needs to improve is definitely the cost of acquisition, the price of e-vehicles like Tesla and Audi need to come down, and so unless they start assembling in India, since the duty of imported cars is very high, an increase in sales seems unlikely,” says Sanghi.
Last week, Audi, which now offers five models of electric cars in India, pitched for lower import duties on EVs in the country, noting that high taxation has been an obstruction for growth of the electric auto sector, and lower taxes would help in lowering the price tag of the imported models, which would convince the headquarters to re-invest in the India for local manufacturing and even sell more of their vehicles. Moreover, only a few banks such as Axis and SBI offer loans for electric vehicles, so the government should encourage other banks to provide loans to aspiring EV customers. Another way to circumvent the high price tag could be hybrid cars, which serves as a convenient middle ground between the two industries. Maruti Suzuki, for example, is focusing on releasing hybrid models until charging infrastructure improves and electric vehicles become more affordable for Indian buyers.
The government has set ambitious, and unrealistic, targets for the transition towards e-vehicles. It says that by 2030, 70 pc of all commercial cars, 30 pc of private cars, 40 pc of buses, and 80 pc of two-wheeler (2W) and three-wheeler (3W) sales should be electric. With just eight years to go, it would mean, for instance, e-car sales have to increase from 5900 to almost 900,000 in a year, a growth of 15,300 pc or at least 1900 pc growth every single year. This would require an estimated cumulative investment of over USD 180 billion in vehicle production and charging infrastructure over the next eight years. Both the figures are entirely outlandish, especially when compared to current performance.
Consider another government scheme to promote the sale of e-vehicles in India. Announced in 2019, Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME II) had allocated INR 100 billion for purchase of 1.6 million e-vehicles within three years. However, in June this year, the government was obliged to extend the scheme due to lack of takers. As against the target of 1.6 million, including of 1 million two-wheelers, 500,000 three-wheelers, 55,000 cars and 7,000 buses, only 78,000 EVs had been sold under the scheme until March 31, 2021, forcing the government to extend the scheme and hope that it would find more takers.
The problems with FAME II and other schemes of the government shows that unless an entirely holistic approach is taken with clear policies that identify the gaps and plug them rapidly, India is likely to miss the race to zero and remain a bystander as rest of the world zooms ahead in e-vehicles.
Source: mediaindia.eu
