Why Buzz around EVs has Calmed: Opportunities and Challenges For Electric Vehicles in India

Electric vehicles (EVs) seem to be India’s missing piece in the jigsaw puzzle of green mobility, write Pradeep S Mehta and Samir Bhattacharya.

 

The increasing amount of oil imports and pollution created by the transport sector has forced the country to think and redesign its transportation system. Electric vehicles (EVs) seem to be India’s missing piece in the jigsaw puzzle of green mobility.

 

And automakers are more than willing to press the E-button.

 

The biggest challenge for mass adoption of Electric Vehicles isn’t only the upfront cost as much as the lack of public awareness concerning the importance of shifting to eco-friendly transportation. Countries like Sweden have included passenger and goods transport in its "eco-labelling" programme, i.e. the practice of marking products with a distinctive label so that consumers know that their manufacture conforms to recognized environmental standards and subsequently witnessed a surge in demand for both eco-friendly vehicles and transportation.

 

Certification and eco-labelling will encourage the adoption of sustainable transport services by delivering transparency in the market and help consumers to relate to healthier green options.
Opportunities and Challenges For Electric Vehicles in India

Although the EV industry in India is still at a nascent stage with only 25,000 units sold in 2016-17, the market is growing. In the four-wheeler segment, Mahindra, Tata Motors and Suzuki have announced their production plans.Tata Motors has also created a new vertical, calling it its Electric Mobility Business.

 

Different business models are being explored by these companies. Mahindra has tied with Zoomcar to provide them with EVs and eased the funding process. Similarly, Tata Motors has partnered with Ola, the ride hailing service. Mahindra is also in the process of developing a three-wheel e-rickshaw and compete with several small units already manufacturing them successfully. One can see them around the country as short journey vehicles.

 

Many other start-ups have joined the EV bandwagon. Unlike cars, where major players are already present, electrified two-wheeler segment is being led by start-ups at the moment. This month, Ather Energy has launched India’s first smart electric scooter. Coimbatore-based start-up, eMotion Motors, has launched a new electric motorcycle.Opportunities and Challenges For Electric Vehicles in India

With new players showing interest in setting their foot, the government is coming up with different initiatives to push the demand. The state-run Energy Efficiency Services Ltd (EESL) has procured 10,000 electric cars through global tender to replace the fleet of petrol and diesel cars in Central and state government offices.

 

Recently the government has slashed the GST charges for electric batteries. Fringe benefits such as green number plate, deduction in toll and parking charges are being explored and expected to be implemented soon.

 

The “Make in India” initiative would attract foreign investment in the country. EV market also offers innovation opportunity for domestic manufacturers of battery, charging and connectivity technologies. These technology disruptions can drive newer business models, creating employment opportunities across the value chain. Domestic manufacturing growth may also spur export growth. Goldstone Infra, in collaboration with Chinese major BYD, has launched the first made in India electric bus to be exported to Nepal.

 

Currently, India imports batteries at a staggering cost of around $250/kwh. Minister of Heavy Industries Anant Geete flagged the urgency of the government to push e-mobility and claimed that lithium-ion batteries will soon be manufactured in India, reducing the cost and import dependency.

 

Lack of steady policy direction is stunting the much-needed investment. Initially, India wanted to take a leap by 100% electrification of public transport and 40% of personal mobility by 2030 and planned to create a national EV policy. Later, it decided to limit itself with a vision document, instead of a policy. The much-anticipated Fame India Scheme II has also been deferred for an indefinite period.

 

Further, owing to inadequate charging stations, the deadline to roll out thousands of electric vehicles has also been extended. The second tender of EESL to procure another 10,000 cars, has been put on hold. Currently the government is working on a policy for battery charging to address the requirements of charging stations.
Opportunities and Challenges For Electric Vehicles in India

Imminent prospect of job losses is also holding the government from accelerating the push for EVs. Over the last two decades, India has managed to develop a competitive advantage in automobile manufacturing. A hasty policy for the promotion of EVs can lead to job losses and disrupt the national economy. At the time when the government is pushing its “Make in India” agenda, it would not like to lose the debate over jobless growth.

 

It is likely that this regressive step of being content with a vision document was intentional.

 

After the initial excitement of the prospect of turning the country petrol and diesel car free, the government has probably realised that in a sector where technology is still at its nascent stage and fast evolving, it would be unwise to frame a long-term policy.

 

Despite a myriad challenges, electric vehicles are steadily gaining traction in India. To encourage more global players, the government is all set to liberalise import norms by removing restrictions on price and engine capacities, as well as the mandatory local testing conditions.

 

As India is embarking on building technology-rich smart cities, the opportunity of greening the transport sector through electric vehicles is manifold. During the Paris climate summit, India committed to reducing overall carbon footprint by increasing renewable capacity additions and EVs can act as a catalyst. This would also bring much needed relief to consumers and society at large who are struggling with the growing menace of pollution. Hope environment minister Dr Harsh Vardhan is listening.

 

He should know that right incentives and awareness can accelerate the adoption of sustainable transport and conferring some credible eco-labels based on environmental sustainability such as Ecomark can be a game-changer. To balance its twin goals of boosting economic development and safeguarding environmental sustainability, fostering innovation through enabling policies for sustainable mobility is one way ahead.

 

The writers work for CUTS International, a global public policy research and advocacy group.

 

This article was originally published in The Asian Age.

 

Disclosure: Nikhil Arora, Founder & CEO of Transfin., is an investor in Emflux Motors, a Bangalore-based Electric Vehicle Startup. 

 

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