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Samanyu Gupta
"Digitization, increasing automation, and new business models have revolutionized other industries, and the automotive industry will be no exception."

Samanyu Gupta
Research Analyst, Envecologic

The Road For Electric Vehicles In India

By Samanyu Gupta, Research Analyst, Envecologic

Published in May Edition
In the words of Tesla founder and CEO Elon Musk, “You have to match the convenience of the gasoline car in order for people to buy an electric car. Now, as the global automotive industry is on the verge of disruption, Musk’s words seem truer than ever. Digitization, increasing automation, and new business models have revolutionized other industries, and the automotive industry will be no exception. Governments the world over are doubling down to lower the cost of electric vehicles to accelerate their fast adoption amongst masses. A recent report by a global financial services company, UBS, predicts that one out of every six cars sold globally will be electric by 2025.

The automotive industry is already feeling the effects of electrification or e-mobility, both globally and in India. By 2030, electrification could lead to electric vehicles holding a substantial share (up to 50% of new vehicle sales in a breakthrough scenario) of the global automobile sector. If India sees a similar momentum, it will significantly impact manufacturers across the automotive value chain.

Major factors driving the trend for higher penetration of EVs are steep reduction in the battery technology costs & decarbonisation policies introduced by different economies globally. The trends in battery costs are promising with significant reductions witnessed during the last five years, as evident in Figure 1.

So, what exactly are the electric vehicles or EVs? Touted as the future of mobility, electric vehicles, are fitted with onboard batteries which, unlike conventional fuel tanks, can be charged using electricity. These batteries, in turn, store and use the energy needed to power a set of electric motors, which ultimately propels the car forward. Because an electric car is devoid of clutch, gearbox and even an exhaust pipe, it is significantly quieter and offers a smoother ride than conventional gasoline-driven vehicles. When fully charged, a standard EV is capable of covering somewhere between 150 km to 170 km before it needs to be recharged. One of the chief features of electric vehicles is that they can be plugged into off-board power sources for charging.

India’s ambition towards a full electric mobility economy by 2030 was announced last year. Although, it is yet to launch a comprehensive policy that chalks out clear directions, there have been initiatives in the past through the launch of National Electric Mobility Mission Plan (NEMMP), 2013, and Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME), 2015. Under the NEMMP, around 6-7 million EVs/hybrid vehicles have been envisaged to be launched on Indian roads by the year 2020, while under FAME, the government has targeted to offer subsidy on EV on an annual basis. In December last year, SIAM or the Society of Indian Automobile Manufacturers came up with a white paper that stated electric vehicles will constitute 40% for overall new car sales by 2030. The apex carmakers' body had predicted a 100% electric vehicle sale only by 2047.

It is important to recognize that despite many economic and environmental benefits of EVs and hybrid vehicles, there may be challenges with regard to resource availability and affordability. Preliminary estimates reveal that a 100% penetration of BEV (only four wheelers) by 2030 would increase material demand by 85 times. Many of these resources like copper, lithium and related materials and components, plastics and magnets are heavily imported by India. Globally 42% of cobalt is used in making batteries and by 2020 and the share is expected to rise to 55%. Research reveals that cobalt Industry has a fragile supply structures among all battery raw materials. Moreover with India being highly import dependent for these resources, their procurement will have significant impact on the manufacturer. Additional challenges include the following:

• Ways to reduce the resource requirements of specific metals for particular components or which alternative technologies could ease the demand for raw materials. Also, need to look into uncertain disruptive changes regarding design and material compositions.

• Charging stations that have a strong network and decentralized presence. Also need to have technologies and systems to generate energy from sustainable sources.

• Fragmented and unscientific end of life vehicle management in India; not much recovery of rare earths happening from non-electric vehicles; Existing resource recovery from batteries has been confined to cobalt, nickel, and copper due to their high value.

With increasing networks being established with Chinese battery manufacturers and exporters, there is import of lithium ion batteries happening at very low prices which may eventually replace the conventional lead acid batteries even in three wheelers and the lack of policy framework and improper dismantling can prove costly from the environment and resource recovery point. While the future of EVs in India looks very promising, aforementioned challenges are just some of the pre-empted ones, with many more roadblocks as we scale up. No doubt that India sits on this gold mine opportunity for the growth of an all industrial segment which will have a positive cascading affect on many other complimentary sectors as well. The sector will critically hinge upon the coordination of the manufacturers, government policies and most importantly buyers’ enthusiasm to participate in this new age green revolution.

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