India has so far remained abysmally short of its stated electric vehicle adoption goals, and its 2030 target seems ambitious for now unless steps are taken to speed up adoption
It’s literally a race against time for adoption of electric vehicles (EV) in India. Despite the imperatives of cutting carbon emissions and reducing India’s dependence on crude oil 82.8 percent of which needs to be imported, we have remained abysmally short of the stated adoption goals since our home-grown EV industry took its first steps 4-5 years ago. Against a three-year target (2019-2022) to sell one million electric two-wheelers (E2W), we have so far only managed to sell 1.4 lakh units.
By 2030, the Indian government wants to see at least 7 out of 10 commercial cars and 8 out of 10 two wheelers/ three-wheelers to be electric. In the passenger car segment, the stated target is to see that 3 out of 10 cars sold are electric. In the bus segment, 4 out of 10 buses should be running on electricity. But from the current reckoning, as also the economic slowdown and a more virulent second wave of the corona pandemic hitting the country, these targets at best appear ambitious.
The stated targets notwithstanding, there is a lot happening in the domestic EV industry of late. The announcement on global EV giant Tesla entering India seems to be acting as a catalyst for the government (both at the Centre and in states) to further push EV-centric policies and regulations. At the same time, the home-grown ride hailing giant Ola has ventured into manufacture of electric two-wheelers with a Rs 2,400-crore ($320 million) investment plan to set up, what it calls, the ‘world’s largest’ electric scooter manufacturing plant in Hosur, Tamil Nadu. But a lot of it remains work in progress.
Before taking a deep dive into the specifics of India’s nascent EV industry, let us first put things in context. In the past three years, the EV makers have collectively sold around 3 lakh EVs (majority of them three-wheelers and two-wheelers, followed by e-buses, and a few thousand four wheelers. The traditional automotive sector, which is battling recessionary pressures and slowdown blues for the past four years at least, has managed to sell more than 8 million passenger cars and around 60 million two wheelers. Clearly, far more fossil-fuel driven vehicles are selling compared to EVs.
For context, sample this: For every single electric car sold in 2020, there was an offtake of around 1,000 regular ICE (internal combustion engine) cars. In the two-wheeler category too, for every single electric two-wheeler (with a speed of more than 25 km/hr) sold in 2020, the corresponding sales figures for ICE two-wheelers was around 780. And that is the humongous gulf between ICE vehicles and EVs that needs to be filled as quickly as possible.
Why the EVs Need a Push
Left to the private automotive sector, EVs would take a much longer time to become affordable and accessible simply because of lack of demand and lack of charging infrastructure. It will follow the basic demand-supply theory. Therefore, faster adoption of EVs is much more in the interest of the government and rightfully so. As per a government report, if half of the country’s on-road vehicular population turns electric, India could end up saving in excess of Rs 2.5 lakh crore in fuel bills annually. As per a NITI Aayog report, of the total vehicular traffic in the country, 79 per cent are two-wheelers, 12 percent four-wheelers (under Rs 10 lakh per unit); four per cent is made up of three-wheelers while another two percent is high end four-wheelers. The balance three per cent is accounted for by buses and trucks. Clearly, two-wheelers as a category should be the target for EV manufacturers. “I think EVs will be liked by the customers if they are affordable, simpler and cheaper to run,” says Sulajja Firodia Motwani, Founder & CEO, Kinetic Green Energy and Co-Chairperson of the Electric Vehicle Task Force at FICCI.
For consumers to shift to an electric vehicle (car or two-wheeler), affordability and mileage are the two main considerations. “In recent times we have seen encouraging growth in electric vehicles. As the total cost of ownership (TCO) for electric vehicles vis-à-vis ICE vehicles reaches a point where the EV TCO is visibly much lower than conventional vehicles, we will see a rapid mass adoption,” says Shailesh Chandra, President, Passenger Vehicle Business Unit, Tata Motors. “The push towards indigenising electric vehicle technology will help bring down the cost of ownership and increase adoption of electric vehicles,” he adds.
In 2019, the government had announced an outlay of Rs 10,000 crore for FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme for a period of three years till 2022. The scheme had envisaged supporting 10 lakh electric two-wheelers, 5 lakh three wheelers, 55,000 four-wheelers and 7,000 buses.
In 2020 (January-December), only 25,735 units of high-speed electric two-wheelers were sold. In comparison, the sales corresponding figures for 2019 were 27,224 high-speed e-two-wheelers. Why this drop? According to the Society of Manufacturers of Electric Vehicles (SMEV), it is only the high-speed electric two-wheelers which qualify for incentives under the government’s FAME II scheme. As per SMEV, when FAME-II was launched in April 2019 the plan was to put at least 10 lakh high-speed electric two-wheelers on the road by March 2022. So has FAME II failed in its objectives? “The actual cumulative sale since January 2019 has been 52,959. However, sales under the scheme have remained only 31,813 units,” SMEV had said in January 2021. SMEV Director General Sohinder Gill had said: “The FAME-II scheme had some good points and laudable objectives but came with so many strings attached, most of them introduced prematurely or unnecessarily, that lead to the achievement of only 4 percent of the stated targets.”
But there are some green shoots in sight. As per SMEV data, the sale of high-speed E2W has nearly tripled if we compare the sales data for January-March for both 2020 and 2021. In the first three months of 2020, E2W sales stood at 7,364. But during the same period in 2021, the numbers were 20,721. That is a good sign for the E2W market indeed.
Meanwhile, in the electric 4-wheeler segment E4W Tata Motors is leading with a market share of 71 per cent (FY21). “We currently cater to both fleet and private segments with our offerings — Tigor EV and Nexon EV. As of March 2021, we sold 4,219 units in the EV segment in FY21, a threefold increase over FY20. We also registered our highest ever monthly and quarterly sales of 705 and 1,711 EVs in March 21 and Q4 FY21 respectively,” says Shailesh Chandra of Tata Motors.
Looking at 2030
The NITI Aayog in its recommendations to the central government (still under review) has proposed incentives of $4.6 billion by 2030 for companies manufacturing advanced batteries. The proposal includes giving cash and infrastructure incentives worth Rs 900 crore every financial year starting with the current year. This amount can then be scaled up further depending on the on-ground situation.
Achieving the ‘2030 Goal’ is subject to multiple things falling in place, say experts. As per SMEV if electric mobility has to be accelerated then all the 6-7 agencies need to work in an integrated way. “While the certainty of achieving the electric mobility goal is there, the time depends on how much energy, resources and decision making are we ready to put into it. Otherwise, it’s easy to give targets. Targets don’t mean anything unless we work towards that goal and do correction,” says Gill of SMEV.
Mega EV Push
Union minister Nitin Gadkari is among the biggest proponents of green fuel, EVs and localised manufacturing of the EV support ecosystem. After all, shifting to EV will help India save a large portion of Rs 8 lakh crore fuel import bill annually. Recently, the transport minister made headlines when he said that he expects the price of EV cars to match those of cars running on petrol/diesel. Basically, today Tata Nexon Electric is the largest selling electric car in India. In Delhi, its ex-showroom price is Rs 13.99 lakh. In the next two years, going by what Gadkari has said, Tata Nexon Electric should cost Rs 7.09 lakh ex-showroom Delhi. “There is tremendous work going on in areas such as metal-ion and metal-air battery technologies, which are set to enable this target. My suggestion is that we must switch to import-substituting, cost-effective, pollution-free and indigenous propulsion options,” Gadkari said recently.
Naveen Munjal, Managing Director, Hero Electric says he wants to aggressively expand in the electric vehicle segment. “FY21 has been one of our best years in terms of performance despite the pandemic. We have recorded a growth of over 15 per cent, ending the year at 53,500 Hero EVs on the road. We are extremely bullish about our sales volume and aim to double our growth to more than 1 lakh units in 2021-22 fiscal.”
By 2025, Hero Electric says it wants to sell 5-7 lakh EVs. And to achieve that, it has earmarked Rs 700 crore to be invested over the next 3-4 years towards expanding, modernising and strengthening the EV supply-chain network. And it is making money on every EV it is selling. “We don’t sell any vehicles which are at loss at all…when you get the volumes, you become profitable,” Munjal told BW in a recent video interaction.
Another player that is fast gaining market share is Ather Energy, currently the fourth-largest player in the domestic E2W market. “My 5-year vision for Ather will be to become the leading EV manufacturer in the two-wheeler market in India,” says Tarun Mehta, Co-founder and CEO, Ather Energy.
‘To Do’ List
Creating swapping infrastructure is a crucial element for any large scale adoption of EVs. Chetan Maini, Co-founder & Chairman, Sun Mobility knows the significance and hence is doing just that. “We believe that the charging infrastructure created needs to be something at scale,” Maini says. That is the reason his company is creating swapping infrastructure, a small ATM-like kiosk that not only provides the facility for charging but also doubles up as the junction for battery swapping.
“One of our little stations, like an ATM kiosk, will probably swap 200 batteries in a day, which is equivalent to serving 200 two-wheelers in a day. So you’ve taken this real estate space of 200 chargers and replaced it with one on this front. So instead of putting up 10 chargers which can today service about 10-30 vehicles, if we put up 10 swapping stations that could service 1,000 two-wheelers, that is the difference of magnitude in this area. Hence the infrastructure must be done at scale. And that is what we are focusing on,” says Maini.
The second part of the mission is the availability of infrastructure. Maini says that the infrastructure should be similar to what people are used to for gasoline vehicles. “Therefore, the partnership with companies like IOCL gives access to 30,000 outlets in an area. We have put up 50 stations today in 12 cities on this front. Hopefully, by the end of this year we should have about 300 to 500 stations in place,” he adds.
If electric mobility has to come in a big way, the charging infrastructure has to be in place, because battery swapping is not the answer for electric four-wheelers, says Gill of SMEV. “For electric two-wheelers where the distance traveled is not too high, charging infrastructure is a support industry and more of a desirable thing. From this point of view, electric two-wheelers are not waiting for the charging infrastructure to make electric mobility happen. But yes, if charging infrastructure happens and is in place it will certainly help electric two-wheelers,” he adds.
What can the government do? Says Gill, “The one thing the government can do without spending money is encouraging companies to switch to electric — which means fleets, ecommerce deliveries, last-mile deliveries — all should go electric. The top-20 big companies should be encouraged to incorporate 30 per cent EVs year on year else the government can impose a tax. Such bold steps are required in my opinion to change the field and create a whole ecosystem.”
Munjal of Hero Electric wants more financing options for consumers opting for EVs. “When you look at EVs the financed vehicles account for less than five per cent. The option of organising financing for electric two wheelers will be a major boost to EV sales,” he says.
Christie Fernandez, Founder, Sooorya EV says India should focus on small electric cars rather than large luxury electric cars. “India is predominantly a small car market. In the big car segment you need bigger batteries, larger powerful motors and fast charging network which is difficult if we start competing in the premium segment as is the case in the US, Europe and China, which are far ahead in the game,” he says.
Major auto-component maker Sona Comstar took a decision five years ago to also supply to the EV industry. Sunjay Kapur, Chairman of SONA Comstar says: “Today, we have slowly but significantly increased the number of parts we supply to the EV industry. So we are supplying components to electric passenger cars and also the fleet industry as a business. Tomorrow if everything turns electric we are not going to go out of business and that was our aim.” Kapur is also the vice president of the Automotive Component Manufacturers Association (ACMA) and Chairman of the Electric Mobility Committee.
Charging Infra Challenges
Charging infra and electric vehicle adoption are in a chicken and egg situation, as the growth of charging infrastructure is key to India achieving its 2030 goals. The much-awaited arrival of Tesla in India may just be the catalyst the EV industry needs. Since the news of its India-entry plans, a lot more communication around ‘what India is doing’ to bolster the EV infrastructure has begun. Examples are the recent announcements by the Ministry of Road Transport and Highways and Power for setting up 69,000 EV charging stations across the country, or the NHAI signing an MoU with EESL to set up EV charging infrastructure works at toll plazas and other places.
The Delhi government has also asked owners of shopping malls, multiplexes, and other marketplaces to install electric charging stations on their premises. Tata Motors has set up close to 400 charging points in more than 45 cities and on several prominent intercity routes across India. It is planning to scale this up to 2,500 across most major cities and highways by FY22. “Leveraging group synergies, we have established Tata UniEVerse which is one of its kind EV ecosystem where several Tata companies have come together to provide EV solutions to consumers. We have partnered with Tata Power to provide end-to-end charging solutions at home, workplace and for captive and public charging,” says Chandra of Tata Motors.
OlaElectric recently unveiled its plan to develop a hypercharge network of fast chargers to support its products. Bhavish Aggarwal, Chairman and Group CEO, Ola said, “Electric is the future of mobility and we are reimagining the entire user experience of owning an electric vehicle. Our plans to build a comprehensive charging network is a key piece of this. By creating the world’s largest and densest two-wheeler charging network, we will dramatically accelerate the customer adoption of electric vehicles and rapidly move the industry to electric.”
Tata Power-D DL recently announced its partnership with SUN Mobility, a leading provider of energy infrastructure platform and services for electric vehicles (EVs), to set up a network of Battery Swap Points™ across North and North-West Delhi.
Ganesh Srinivasan, CEO, Tata Power-DDL says, “Together, we will accelerate the pace of EV adoption across vehicle segments, in this Megapolis with one of the highest vehicle densities in the country, especially in the mass category of cars, two-wheelers, public/shared transport vehicles and good carriers.”
Ather Energy has set up 10 fast charging points called Aether Grid across key hotspots in Delhi, Noida, Gurugram and Ghaziabad and will install more charging points in the coming months. The company has partnered with national bodies like EESL to set up fast-charging points across the city and will be looking to partner with progressive hosts including cafés, restaurants, tech parks, malls, and gyms. More than 128 public fast-charging points, AtherGrid, are up across more than 18 cities in India.
The road to EVs requires a focus on import substitution, localisation and self-reliance to build a formidable ecosystem in the next 10 years to make EVs mainstream. “The push towards indigenising EV technology will help bring down the cost of ownership and increase adoption of electric vehicles,” says Rushi Shenghani, Founder and CEO, Earth Energy EV.
As EV battery prices are set to go below $100, there is a huge opportunity in the sector to localise EV components and rescale our capacities for electronics and digitisation. “Through cost-intensive research efforts and optimisation, battery prices are projected to drop more than 30 per cent making electric vehicles more affordable over time,” says Shaju S., General Manager and Head of Transportation Business Unit at Tata Elxsi.
The OEMs are increasingly using connected digital cloud platforms to accurately predict the remaining range, battery life, suggest best charging options and also for providing driving advisories to the customer.
India would need to invest more in developing infrastructure for EVs, especially fast charging hubs, in the coming years, says Anmol Jaggi, Co-founder & CEO, BluSmart Mobility. “This can be very similar to how petrol pumps operate. Office buildings, public parking spaces, shopping malls, metro stations and numerous other places can be excellent spots for charging infrastructure,” he adds.
The industry wants the government to emphasise on materials like lithium, manganese, nickel, cobalt, and graphite to help reduce costs and also help in the indigenisation of battery packs. The government is expected to announce a comprehensive policy on advanced battery policy to power EVs.
The Delhi government is among the states to have created an enabling policy environment to support and promote the faster adoption of EVs. It is offering the highest incentive in comparison to other states, which is Rs 30,000 on two-wheelers and up to Rs 1,50,000 on the purchase of fourwheelers. Ever since last year when the Delhi government implemented the electric vehicle scheme, there has been an increase in electric vehicle sales. “I think that 2030 goals are very tame, still only in the realms of catching up with the world. We can, and we must go for larger ideas and more aggressive plays,” says Siddharth Bagri, Co-founder, 7 CEO Pravaig Dynamics.