Electric Vehicles (EV) – Decoding “The Car of Tomorrow”

“Electric Vehicles (EV) are the single biggest business opportunity for next couple decades”, says Anand Mahindra, Chairman of Mahindra Group. Globally, the business is set for a disruption as electrification, connectivity, shared mobility and autonomous driving are set to revolutionize the sector with new players emerging and competing to dethrone the incumbent. The hovering question is ‘how soon?’ If analysis of past technology transition is anything to go by, it is sooner than you think. If it seems unlikely, consider cell phones, which at one time were regarded unfeasible for mass adoption but now are an innate part of our daily life, all within 10 years of time or shift from horses to cars as a primary mode of transportation. Compared to that, this transition seems fairly small

Global EV Market

EVs have been in the global market for many years, but it was Tesla Motors which actually sparked definitive interest in EVs with its compelling design and superior capabilities that were at par or far better than the Internal Combustion Engine (ICE) powered premium vehicles.

While EV’s market share in global, light-vehicle segment is still minuscule (less than a percent), the growth has been exponential with just 40,000 vehicles in 2011 to over a million vehicles sold in the year 2017. This growth was primarily fueled by lower Lithium ion battery (LiB) cost combined with stricter emission regulations, government subsidies as well as increasing customer acceptance. The top 5 EV manufacturers – Nissan, Tesla, BYD, General Motors and Volkswagen have collectively captured 50% of the Global EV market.

EV Global Penetration & Target

Many developed economies (France, UK, Norway) have announced 100% shift to EVs by 2025/2040

China, the world’s largest car market, has announced aggressive policies to promote EV, thereby to reduce import dependence, improve air quality as well as to foster local champions.

India, has announced an ambitious target of 100% EV adoption by 2030

Globally, 95% of electric cars are sold in only 10 countries: China, U.S., Japan, Canada, Norway, U.K., France, Germany, Netherlands and Sweden.

Indian EV Market

India’s mobility architecture is up for a change as it focuses on next generation, transportation solution, be it the Mumbai – Ahmedabad High Speed Rail project or Hyperloop. However, nothing has captured the attention of the industry quite like the government’s ambitious plan to electrify all the vehicles on the Indian road by 2030. This humongous opportunity also comes with challenges as it seeks to attract new players looking to destabilize the existing, given that it is a level playing field for everyone.

The report titled “India Leaps Ahead – Transformative Mobility Solutions for all” by NITI Aayog, lays down a 15-year time plan for a shared, connected and electrical mobile solution to be implemented in 3 phases.

Government’s Big EV Push

• Faster Adoption and Manufacturing of Hybrid & Electric Scheme (FAME)

FAME was launched under National Electric Mobility Mission Plan 2020 (NEMMP) which seeks to promote the EV ecosystem.

• Concessional GST

To promote EVs, EVs are being charged at 12% GST against 29% to 53% for ICE passenger vehicles.

• Government Cars – Half a Million Electric Vehicle Opportunity

Roughly, half a million vehicles are used by the government departments alone. A time bound push to convert all government owned cars to EVs will itself create a huge market. To its credit, the government has initiated the process as it proposes to buy 10,000 EV to replace part of their existing Petrol/Diesel vehicle used in different departments. In the first phase, Tata Motors will be supplying 350 vehicles while M&M 150 vehicles.

Electric Disruption

The Indian Auto & Auto Ancillary industry that collectively employs 30 Million people and contributes 7.1% to GDP is up for a disruption as auto sector inches towards electrification. The technological shift from the century-old internal combustion engine (ICE) two electric motor-driven vehicle demands a very different vendor and componentry ecosystem. While a conventional ICE car is complicated, with over 3,000 moving parts, an EV has just about 30. Besides automotive, the EV thrust will impact sectors like oil & gas, power, batteries, mining and natural resources (as demand for materials like lithium and cobalt will spike) and infrastructure (integrating charging stations is part of the plan).

Making India EV Ready

Despite the euphoria swooning the EV landscape, making India EV ready is still a distant dream. One such hindrance to the ambitious target is the lack of charging-infrastructure to take care of “range anxiety”. India has approximately 500 charging points against 1,50,000 in China. To bridge the gap, India Inc, with legacies spanning over 100 years, have already forayed in setting up infrastructure. For solar power developers to automobile manufacturers to some of the Maharatna and Navranta companies, all have thrown their hats in the ring to grab a piece of the EV pie.

For energy firms, investment in charging infrastructure seems lucrative given that there will be an uptake in demand for electricity thereby enhancing viability of stressed power projects. Besides, another related emerging technology is EV that can double up as storage device which could help with grid balancing, thereby further complementing the government’s push for solar power. Furthermore, with a renewed design of reducing the cost of charging station by half, comparisons are stark with yellow colored PCO that took the telephone to the nook and corner of the country.

An ideal EV scenario is where EVs are charged using renewable thereby saving Rs 4.16 trillion to buy 202.85 million tonnes of crude oil in 2015-16.

Problem Aplenty

Everything is not as rosy as it seems as hurdles in the policy-making and corporate landscape remain. Once such hurdle is requiring electricity retailing license for setting up charging stations. Besides, India is yet to come up with necessary regulations for creating a sustainable EV ecosystem as it is struggling with multi-hued scrutiny and policy flip-flops, be it overnight ban on diesel vehicles, green-cess or direct transition from BS IV to BS VI

Despite these, India Inc remains buoyant as it believes that transition to e-mobility is inevitable as it embarks a new journey, one that will be full of challenges but at the same time presenting an opportunity to build a New India, with greener and cleaner environment, enhanced competition and an investment destination, full of great possiblities.

Source: marketexpress.in