The Growing Interest in EVs

India has seen a flurry of activity over the past few weeks, specifically on electric vehicles (EVs). Some official and policy setting, but mostly industrial lobbying - keeping the focus on an urgent need to step up EV capabilities and affordability in the country. Further, amongst a backdrop of daily price increases on petrol and diesel fuel to historical record highs, a result of volatile global oil prices and a steadily weakening Indian rupee - the context has become even more imperative. Currently, the Indian EV Industry remains nascent, with primarily two electric car manufacturers, two to three commercial vehicle and bus manufacturers and a dozen or so two/three-wheeler manufacturers. Although global OEMs have presented their global prowess and showcased concepts of their EV products at the Delhi international auto shows over the last few years, they remain tentative in including India on their global EV projections.

Government Sets a Direction

An increased interest in EVs and the existing condition of the Indian EV industry necessitates, at least for the short to medium term, intervention and handholding by the government. There has been some intent in direction setting by India’s Ministry for Transport in 2017, with a statement looking at 100% electric fleet vehicles by 2030. However, with most industry experts declaring that with the prevailing capacity and lack of an integrated EV ecosystem, even around 40% conversion by 2030 would be an ambitious expectation, prospects have been subsequently moderated to a more realistic 30%. Walking the talk, the Government of India has already gone ahead with procuring EV fleets for its officials. Tenders have also been released for supply of public transport vehicles, offering opportunities for EV automakers to industrialise emerging technologies through some initial scale secured. By the end of 2017, the government had tendered 10,000 electric cars and supply of electric buses for 11 Indian cities, albeit with mixed results experienced on their delivery.

Opportunities with Public Transport

From the tone of more recent announcements, it is apparent that India’s growth in EVs is going to be focused initially on public transportation requirements – electric buses, two and three-wheelers and fleet cars. Personal vehicle options for EVs, by comparison, will require further development, assurances and accessibility to a reliable infrastructure and broader ecosystem. Evidently, a significant opportunity has been identified within the commercial segment of two/three wheelers, such as delivery bikes and last mile connectivity transportation, which have short and frequent high-daily runs, as the precursor for popularising e-vehicles. Given their relatively lower and limited inter-city range requirements, this specific two/three-wheeler segment represents the highest potential for achieving proliferation of EVs in the country, including remote areas, with minimal basic charging setups.

Collaboration: Key to Building the EV Ecosystem

Automakers, battery manufacturers, suppliers, dealers and power utilities are now scrambling to understand how to make all this work for themselves. The critical need, however, is for these stakeholders to huddle and collaborate with a singular purpose to establish a sustainable EV ecosystem in the country. Co-dependency, partnerships and alliances will be an encouraging and natural outcome of EV development in the coming years. Several foreign collaborations and associations between OEMs, battery producers and other suppliers have already been established and more can be expected in the future. Some significant recent cooperation announcements include the partnership between start-up Sun Mobility and India’s leading bus and truck manufacturer, Ashok Leyland, for supporting electric buses through a network of swapping-battery stations named Quick Interchange Stations (QIS), where users will pay only for the energy stored in the battery and not the battery itself. Earlier this month, Suzuki and Toyota announced forming an alliance for readying a host of electric and hybrid vehicles for the Indian market by 2020-21, signifying Suzuki’s aspiration to also be the leader in the EV category in the country. These partnerships are just the beginning and a demonstration of things to come as the EV ecosystem takes definite shape. Along with these alliances, new business opportunities will also emerge. For example, in the case of charging infrastructure setups - being established at residential households/apartments, at commercial public parking lots and shopping/business ccenters as well as in industrial/institutional facilities, much like existing fuel stations. Within each of these setups, conventional AC, fast charging DC, as well as battery-swapping options could be available. These charging setups could be established either by OEMs, parking lot owners, solar energy enterprises, estate owners, fleet owners and even closed user groups. Charges could be by the hour, by units of electricity, at a fixed rate, even at special promotional discounted rates (e.g. for driving customer traffic into retail stores), or any combination of these. At the resource and energy level, automotive and power sectors will need to be closely linked and working with some degree of synchronicity. Enabling this inter-dependent ecosystem will require policies and investments supporting domestic manufacturing of vehicles, batteries and electric vehicle supply equipment (EVSE). Electricity distribution networks and grids will require upgrading to deliver to the higher power demanded by EVs projected in the future. Currently, various regulatory bodies like the Automotive Research Association of India and the Bureau of Indian Standards, are working towards formalising the required technical standards for the design and manufacturing of EVs, EVSEs and charging infrastructure. Power distribution companies, mostly public undertakings, and OEMs will need to work out strategic business models, consistent with their respective commercial requirements. It is essential that any policies proposed by central and state government agencies, be supportive and not be unintentionally restrictive. Stakeholders understand ithe nitial cost, infrastructure reliability, range anxiety and operational costs, are all critical barriers for adoption of EVs, especially with value conscious Indian operators. While EV adoption can be boosted, as demonstrated by the Norway experience in achieving around 40% acceptance; for a complex and diverse market such as India, switching to EVs will need to be initially facilitated through a combination of incentives and regulations to achieve timely outcomes.

Further Challenges Ahead

On a more cautionary note, while urgent steps are being taken, India will continue to remain challenged on the availability of critical raw materials and technology. On raw material aspects, India - much like most other countries in the world - currently imports its lithium, nickel, cobalt and battery-grade graphite requirements, all vital and basic elements for rechargeable battery manufacturing. India should consider favourable trade agreements and MOUs with relevant countries for protecting supplies and prices of these raw materials, especially given the growing international demand and therefore competition for these resources. Likewise, on technological aspects, appropriate and latest technology transfer for lithium battery manufacturing will be needed. Other immediate challenges include deficient semiconductor manufacturing and inadequate proficiency in electronic controller designs. These industries form the primary foundation for operating hardware systems required by EVs. Industrial policies should look at addressing issues that will facilitate their viability and growth for developing necessary capabilities within the country.

Conclusion

With the switch from ICE to EVs consistently acknowledged by stakeholders to be the beneficial way forward, both economically and environmentally; establishing the appropriate eco-system will be a critical pre-requisite for achieving mass customer consideration by users in India. With the large ground to be covered in the subcontinent, it is encouraging to see tracks now being laid in preparation for the long drive ahead.

Steps to Building a Sustainable Ecosystem for EVs in India