Electric vehicle market grows in India

Electric mobility is the future and India is actively pushing for a Make in India policy to ramp up electric vehicle numbers

November 3, 2017

Half of global passenger vehicles are estimated to have an electric option by 2020

EV sales in India were recorded at 22,000 units for the year ending March 31, 2016

Electric mobility has opened new opportunities for foreign technology collaborations

Foreign carmakers have announced new investments to tap into the growing market

Government of India’s determined push for complete electric mobility in future holds out multiple promises for the country’s Make In India programme along with enhanced inflow of foreign direct investment (FDI). Complete electric mobility will necessitate massive investments in creating domestic production facilities for cost-efficient electric vehicles, as well as for associated infrastructure and servicing platforms. Even as an Electric Vehicle (EV) national policy is awaited for more clarity, the Government and private automobile players have accelerated their activities in this space. Worldwide, countries are switching to EVs, with half the world’s vehicles estimated to have an electric option by 2020, according to Bloomberg New Energy Finance, international consultancy.

EV offers exciting investments opportunities

EVs have become unavoidable, driven by the spectre of fast depleting fossil fuel reserves and rising health costs from polluting internal combustion engines. No one knows it better than neighbouring China, the world’s largest EV car market in 2016: the country registered 336,000 new EVs, double the amount that USA sold. EV sales in India were 22,000 units for the year ending March 31, 2016, according to the Society of Manufacturers of Electric Vehicles.

India has decided to opt for the Made in India model to ramp up EV numbers on the roads. And, the auto industry has responded with a host of e-vehicle focused start-ups: Bengaluru based Ather Energy Pvt. Ltd will develop a homegrown smart e-bike; in Nagpur, Ola, a ride integrator, Mahindra Electric and the government are experimenting with an all-electric shared vehicle fleet as a pilot project. In Mumbai, Sajjan Jindal’s JSW Group has announced an ambitious US$620 million EV project, which includes building an electric car, electrical battery, energy storage systems and charging infrastructure space.

Bengaluru-based EV pioneer Chetan Maini’s SUN Mobility, has tied up with Ashok Leyland, to provide a pilot battery swapping charging infrastructure by January 2018. Established players like the Bajaj Group are promising “to do a Tesla” in the two-wheeler segment by 2020, under a new franchise code-named Urbanite.

Multilateral policies to drive EV growth

State governments too are not far behind. Karnataka government, which unveiled an ‘Electric Vehicle and Energy Storage Policy 2017’, wants to set up new EV manufacturing zones, charging stations in airports, railway stations, and metro stations. Hoping to net investments worth US$4.8 billion, the state wants to become a hub for production of alternative fuel vehicles that will reduce dependency on fossil fuels and bring down pollution levels, while pushing the ‘Make In Karnataka’ initiative. Maharashtra too is framing a policy to set up charging infrastructure.

Government of India is motivating Indian auto companies to acquire technological leadership in EV technology.  India’s lack of cell and electric motor manufacturing technology is a key lacuna in domestic production of EVs, which will require foreign partnerships

On its part, the Central Government is trying to motivate Indian auto companies to “acquire technological leadership in EV technology and is looking to share with them the know-how of commercial production of lithium-ion batteries developed by the Vikram Sarabhai Space Centre. Their bulk procurement programmes such as a recent order of 10,000 Evs placed by the Energy Efficiency Services Ltd’s should further bolster manufacturing of vehicles and components. While policy makers have been emphatic about subsidies not being forwarded to the nascent EV sector, the Government is striving to create infrastructure by providing liberal rules for the setting up of charging stations to power EVs.

Partnerships to augment technology

The Central Electricity Regulatory Commission (CERC), tasked with framing the norms, has identified three business models for electric vehicle charging infrastructure. Firstly, state electricity distribution companies (DISCOMS) can build charging stations with separate tariffs under a special category for EVs; secondly, a private player can partner with DISCOMS through a public-private partnership franchisee model, acting as an agent without needing a new license. And finally, a company can operate via a battery swapping model – the company collects and charges batteries and leases them out to vehicle owners.

Electric mobility opens window for new foreign technological tie-ups in the automotive sector. For example, India’s lack of cell and electric motor manufacturing technology is a key lacuna in domestic production of EVs, which will require foreign partnerships. In addition, manufacturers will also need to enter into long-term supply contracts with global commodity producers (such as Chile or Brazil) for importing key ingredients like lithium and cobalt. Some global automotive companies have already evinced interest in India’s EV market. Japanese automaker Suzuki Motor Corp is setting up a lithium-ion battery venture in Gujarat and Chinese PSU major Yinlong is proposing to run electric cars and buses in Amritsar. The potential in the EV market is picking up momentum at a promising pace.