Opinion

Electric Vehicles: is the shift imminent?

The thrust has been clearly noted in the recent Union Budget with the government policy of battery swapping expected to give a boost to the domestic EV industry, specially for public transport, as it will provide an affordable solution to the charging issue. Industry stakeholders said the policy will help develop the infrastructure needed to make EVs improve their use in public transport as also for general users.

Electric vehicles are causing a buzz. Not only aren’t these being promoted to tackle the looming environmental crisis, but the consumer’s choice is slowly changing. The demand, be it four or two wheelers, is steadily picking up. From environmental perspective, the EVs are the future of the auto industry in India as in many other countries.

The thrust has been clearly noted in the recent Union Budget with the government policy of battery swapping expected to give a boost to the domestic EV industry, specially for public transport, as it will provide an affordable solution to the charging issue. Industry stakeholders said the policy will help develop the infrastructure needed to make EVs improve their use in public transport as also for general users.

In fact, the government’s EV policy ‘Scheme for Faster Adoption & Manufacturing of (Hybrid & Electric Vehicle in India’ has seen a big boost from Rs 800 crore to Rs 2908.28 crore in the budget for 2022-23. E-mobility is all set to get a major impetus with the announcement of a battery swapping policy with the provision of land for establishing charging stations at scale. The target obviously, would be to have more EVs on the road in the coming years.

That India is destined to be a manufacturing hub for electric vehicles within the next five years was forecast by Union Road and Transport Minister Nitin Gadkari, stating that several countries no longer want to deal with China following the COVID-19 crisis. Gadkari asked Indian automotive companies to boost their EV technology and also to focus on finding alternatives to lithium-ion battery tech to help make India the next global manufacturing hub for electric vehicles. “I am confident that in five years, India will become the number one hub for manufacturing electric buses, cars and two-wheelers. There is also a blessing in disguise that a majority of countries are not interested in dealing with China anymore. So, now there is a huge potential for India,” he had pointed out at a webinar titled ‘India’s Electric Vehicle Roadmap Post COVID-19’.

So far China has been on top in terms of EV production globally by producing over 80 percent of all EVs. It has the fourth largest reserves of lithium in the world, hence giving it a monopoly in the lithium-ion cell market. Lithium-ion battery packs are currently used the most for powering from small electric two-wheelers to electric commercial vehicles.

It may be recalled that the government launched the National Electric Mobility Mission Plan 2020 in 2013 to enhance fuel security as also to address vehicular pollution through the promotion of hybrid and EVs. The government launched the Faster Adoption and Manufacturing of Hybrid & Electric Vehicle scheme under NEMMP, 2020 in 2015-16. The scheme was to make hybrid and EVs as the first choice for buyers instead of internal combustion engines and reduce liquid fossil fuel consumption in the country.

Since April, 2019, the outlay of the scheme (FAME-II) has been enhanced to Rs 100 billion for a period of three years, mainly to offer upfront incentive on the purchase of EVs and also to establish the necessary infrastructure for electric vehicles. Though higher EV sales had not picked up initially, from early 2021 the trend is changing as a lot of manufacturers of four wheelers and two wheelers have entered the market.

Recently, the governments of Tamil Nadu, Punjab, Telangana, Maharashtra, and West Bengal invited the auto company Tesla to set up shop in their respective States. This open invitation was a response to company founder Elon Musk’s tweet that Tesla was “facing a lot of challenges” launching their EVs in the country. The enthusiasm with which the five States have rolled out the red carpet for Tesla isn’t surprising.  Estimates pegged the market opportunity for the electric vehicles sector in India to be worth approximately $206 billion by 2030. Despite contributing less than one per cent of all vehicle sales in the country, overall EV sales are rising with over 50,000 new registrations each month.

Governments are thus keen to set up shop and manufacture domestically. However, these companies would rather sell completely built units (CBU) made outside the country. Subsequently, Tesla, Audi and Hyundai have urged the Modi government to cut import duties and help bring down prices and generate demand for EVs in India.

However, the government remains unmoved and maintains the 100 per cent import duty on CBUs manufactured abroad. Instead, it has been pushing for greater localisation of EV manufacturing through multiple policy measures FAME-II. Additionally, it has launched several production linked incentive schemes for manufacturers in the automobile, components and advanced chemistry cell battery sector to develop indigenous supply chains for critical EV components. To boost sales, it has also launched several consumer-centric incentives such as tax exemptions, subsidies and interest subvention schemes, intended to trigger a mass demand for EVs.

For EVs production the most important raw materials such as lithium, cobalt and nickel, which are used to make lithium-ion (Li-ion) battery cells, are not available in the country. Consequently, Indian manufacturers must rely heavily on imports of battery cells from China, Japan, Korea, and Taiwan and assemble them into battery packs. Though there is optimism and encouraging response from investors under the PLI scheme to manufacture ACC batteries domestically, most bidders are expected to start manufacturing only from 2025. It is thus quite natural that India’s import-driven strategy, for domestic assembly of critical battery packs, will continue for a few more years.

Additionally, the manufacturing of electric motors and power electronics requires critical raw materials, deep technological expertise, and large capital investments to manufacture – all of which India lacks. Thus, import dependency has been the only option for domestic manufacturers to secure critical parts for EV assembly.

Besides, domestic EV manufacturers are exposed to increasingly volatile global supply chains and higher costs due to Covid-related disruptions and the US-China trade war. The prices of lithium carbonate and lithium hydroxide have risen by over 400 percent and 255 percent respectively since beginning of 2021. Similarly, prices of praseodymium and neodymium oxide, used to make magnets for electric motors, have almost doubled in the past 15-16 months. As a result, some manufacturers hiked prices of their EVs to counter the rise in raw material cost.

Some technical experts have suggested that electro-chemical energy in the form of metal air batteries could be the choice of the future, at least for India. Metal air batteries can match the driving range of conventional internal combustion engine vehicles and reload full energy to full energy capacity in less than five minutes.

Significantly, much research has taken place on such batteries during the period 2014 to 2020. Unlike conventional batteries, metal air batteries utilise oxygen from the atmosphere at the cathode. These have higher energy density (energy per unit weight) compared with lithium batteries.

Aluminum can be used as the anode of metal air batteries as the country has abundant bauxite deposits in the country. The road to progress is certain only if the Government does not put any brakes and aids the EV manufacturers to achieve its target.

 

The Dispatch is present across a number of social media platforms. Subscribe to our YouTube channel for exciting videos; join us on Facebook, Intagram and Twitter for quick updates and discussions. We are also available on the Telegram. Follow us on Pinterest for thousands of pictures and graphics. We care to respond to text messages on WhatsApp at 8082480136 [No calls accepted]. To contribute an article or pitch a story idea, write to us at [email protected] |Click to know more about The Dispatch, our standards and policies   

About the author

Dhurjati Mukherjee

Add Comment

Click here to post a comment