With an aim to reduce the overall carbon footprint, we should look for renewable sources of energy like solar to power such charging facilities and incentives need to be tailor-made to promote such initiatives.

The last few months have been most critical in terms of our plan to transition to an electrified future for mobility. The introduction of Faster Adoption and Manufacture of Hybrid and Electric Vehicle II (FAME) and proposed deadlines mandating faster adoption has created a sense of urgency. 

The conversation and interest in electric vehicles is not new. For more than a decade, several companies have been conducting intensive R&D in this space. However, recent government policies and increased public awareness has created an enabling atmosphere for innovation.

That being said, full electrification of public transport and more than a quarter of private vehicles by 2030 requires several aspects of mobility to merge together seamlessly. The second biggest automobile industry faces several challenges that have to be critically addressed before setting definite deadlines. 

Enabling the Infrastructure 

The numerous milestones proposed in the past few months in terms of EV adoption raise a critical question - what is the extent of work required to ensure that at least the first set of electric vehicles can make the transition seamlessly?

The first challenge is enabling the infrastructure to support the upcoming demand, which requires ensuring there is adequate constant supply of power and wide network of charging points to support the EV ecosystem. For long distance commuters, charging facilities dotting major highways and in major towns/cities are the immediate need of the hour. Range anxiety among users, which remains an inhibiting factor for adoption of EVs can be addressed to a certain extent with infrastructural support. 

With an aim to reduce the overall carbon footprint, we should look for renewable sources of energy like solar to power such charging facilities and incentives need to be tailor-made to promote such initiatives.  

In a step in the right direction, the FAME II Scheme offers nearly Rs. 1,000 crore in incentives to set up charging stations across India. Under the scheme, the Government is proposing to set up 2,700 charging stations across the country, ensuring that at least one station in a grid of 3 square kilometers. It has also initiated a process to define standards and guidelines for electric charging stations. 

However, there are several companies that have already taken the lead to set up charging stations in different cities such as Bangalore, Delhi, Mumbai etc. The FAME II scheme provides additional incentives for more companies to join this initiative. 

As a new technology, the pace of development henceforth will be multifold. We have to keep in mind that any infrastructure network being setup needs to allow for scalability and adapt to future requirements. 

Battery Technology

A battery costs nearly half the price of an EV currently and the debate between optimising range vs cost is put to rest with FAME-II stipulating strict norms for eligibility for incentives by linking them with capacity of the battery and performance. 

Of course, a company might choose not to avail the incentives offered in FAME-II. The scheme is meant to incentivise public forms of mobility, and not necessarily enhancing private EV ownership. 

But battery technology remains an important part of an “EV Conversation”. 

India, being a price-sensitive market, we will have to ideate on cost-effective battery technologies to supplement this transition. An optimal balance between performance, storage capacity, size and durability vs price and range should be our top priority. 

ISRO has already begun working on the cost reduction of Lithium-Ion batteries. It has announced the development of a low-cost li-ion technology earlier in 2019, and has shortlisted 15 companies to whom the manufacturing technology will be transferred to. This will result in a reduction of the battery price, which translates to a lower vehicle cost. 

Lastly, we also need to explore the possibility of recycling of batteries. The majority of EVs are powered by lithium-ion batteries. Lithium-ion batteries are used extensively in other industries as well like the smartphone industry. Dedicated policies will lead to effectively managing these end of life cycle batteries.

 Local Manufacturing: 

The Indian government is stressing on the localisation of EV components. Electric and hybrid vehicle manufacturers need to build control units, chargers and AC units, among other parts, locally to qualify for subsidies. All-electric vehicle and hybrid manufacturers are also required to localize the manufacturing of wheel rims integrated with hub motor from 1st October 2019. 

Despite the scheme’s stress on localisation, the guidelines do allow imports of key battery components, in order to remove immediate technological challenges and manage costs. However, within a couple of years, import duties on lithium-ion cells and battery packs, are slated to rise, subtly pushing battery manufacturers to begin localisation immediately. 

Localising battery manufacturing would help reduce these costs further.    According to India Energy Storage Alliance (IESA), India is expected to attract over $3 billion for setting up four ‘gigafactories’. BHEL is already in talks with a multi-national consortium to build India’s first Li-ion gigafactory. 

To boost the charger manufacturer industry, government has slashed the GST to 12% from 18% and the EV industry is expecting a host of tax sops in the upcoming budget. This will encourage local manufacturers to participate and offer EVs at competitive prices to customers.

Looking Ahead of 2025

The 2-wheeler and 3-wheeler market would adopt EVs quicker in the short term, as well as the public transport section, buoyed by the incentives from FAME II. The adoption in the public transport space would ensure better awareness and quicker infrastructure setup that will trickle down to other parts of the industry. 

4-wheeler EVs for commercial and fleet applications will see great traction. Due to the incentives available, the economies now make sense. The cost of ownership is lower than running ICE vehicles for these applications. There will also be a significant reduction in the pollution as these vehicles cover large distances every day. 

FAME-II also focuses heavily on enhancing public transport. This is evident from the allocation of Rs. 3545 Cr. (35% of the overall incentives) towards incentivizing electric buses. The central government recently floated the largest ever tender of 5000 electric buses and asked for proposals from state governments. 

India is one of the fastest growing countries in the world. With rapid urbanization and growing per capita incomes, there will be a huge demand for mobility. The increase in vehicle penetration to meet this demand is not sustainable in the longer run. The way people move will change significantly. Mobility solutions for moving a billion people in India will need a fresh look. Multi-modal shared mobility is the way forward for India. This is a great opportunity for the Indian automotive industry and policymakers to establish a smooth, effective infrastructure for the future and lay the groundwork for a truly smart country.

Mr Mahesh Babu S, Chief Executive Officer, Mahindra Electric and Steering Committee Chair – ITEC India 2019 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house