The Future Of Electric Cars In India
Every year, the republic day parade on Rajpath is a special attraction. This year tableaux from the Ministry of Information and Broadcasting caught everyone’s attention. Guess why? Because the main showcase was Tata Nexon EV for their theme-‘Vocal for Local’. A homegrown electric vehicle(EV) from our very own Indian automobile manufacturer getting showcased for the republic day parade was an indicator of many upcoming things in the future. We will try to gain insight into it and hopefully gain more clarity regarding the future of electric cars in India.
Indian customers looking for an electric car had very few options until 2019. They either had low range and were slow(eg.-Mahindra E2O, Tata Tigor EV) or had ample range but were very expensive(eg. – Hyundai Kona). People avoided buying EVs because there were no charging stations and nobody was setting up charging stations because there were no EVs on roads. A typical egg and chicken problem.
Indian EV Market
And then exactly a year back Tata Nexon EV was launched. Tata broke this deadlock by making some smart design choices. Instead of going for the high investment born electric platform they chose to develop their car around high selling compact SUV-Nexon. Going for such an electrified platform(originally designed for a combustion engine) brought the cost down and presented a better EV package in the form of a familiar car. Then Tata motors pulled out their contacts in the massive Tata group. Tata Power was given the responsibility to set up the non-existing charging stations in the country. Also, a charging point was set up at the customer’s location of choice at zero cost. This success story cracked the puzzle of widespread electric car adoption in India for other manufacturers. It taught that if an electric car is presented as a car giving better value for money than its ICE counterpart and the charging infrastructure is taken care of then the Indian customers will take the jump.
Tata has also lined up future launches of Altroz EV, HBX EV to have an electric car in every segment. For that, they have future-proofed their platforms(ALFA and OMEGA) by making them flexible for the electric powertrain. Once the volumes increase to a substantial level Tata will be switching to a born electric platform to maximize the benefits of an electric powertrain to full potential.
After selling India’s first electric car-E2O(erstwhile Reva) and tasting a good amount of success in formula-E, Mahindra is ready with a slew of launches. It is also following the same path of initially launching electrified cars like eXUV 300 and eKUV300. But unlike Tata they are initially betting on fleet and commercial transport and when the prices of the battery will drop then focus on personal transportation. Mahindra has developed Mahindra Electric Scalable Modular Architecture (MESMA) which will be scalable in terms of both performance and range to be used on all-electric vehicles.
Maruti Suzuki’s parent company has partnered with global leader Toyota to develop EVs in partnership. Toyota has done a lot of development in much superior Solid-State Battery technology and holds a lot of patents in the same. Maruti Suzuki has also planned to set up a battery manufacturing plant in a joint venture with Toshiba and Denso in Gujarat. Maruti Suzuki believes in first developing a proper local supplier chain and then developing a sub 10 lakhs electric car. Unfortunately COVID-19 pandemic has thrown a wrench in the development of EVs in India. WagonR EV has been canceled.
Many other projects have also been postponed due to uncertain sourcing of parts from China. One of them includes the recent semiconductor shortage. But there can be a hidden opportunity under this crisis. Unlike before, many companies are looking at India for manufacturing vehicles. Indian customers could directly benefit due to the scale.
Luxury automakers have also slowly started introducing their EVs in the Indian market. Customers of these cars don’t worry that much about range anxiety as they own more than one car. Also, these customers are the early adopters of the new tech. They are more self-conscious to own the green tag status. The entry of Tesla might heat the segment even more. Currently, all the luxury segment EVs are directly imported which is making their prices exorbitant due to the high import taxes.
Role of government
Lithium-ion(Li-ion) batteries are critical components of EVs. India imported 1.2 billion dollars worth of batteries(the majority was from China). India wants to become self-sustaining in terms of Li-ion batteries. India is trying to secure supplies from the largest reserves in the world from countries like Argentina, Chile, and Bolivia. A new company called Khanij Bidesh was set up where three state-owned companies came together to acquire lithium assets from foreign countries. There is a focus on building the infrastructure to process the procured lithium ore to battery grade Lithium by setting up refineries. The first such refinery is going to be built in Gujarat.
The Government has invited proposals for charging stations on the major highways all over India. Under the FAME-2 scheme, the government is giving capital grants to the entities that are promoting the use of EVs. Also, every state is promoting sales of EVs by slashing the taxes or the registration amount and sometimes even giving subsidies. This is working as the price gap between electric and combustion cars gets reduced due to these benefits. Certain conditions make these incentives valid only if the majority of the vehicle is made in India. This might be good in the long term to develop a proper ecosystem in India but it’s hurting the initial sales in the present scenario.
2020 might be the year of pandemic. But as we saw from the anecdote, in the beginning, it might prove to be the launchpad for the future of electric cars in India. Automobile companies, the government, and also the customers have started working together. The strategies are different but the end goal is the same which is to move towards sustainable mobility that reduces pollution and our dependency on other countries for fossil fuels. And thus we move towards a greener future.