electric vehicle: Let’s hit the road, electric vehicle driver: India’s time for a technological leap may have arrived
The transition to clean mobility has accelerated due to the rapid evolution of battery technology. Battery prices have fallen over 90% in the past 10 years to $137/kwh. By 2023, it is expected to drop below $100/kWh, marking the initial cost of electric vehicles becoming cheaper than ICE vehicles.
A battery of options
Manufacturing of lithium-ion batteries is accelerating globally. But the global supply of lithium is limited and there is a demand for safer, longer lasting and more energy efficient batteries. New uses for batteries are rapidly emerging, including for electric vehicles and storage. To meet these needs, the race is on to develop the next generation of batteries: sodium-ion, redox flow, nanowire, metal air and next-generation lithium-ion (lithium-sulfur, lithium metal, semiconductors and semiconductors). drivers). -strong batteries).
Vehicle ownership per capita in India is extremely low at less than 20 vehicles per 1,000 people, compared to 900 per 1,000 in the United States and 800 per 1,000 in Europe. This gives India an opportunity to technologically leapfrog the legacy model of privately owned ICE vehicles which are only used 5% of the time. India needs to focus and emphasize shared, connected and electric transport.
This disruption of electric mobility would lead to accessible, affordable, inclusive and safe transportation options for citizens. The focus should not only be on the transition to electric vehicles, but also on moving people to public transport and electrifying them. Here, 2 and 3 wheels will play a significant role since 80% of vehicles sold belong to these two categories. India must aim for 100% electrification of these two segments and emerge as a global champion in this sector.
A robust public transport network is the backbone of urbanization. Recently, the demand for electric buses in five Indian cities was consolidated and the world’s largest tender for 5,450 electric buses was launched. This has led to record prices, with electric buses being cheaper on an operating cost basis than diesel buses. The objective now is to consolidate the demand for 50,000 e-buses with Make in India provisions and to make a radical shift towards e-buses in all metropolitan cities.
Another success story is that of e-rickshaws. With over 20 lakh e-rickshaws circulating on Indian roads, we are well positioned to electrify all e-rickshaws across the country. E-bikes also offer great potential.
The GoI has taken a series of actions to support a clean mobility future. The GST on electric vehicles is 5%, compared to 28% on ICE vehicles. An income tax deduction of ₹1.5 lakh is offered on interest paid on loans taken out to purchase electric vehicles. States and cities will play a critical role in driving mobility transformation. Several states have already announced their electric vehicle policies. Entrepreneurs have also taken the lead in manufacturing electric vehicles. The OLA FutureFactory in Krishnagiri, Tamil Nadu is the largest electric 2-wheeler factory in the world with a capacity of 10 million scooters. Then there’s Ather Energy, Tork Motors, Okinawa Autotech, Revolt, Emflux, and others spinning in this space.
Drive to hook up
Established giants like Bajaj and TVS are also doing intensive R&D and have launched new products in the market. All of this shows the signs of a market ready to burst.
However, there are several challenges:
Funding. End users face high interest rates, lower loan-to-value ratios, higher down payments, collateral requirements and higher insurance costs. This is due to the underlying risks associated with loans for electric vehicles. There is asset risk, with resale value apprehensions due to the lack of a secondary market. In the absence of reliable data on the performance of electric vehicles, this would force multilateral financial institutions to establish risk-sharing mechanisms that would provide loan guarantees to banks and NBFCs to cover potential losses.
According to the Rocky Mountain Institute-NITI Aayog January 2021 report, ‘
Mobilizing financing for electric vehicles in India‘, Over the next decade, the transition to electric vehicles in India will require a cumulative capital investment of ₹19.7 lakh crore on vehicle charging infrastructure and batteries. The size of the electric vehicle financing market has enormous potential for growth and expansion.
To rely on imported components and parts while the FAME (Faster Adoption and Manufacturing of Hybrid and EVs)-II program envisages a 50% localization. This would force Indian manufacturers to quickly shift to making components for electric vehicles.
To rely on imported batteries, which represent nearly 40% of total EV purchase costs. As India’s battery manufacturing capabilities expand and supply chains are established, India can produce both cells and battery packs while importing raw materials only. In this scenario, India is expected to capture almost 80% of the total economic opportunities.