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What India needs to do to give electric vehicles a push

LiveMint logoLiveMint 12-09-2017 Amrit Raj

New Delhi: Three large multinationals and the world’s two most populous countries, India and China, have come forward to secure an all-electric future for the automobile.

After India expressed its desire to go-all electric this year and backed its intention with a policy push, the Chinese have hopped on board with an announcement last week that they are working on a timetable to end sales of fossil fuel-based vehicles.

A few manufacturers have also followed suit. Volvo AB wants all its new cars to run on electricity from 2019. Jaguar Land Rover Automotive Plc. will only make electric and hybrid cars from 2020 and Volkswagen AG (VW), the world’s largest car manufacturer, on Tuesday said it is building batteries that can run automobiles for up to 1,000km. Every fourth car VW sells will be powered by electricity, it said. VW has been the pioneer of diesel technology, and a 2015 scandal around cheating on emission tests has forced it to change tack. The German car maker now wants to emerge as the leader in green tech. On Friday, the ride-hailing behemoth Uber Technologies Inc. said all its cars in London would be fully electric or a plug-in hybrid by 2025. Mint on Tuesday reported that India’s JSW Group is in talks for a partnership with Volvo for electric vehicles.

Back home, there is only one true blue manufacturer of electric vehicles—the homegrown Mahindra & Mahindra Ltd. Sure, there are multinationals such as Nissan Motor Co. Ltd and Toyota Motor Crop., which have advanced technologies in the sphere, but they are costly. So, Mahindra does have an advantage, especially after the government clearly said companies that follow official policies aggressively and switch to non-polluting fuels stand to benefit in the long term.

So, how much of this can come through? As of now only 2 million of 1 billion cars plying on world roads are electric.

Let us talk about India.

The biggest challenge continues to be battery-charging infrastructure, the media have pointed over the years. Cost is no more a challenge if falling battery prices are anything to go by. They have fallen $600 per battery in 2012 to $250 in 2017 and are expected to go down to as low as $100 by 2024. This makes the Indian government believe that in the next five years, capital costs of electric vehicles will be less than that of petrol vehicles—with acceptable range and operational costs at a fraction of that of petrol vehicles. Ashok Jhunjhunwala, principal advisor to the ministry of power and the ministry of new and renewable energy, says that if India does not get into the game now, it will be importing most of electric vehicle sub-systems and batteries instead of oil.

Of course, there are naysayers who have said there is a need for a reality check on the high-voltage hype about battery-powered cars. Some from the industry say nobody wants to buy electric vehicles and some question India’s ability to generate enough electricity to propel its mobility. Then there are those who question if electricity won’t cause pollution. To be sure, full conversion of the Indian vehicle fleet into electric will only consume 20% of the power that the country generates. There is no shortage of electricity and India’s thermal plant load factor today is 59.6%. On the pollution front, there would be zero emissions if renewables are used; their prices have also come down drastically. If electricity is produced from the current thermal plants, there won’t be any tail-pipe emission from vehicles, bringing the carbon dioxide pollution down by half.

So, how do we enable electric vehicles today? World over, electric vehicles are backed by 30-40% subsidy. India does not have enough money to fund a subsidy. So how does it encourage commuters to switch to electric cars without offering a subsidy and build a model that makes economic sense and at the same time enables it to scale early.

These are the questions that policy makers and the industry will be deliberating on in the year. It’s time that India picks up speed and builds the kind of volumes that will provide economies of scale to bring down prices further and enable personal electric vehicles, especially two-wheelers, to take off in the beginning, followed by cars and commercial vehicles.

After all, an electric vehicle gives better efficiency with a fewer number of moving parts. An electric vehicle is 95% more efficient than an ICE (internal commercial engine) automobile and has around 20 moving parts as against the 2,000 which go into a traditional automobile.

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