Global Electric Vehicle Market
Electric vehicles or EVs may just be the single largest disruption to hit the car industry in its 133-year history.
Accenture and Deloitte reporting confirms the trend, saying that 2018 saw unprecedented 2 million new electric car sales globally, this number is expected to reach 4 million in 2020, 12 million by 2025 and 21 million by 2030. By then, the reports say, all-electric car sales will account for 70 per cent of EV sales globally.
Bloomberg analysts expect electric vehicles to eclipse gas versions in 20 years.
This growth is primarily fueled by lower Lithium ion battery (LiB) cost combined with stricter emission regulations and presence of monetary and non-monetary government subsidies.
The latter can be observed in Norway where the government is driving the EV market with measures like nationwide access to bus lanes helping save an hour on daily commute time. Chinese government, in order to reduce emissions, decided to ban conventional scooters from mega cities. In 2013, this led to sales of 9.4 million electric scooters. Electric vehicles are beginning to gain ground in US, largely due to Zero Emission Vehicle program adopted by state of California that requires automakers to sell electric cars and trucks there. California today has 59 percent of market share of registered electric vehicles in the U.S
Singapore government too has hit the road running, launching its first electric vehicle sharing service in December 2017 with 80 cars and 30 charging stations, targeting 1,000 EVs, 500 charging locations, and 2,000 charging points by 2020.
EVs have been in the global market for many years, but it was Tesla Motors which actually sparked definitive interest in EVs with its compelling design and superior capabilities that were at least at par with the Internal Combustion Engine (ICE) powered premium vehicles. Today Tesla is among the top 5 EV manufacturers. Tesla, Nissan, BYD, General Motors and Volkswagen have collectively captured 50% of the Global EV market.
Government of India Initiatives
Given that historically India has relied on pollutant hydrocarbons to run its power plants(72% of country’s electricity is coal based) and that 14 of the world’s 20 most polluted cities are in India,, Government of India (GoI) has set a target of 30% EVs on its roads by 2030.
Through scheme for the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) and now FAME II, a three-year subsidy program for electric vehicles valued at about $1.4 billion, the GOI is supporting the development of the hybrid and electric vehicles market and the allied manufacturing ecosystem by focusing on technology development, demand creation, pilot projects and charging infrastructure. According to a report by the Society of Manufacturers of Electric Vehicles, there has been a 37.5% rise in the sale of EVs in India in recent years.
The Government is easing the procedures for setting up of charging stations by allowing individuals to open public electric vehicle charging stations without applying for licences. It is also working towards modifying the existing legal framework to incorporate EV charging stations in residential as well as commercial complexes including parking lots and in adoption of uniform standards for electric vehicle charging stations.
State wide policies have also been gaining traction; Karnataka, Andhra Pradesh, Telangana, Maharashtra, Delhi, Kerala, Uttar Pradesh and Uttarakhand have come up with their own policies, offering a mixed hamper of financing support and incentives, capital subsidy, reimbursement of stamp duty and power, land and skill development incentives.
State electricity regulatory commissions are planning to fix tariffs for electricity supply from distribution companies to the charging stations at a ceiling of 15% over the average cost of supply. The tariff charged by charging stations from electric vehicle owners will also be capped by the state Government.
Another solution deployed by states like Maharashtra is a variable tariff structure called time of use (ToU). It means power tariffs will be cheaper at certain times of the day when the demand is usually low. This helps shift consumption to off-peak hours and, thus, balance demand.
Private Sector Initiatives
Apart from the government’s push, startups such as Ather Energy, Emflux Motors, Emotion Motors and established automakers such as Mahindra, Tata Motors, and Maruti Suzuki, among others, are driving the EV show in India, in a bid to create a self-sustaining electric vehicle ecosystem.
Ola’s Mission: Electric initiative aims to put over one million electric vehicles on the road by 2021. It also partnered with Mahindra & Mahindra to build an electric mass mobility ecosystem in Nagpur, targeting 10,000 e-rickshaws and electric auto-rickshaws on the road by end 2019.
Other players to watch are Lithium Cabs, Zoomcar and SmartE in the e-rickshaw space. The Centre of Civil Society reports that around 29,000 e-rickshaws were registered in New Delhi in the 2013-2017 period.
Mahindra and Mahindra has tied up with Uber to deploy EVs across several Indian cities. Mahindra Electric and Zoomcar have partnered in an agreement for 100 e2oPlus electric cars to be offered on the Zoomcar platform in Delhi for self-drive rentals. The initiative has already been launched in Mysuru, Hyderabad, and Jaipur.
Gurgaon-based EV startup Twenty Two Motors is offering two-wheeler lithium-ion battery packs, battery management systems (BMS), and smart electronics. IoT, analytics and AI will be leveraged to determine users’ ride behaviour. E-car Reva founder Chetan Maini has set up SunMobility, a startup which will set up EV infrastructure across India.
All is not upswing however. The latest Bloomberg report says that the growth of EV 4 wheelers will take much longer than what the Indian government expected.
About 55% of all the passenger vehicles sold currently in the country cost less than $8,000 (Rs 5.6 lakhs), which is much cheaper than the cost of a basic electric car.
Even with the steep fall in battery prices highway-capable EVs with a range of 200 miles will not be able to achieve upfront cost parity with these low-priced vehicles.
Only 10 per cent of the latest subsidy program is allocated for charging stations despite India having only around 350 public EV chargers. In comparison, USA had 16000 and China over 200,000 charging points by the end of 2016.
India is home to over 2 million electric two-wheelers and rickshaws — more than the number of electric cars in China. But in the absence of charging infrastructure, many of their drivers have been illegally siphoning power. The power sector loses more than $16 billion a year to theft — more than any other country in the world.
According to Ola Mobility Institute ‘s recent study, electricity currently accounts for over 30% of the total cost of operating an EV. If electric vehicles (EVs) must make economic sense to customers, charging them should cost less than a third of what it does now. Power used for EVs should be billed at Rs 5 per kilowatt-hour (kWh), not the current Rs17.7, for financial feasibility. Also more than half the retail cost of petrol is taxes, which would need to be covered via other means if the country moves to EVs. It is unlikely one can (or should) tax electricity at the same rate.
An EV with a daily commuting distance of 30-40 km needs 6-8 kWh of energy, equivalent to the daily power needs of a small household. If 80% of India adopts EVs, the total power demand could touch 100 Terawatt-hour or about 5% of the total electricity demand of India by 2030. This is expected to put immense pressure on the electricity grids, already under stress due to the huge subsidies to the agriculture sector, high rates of theft, and pilferage.
Further, the electricity grids and sub-stations would need overhauling to have a dedicated capacity for the EV industry. By 2030, a city like Delhi could require around 300,000 fast chargers, presuming a 30% EV penetration into an estimated car parc (number of cars or vehicles in a given area) of 10 million.
There is also the related issue of when the EV plug in for charging, if it is during night times when coal-based power is available, it will be worse greenhouse gases-wise compared to internal combustion engines.
Financing of EVs is still a bottleneck as since they are a new item on the list of the book-keepers, their depreciation and residual value are not well established like conventional vehicles.
Another very critical issue is of jobs.
Millions of jobs could be at stake if there is a sudden move towards electric vehicles.
Internal combustion engines (ICE), which are used in most cars today, have more than 2,000 moving parts, while an electric vehicle has about 20, resulting in fewer breakdowns. Among the parts that will see demand dry up once electric vehicles dominate in India, are engines, transmission, aluminium castings, cylinder blocks and cast iron. These will give way to an electric motor run by batteries. The ICE powertrain contributes to over 60% of the employment generation in the auto component sector, and that a switch to 100% electric could impact up to 5.6 million jobs by 2025-26.
Another looming threat is China. China enjoys significant scale and cost advantages in the EV sector as it is already the world’s largest EV manufacturer with almost 60% of the global market share by way of volume. With active policy support from the Chinese government it is creating a huge ecosystem for battery manufacturing, recycling, charging infrastructure and other related components of the EV package.
China exported auto parts worth $3.95 billion to India in April-Feb 2018 (most of which are for EVs since, unlike for traditional vehicles, India lacks an indigenous manufacturing ecosystem for EVs) and with EVs becoming the future industry standard, China will have a strong influence in India due to the geographic proximity.
As India makes more EVs, China’s dominance will further increase because of its leadership credentials in Lithium, the key ingredient for car batteries of the future.
The Way Forward
Unlike conventional vehicles (internal combustion engine models) that run on petrol, diesel or CNG powered engines, the ‘fuel’ for an EV is electricity. At a risk of over-simplification, there are three parts to an EV: the battery, the electronics and electrical systems, and the rest of the vehicle.
India already has significant manufacturing skills and capacity for the rest of the vehicle. Batteries are a tough challenge since India today lacks the resources supply chain for specialised materials, including lithium and cobalt. This leaves the electrical and electronics portion for innovation and scaling.
One possible new option is the creation of modular platforms, which can separate the battery from other components, all of which could be mixed and matched. This has the additional benefit of allowing not just customisation but the possibility to achieve scale without necessarily having a single mega-sized facility. This could even allow for a larger number of small-to-medium scale factories across India.
Bloomberg | Economic times | Downtoearth.org | Autocarindia.com
Marketexpress.in| Thedriven.io | Accenture | Deloitte
IEA | CAM | Brookings | Qz.com | Yourstory.com | Goldman sacs
- Can Government’s Push to Develop Charging Infrastructure Increase Demand For Electric Vehicles? – Enterpreneur
- Road for switch to e-cars not clear, say industry leaders – Times of India
- One danger of electric vehicles no one’s talking about – The Week
- Govt’s electric vehicle policy receives mixed reaction from carmakers, industry stakeholders – Financial Express
- EVConIndia – Industry Experts’ Perspective on Mapping The Indian Terrain and Charting The Course