Bold Move Towards Electric Vehicles – Ambitious or Unrealistic?

EV makers are now achieving running ranges that make the vehicles suitable for the daily urban commute.

By: | Updated: May 4, 2017 3:40 PM

 The Sustainable Future Conundrum

Starting today and over the next four weeks, I plan to solve the problems that the Indian automotive growth story faces. From emissions to safety and from urban clogging to alternative fuels, I plan to address them all. The solutions range from gun licenses to wooden tops and primary education to body shapers…so bear with me.

A few days back, Piyush Goel - Minister of Power & Renewable Energy, stated that no conventional (fossil fuel powered) cars would be allowed registration after 2030. In simple speak this means that the government is pushing us towards an Electric Vehicle future.

Guys working on future internal combustion engine technologies just took a break to learn Python.

Goel’s statement is surprising — till last Friday we were still an economy with a huge power deficit, questionable power quality and mostly running off Sudhirs & Cummins in malls, offices & apartments. We are as far away from EVs as the country’s political opposition is from sanity and filling the gap is challenging.

I can make an easy list of things that hold back Piyush Goel’s dream. We don’t have quality electricity supply, no charging infrastructure, the quality of our plug points suck, there are no investment plans for EV infrastructure and (worse) the government often works in a knee-jerk manner.

The knee-jerk manner is interesting here. When all a congested city like Gurgaon needs is foot overbridges, the government announces Pod Taxis and when all we needed was better primary education, we make airbags mandatory. Sometimes the zeal of performing can overcome logic and we end up buying Beyblades when wooden tops work much better.

Read about: Kabaddi and why Royal Enfield needs to smell the coffee

Coming back to Goel, we cannot take his statement lightly. He is a performer and has worked wonders in rural electrification, achieving more in two years what governments in the last sixty years could not.

So I decided to take Goel seriously and examine why his ambitious target may be achievable.

EVs - Global Trend
First of all, he is on to something as the world is increasingly moving towards an EV future. Talking of the world, let’s start with Scandinavia, the global leaders in creating a sustainable future and driving opposite lock.

The Scandinavians are nice, friendly, chilled out people with an ultra-competitive streak. Somehow they know something more than the rest of humanity and are ahead in taking pathbreaking decisions looking far into the future. In almost all cases they lead, the rest of Europe follows and in a few years the world catches on to the new normal.

The Scandinavians are truly wonderful. A few years back they stopped reproducing…

Coming back to cars, Norway is already the global leader in EV sales. In 2015, more than 17% of all cars sold in the country were electric. They were clearly not satisfied with that and in June 2016 decided that 2025 would be the end of the road for all fossil fuel powered cars in the country. No new registrations would be allowed post that.

Not surprisingly, Elon Musk went ballistic with happiness at the announcement.

Norway leading the ban on the poor Internal Combustion Engine (ICE) is surprising, and maybe not. It is surprising because the country derives a huge chunk of its revenues from Petroleum. It is the automotive equivalent of Thailand banning porn.

Wait, it did!

At the same time Norway doesn’t surprise me. Considering that they are so high up on the map, I can quite understand them being anal about pollution and global warming.

While the Norway declaration fell through shortly after thanks to politics, the seed has been sown. They have tasted blood and a few months later Oslo banned diesel vehicles from entering the city centre.

Like earlier, the rest of Europe is not far behind. Germany is working on killing fossil fuel automobiles by 2030 while Netherlands would stop registering five years earlier.

And then there is China which is investing a mind-boggling USD 15 billion on its EV infrastructure. There is no date for killing fume emitting cars yet and that may be because of the huge size of the Chinese market.

School Canteen & Lettuce Farmers
The China bit is a bad omen for Goel. Like China, India too is a huge market and would be about twice the present size by 2025.

It is easy banning fast food in a school canteen but difficult to ban burgers across the country in one go even though we know Mcburgers are bad for health. You see, the iceberg lettuce farmers, all 22 of them, will starve.

That’s the issue India faces. You cannot change a six million units a year (Source - EMMAAA LV forecast for 2025) light vehicle market by just changing laws. There are massive repercussions that first need to be sorted out. In the perfect case, technology and ecosystem should guide the market rather than regulations.

That has been the weak point of the government. The Indian government has worked on subsidising EVs rather than investing in creating the ecosystem. The result is that no one buys the Mahindra E2O and the other carmakers don’t even bother trying.

The Solution
As I promised right at the beginning, this piece is all about suggesting solutions. The Minister can achieve his targets if two things are taken care of - technology & ecosystem.

I don’t worry too much about technology. EV makers are now achieving running ranges that make the vehicles suitable for the daily urban commute. The upwards trend of the technology curve means that this range would be extended even further with time. By 2025, we are looking at an EV range of 300-500 km for a small hatchback car.

Cost is again something that I don’t worry about much. While EVs may seem like an expensive preposition today, the cost comes down fast when volumes increase. Goel is pushing a big 6 million units per annum pie towards the industry — costs would crash through the floor.

The biggest challenge remains the ecosystem — people just won’t buy EVs if the charging infrastructure is not in place. Unfortunately, we haven’t started on this yet. If the Minister is serious about achieving his targets, he should focus on making charging points mandatory in the basements of all buildings sanctioned hereafter. The older ones would have to be retrofitted. This is a huge task and needs political will, something that this government should have in plenty.

A more palatable solution may be to run EV pilot projects — identify towns where the registration of fossil fuelled powered vehicles should be banned right away. These can be heritage/tourist places like Agra or hill towns like Mussoorie still clinging on to the last shreds of green cover. The same may be extended to any new city being planned. Buyers in these pockets should be heavily incentivised by the government to buy EVs.

Ohh, don’t forget to ban the conventional three-wheelers as well. It creates pollution — air & noise both.

This serves three benefits — first, the air quality in these places improves as fume emitting vehicles are slowly removed. Second, as the government would need to create the charging ecosystem, the considerable investment would flow into these places raising the infrastructure levels. This is a big benefit as most of these places attract foreign tourists and are yet quite short of quality infrastructure.

Third, and the most important, it creates an automatic guaranteed demand for a considerable volume of EVs. This will keep factories running and attract greater investment into the technology ecosystem, something that is important for creating the other end of the equation. We currently have one electric car manufacturer going through a rough phase and no one else willing to jump in. This has to change for a long-term sustainable development.

Next week I look at automotive safety and why we need painters and not airbags.

Author: Deepesh Rathore is a Director at Emerging Markets Automotive Advisors (EMMAAA)

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