Waiting for a push

Written by Malabika Sarkar | Malabika Sarkar | Updated: Mar 31 2009, 06:14am hrs
When the Indian-made electric car REVA hit the road in 2001 in Bangalore, auto industry watchers predicted a revolution. The brand had a lot going for it. For one, the climate for electric vehicles was turning conducive. There was a debate raging in New Delhi then over the use of CNG (compressed natural gas) for public vehicles, indicating a sense of urgency among people to find eco-friendly alternatives to conventional motor vehicles.

For another, the car itself represented an interesting proposition. A two-door hatchback that can seat four people with ease, it had no clutch, no gear and ran on a battery power pack. With a running cost of 40 paise per kilometre, a REVA would set its owner back by about Rs 2.5 lakh (at present Revas on-road price in Delhi is Rs 2.99 lakh compared to Rs 3.6 lakh in Bangalore), about the same price as a Maruti 800 petrol-version that time.

Mind you, Reva was by no means the first electric car to be made in India. Automaker Mahindra & Mahindra has launched battery-operated three-wheeler, Bijlee, in the late 1990s. Even before that, the Chalakudi, Kerala-based Eddy Current Controls had unveiled its own DC motor-driven electric passenger car, the Lovebird. Public sector company, Bharat Heavy Electricals, together with the Central Electronic Engineering Research Institute and the Indian Institute of Technology, Mumbai, had also developed all-electric vehicles.

Almost a decade on, experts are still debating if the electric-vehicle manufacturers have truly explored the potential. According to figures provided by Reva, approximately 550 of its cars were sold in the financial years 2006-07 and 2007-08. This is considering Bangalore and London as its primary markets. As much as 60% of the companys sales come from the international market and 40% from the domestic.

In two-wheelers, the figures read something like this. While 80 lakh two-wheelers were sold last year, the electric two-wheeler segment posted 1,01,000 units last year, and is expected to touch 1,05,000 this year. The major players in the market include Hero Electric, Ultra Motors, Electrotherm (Yo Bykes) and Eko Vehicles, which, together command 80% share of the market.

Experts say most such initiatives have failed to take off because of two reasons. One, they cannot compete on price with the well-entrenched petrol and diesel technology, and two, battery technology is as yet inadequateendurance and speed-wisefor an all-electric passenger vehicle. Given that, their utility remains limited to applications such as airport-ferry vehicles, golf carts or factory-floor service cars.

There should be mass-motorisation in India for this concept to flourish, says VG Ramakrishnan, senior director, automotive and logistics, South Asia and Middle East, Frost & Sullivan. Environment consciousness is low in India. This is the biggest drawback and the reason why the concept of electric vehicles did not take off in the country. Take the United States. Almost everyone owns a car and the tendency to go green is common even among the masses. There should be mass-motorisation in India for this concept to flourish.

Consider the benefits electric vehicles offer. If we can have three lakh electric vehicles on the roads by 2020, including three-wheelers, cars, and scooters, this could result in a reduction of over 16 lakh metric tons of CO (carbon monoxide), NOx (nitrogen oxides)and HC (hydrocarbon) by 2020, savings of over Rs 3,700 crore in foreign exchange and significant health costs savings. EVs are zero polluting, easy to handle and have low running and maintenance costs, says Chetan Kumaar Maini, deputy chairman and chief technical officer, REVA Electric Car Company, in his column The future of electric vehicles in India posted on the Federation of Automobile Dealers Association (FADA) website.

Needless to say, Reva Electric Car Company, a joint venture between Maini Group of Bangalore, and AEVLLC, USA, and the leader in the electric four-wheeler market, is optimistic. Especially, so after the launch of the companys latest offering, the REVAi, which boasts of a high performance AC drive train. It is currently sold in 10 countries and is being test marketed in 10 others. The REVAi offers increased power resulting in a higher top speed, 35% better acceleration and grade ability last year, the REVAi was launched in Delhi. After the Delhi launch, the company expects the overall sales for the current financial year to witness a marginal increase from the previous financial years with the ratio in sales expected to shift to 60% domestic and 40% exports.

Maini says, We have showrooms in Delhi and Bangalore and are selling through Reliance Digital in Hyderabad and agents in certain cities like Mumbai. We have service centres in cities like Pune, Mumbai and Goa. We plan to expand the companys sales network to about 15 cities in 10-12 states by the end of this year.

According to Maini small electric buses, three wheelers and electric scooters are ideal for city mobility in India but it could take anywhere between five and ten years before they become viable for commercial use.

Industry insiders say the segment will pick up with a little more proactive support from the government. Look at neighbouring China where electric vehicles have a huge consumer base. It only needs a little more assistance from the government to take off and some more big names like Hero to jump in, says Sohinder Gill, CEO, Hero Electric.

Take the case of the US. President Barack Obama recently unveiled a $2.4 billion dollar boost for electric-vehicle development, vowing to compete with other countries in the race to be world leader on renewable energy. He set a target of putting a million of the environment-friendly vehicles on the US roads by 2015. The plan would also give a $7,500 dollar tax credit to people who buy plug-in hybrid vehicles.

In India, says a marketing executive with an electric vehicle manufacturer, states such as Delhi and Uttaranchal are encouraging electric vehicles with subsidies. First, the central government waived the entire excise tax of 8%, and then last year the Delhi government took a series of steps to push the electric vehicles. It announced a gross subsidy of 29.5%15% general, 12.5% value added tax (VAT) and 2% road tax and registrationfor electric vehicles. This meant that these vehicles would have a lower on-road price. Of course, a few state governments have reduced VAT from 12% to 4%, but what is needed is a much more comprehensive approach to assist development of this non-polluting and economical option, says an electric two-wheeler manufacturer.

The fraternity has come together under the umbrella of the Society of Manufacturers of Electric Vehicles (SMEV), with Hero Electric being one of the prime movers of this body. Among its members the society counts Hero Electric, Mahindra & Mahindra, Electrotherm, Avon Cycles, Lohia Auto, BSA Motors, Lectrix Motors, Paradise Electro, Shubh Arya Steel, Crazye Bikes, ACE, Sinic Motors and Texas Instruments. The society hopes to serve as a platform to support alternative, economical and eco-friendly means of transport.

To this end, it has been urging the government to strengthen the regulatory norms for the electric vehicle industry. We are in talks with the transport ministry to start installing number plates on the low-speed scooters. We are also emphasising on reducing import duty on critical items, extending subsidies and installing charging stations, expressed Hero Electrics Gill, who is also director, corporate affairs, SMEV.

Maini writes in his FADA column, Although, government has reduced the custom duty on three of the imported components in battery operated vehicles to 10%, still the incentives seem too less for the price reduction of such vehicles. Other initiatives, which need to be taken to make the EVs affordable, include measures such as relaxation in excise duty and VAT uniformity for the key inputs and components and also for the finished electric vehicle. In addition, in various countries, electric vehicles receive subsidies so as to promote the technology and reduce emissions. Similar initiatives should be introduced in India.

Quality issues remain a bugbear. The International Centre for Automotive Technology, an apex body for the implementation of the national automotive testing and research and development infrastructure project, government of India, reportedly shoots down 20% of the bikes tested on grounds that they do not meet quality standards.

All the players seem to be waiting for that one big push. If the right technology and right product is offered, electric vehicle can replace at least 50% of petrol two-wheelers in five years, says Mukesh Bhandari, chairman and chief technical officer, Electrotherm India.