‘OEMs need to be more open and friendly in deal-making with fleet owners to promote electric vehicles’

There is a significant shift happening in mobility today. Not just on the technology side but even in demand creation. Till today, the end customer used to interface with the OEM, now those end customers are interfacing more with shared mobility applications.

By: | Published: October 11, 2019 3:10 PM

The central government is aligning its policies in sync with its aim to steadfast the adoption of electric vehicles in India. However, to achieve a respectable milestone in relation to electric mobility, our country needs to overcome a plethora of hurdles related to infrastructure, ease of usability, costs, comparable products among others. In order to shed some more light on the future of electric vehicles in India and what are the various factors that govern the transition from ICE vehicles to EVs, Express Drives' Ayush Arya had a detailed interaction with Akhil Aryan, Co-Founder and CEO ION Energy.

Government is clear in their policies and the automobile manufacturers don’t have any option but to agree to them. Tata Motors is planning to launch their electric car and others will follow eventually. What do you think the EV industry or the electric mobility industry should do to create the demand from the consumer?

Eventually, in every technology, there is this demand-supply infinite loop. Whenever a new technology comes, there are some early adopters. Those early adopters are willing to accept a sub-par experience. But they want to support the cause. Which is what is happening today. If someone buys an available EV in India, they are accepting the slightly sub-par experience and taking into consideration getting a Nissan / Tesla in the US, it’s not comparable. But since people believe in the cause, they are still the early adopters and takers for battery-powered vehicles in India today. Where there is no infrastructure, practically everything is broken. But they are still adopters which mean there is a growing set of customers that are willing to create demand, even if the experience is sub-par. Which means if you improve the experience, you will easily see these people buy that product. So it’s not like there is no demand.

Is the demand big enough for large OEMs to make big investments towards shifting their focus? There is a significant shift happening in mobility today. Not just on the technology side but even in demand creation. Till today, the end customer used to interface with the OEM, now those end customers are interfacing more with shared mobility applications. The demand creators, in reality, can also be essentially fleet owners of vehicles which are your Ola and Ubers of the world. Now various start-ups which are trying to make their bikes/scooters are all of the different mobility play. Even if it is Ola electric, what they are doing, or whether you think of the plans of Bounce or anyone else you think about, they are also EVs. These people will demand a good vehicle, the problem for them is not the cost. Cost is essential as it’s their business, but their mission is to support EVs. Due to this, they are willing to spend more money, if the experience or the product is good.

Now, these fleet companies are influencing the decisions of OEMs by telling them you do this and I will buy so many vehicles. They are forcing a better quality of vehicle by guaranteeing demand. This gives a breather to some of the OEMs. which means there is demand from people who have money, people who have the capability to consume these vehicles and make a commercial output. In the short term, there are 3 things that the OEMs can potentially do. First is to build a better product, that’s like a fundamental core because if the product is good you will have demand from both B2C as well as B2B, who is willing to pay for it. So that means the battery should last longer and should charge faster.

Secondly, they need to be more open and friendly to deal-making with fleet owners because that will be their big junk of demand creation for new vehicles. Lastly, they need to focus on identifying key technologies including the BMS, the software that delivers a better and more reliable user experience. If you look at Tesla, they may not be the best carmakers. But if you look at their user experience, it’s great. Right from the acceleration to software panel to the mobile app, it’s an unprecedented user experience that is provided which is super powerful if you are looking at the B2C play. It’s a huge differentiator. This is what a lot of OEMs need to take it at heart and thereby build and enhance the user experience.

There also needs to be a circle of accountability. For example - if an OEM thinks they are winning as their sales are happening through the distributor, that’s not enough today. You need to have a layer of accountability that goes further. It should be like 2 years after my car was sold, is my customer happy? Are you thinking that extra, not only till the distributor or retailer level? Can I deliver customer reliability? That’s a different mindset and sometimes you have to curb profits and invest in R&D or do something more to unlock that. This is something automakers need to seriously think about.

You spoke about creating demand with the help of better products and gave the example of Tesla, which provides a better user experience. But the other major concern for the consumer is about the safety. The entire EV as a whole concept primarily comes down to battery because we have seen the accidents in the past where due to crash, batteries catch fire and due to their structure, it’s difficult to suppress the fire, in that arena. Being closely associated with battery manufacturing, how do you think this concern can be addressed?

First, is to accept that it’s not just EV batteries, there are gas-powered vehicles as well and when they get into accidents, they are also exposed to the same risk.

(but batteries are a new concept)

I agree it’s a new concept and a new concern. At a fundamental level, it’s a different kind of fire and it’s a chemical reaction rather than an accident-related reaction. You can split up the concern in two parts. One is eliminating the ability for there to be any combustion. Second is doing a good job of containing it. So that’s like 2 different challenges. Physically the way the lithium-ion cells are designed are probably the ones which will exist in the next 10 years. There is an element of it being able to combust. If there is a chemical reaction that is caused within the cell or via an accident, (this holds for even gas vehicles) for eg - if there is a mission-critical system, that is pierced with a shard of aluminium that goes through it, you physically can’t control it. Even firms like Tesla can’t control it! It’s the same thing with combustion, however, what you can do is have (like Tesla has) these main power units where if something was to catch fire in one place, but stop it from spreading to the rest of the car. There are sections on the Tesla car, they can defuse the entire battery pack and not allow the chain reaction to spread in case the battery catches fire. Effectively, it’s all a chain reaction, it starts with a small cell and goes through the entire car. So if you can stop that, you may not be able to stop the combustion but you can contain it significantly.

Secondly, we need to create more awareness amongst 2 people - the fire-fighters and amongst emergency responders as to how to deal with EV fires. When it comes to EVs, the flame is different, it is not something you can put off with water. They need to be trained as to what has to be done if it happens to an EV. Maybe in the future, we will put together a small manual and publish it from ION Energy’s side and it might be useful for everyone. That’s one part of trying to contain it as well!

Another part is, which ION Energy does, is it leverages data to predict fatal mishaps. There are multiple reasons that can cause fatalities, it’s not just batteries and not just accidents. So you need to be able to see usage patterns or battery performance data and be able to see if there is a higher risk of something compared to the other. This is where artificial intelligence (AI) comes into play. For example - we have come up with an algorithm where you can effectively see the stress level on a particular battery. And if that stress level increases over time, because of how you are using it, two things will happen - the life of the battery will degrade faster but you will also increase the risk of mishaps because the stress levels are high. To make sure that there are no mishaps you have BMS.

Lastly, if there is an incident, it’s a joint responsibility. It’s just not on the industry, you have to give it a fair chance that it can also happen because of the internal combustion. It’s not the 1st time the vehicle would be inflamed. The reasons can differ and if you focus only on the outcome then it’s slightly misleading the public. You can investigate the reasons - was the OEM being cheap, was there any accident, did the emergency responders act in the right way, was the user being irresponsible. That post mortem should be done and worked upon. In reality, if you do a one-to-one comparison, leaving the exception of unpredictable freak accidents, today we have enough data to showcase how reliable EVs can be. Maybe not enough data in India, but globally the number of vehicles that are in a mishap over the total the population of EVs is a significantly lower percentage compared to internal combustion at least today.

In terms of cost, in the future, if the price of the battery or an electric component comes down, how do you think it is possible? Is it only possible through the government or are there other factors as well?

As start-ups, we solve problems without depending on government subsidies. We solve problems assuming and depending on the situation. While there is a push required from the govt which they are already doing, you can see that they are going in that direction. At the end of the day, today there are ways to optimise your supply chain, leverage your brand and leverage your volumes because the reality is that Indian automotive firms have huge brand weightage, they have the cloud and volumes to move the needle in their favour.

The cost will definitely come down but the challenge with the cost is 2-3 fold. Firstly, whenever a new disruption is accelerated there is always wastage, you have to make compromises whenever you try to do something fast, so the value engineering phase that every OEM goes through hasn’t started as yet. That value engineering happens typically once your product is stable, it reduces the cost of the vehicle and increases the profitability of the company. That’s kind of in a sequence. Today we are not in that phase yet for EVs as we are in the phase where we want to create a good product and create a demand for the same. When the value engineering phase starts, the cost will come down both for the customer and OEMs and the profitability for OEMs will increase. In terms of actual raw material cost, even that is going down to some extent. A lot of elements that used to exist before in internal combustion engines are being replaced. A lot of mechanical parts are getting replaced with screens or electronics. 30-50% of a car now is electronic. And electronics are taking up a higher percentage of space in the car. The cost of the physical components are reducing, the number of components itself is reducing but because there is an urgency to get to the market, we are in the 1st phase of launching a new product. This is not the value engineering or cost reduction - that is the 2nd phase, which will happen once there is a decent demand, product, infrastructure, then you will see a whole other mission of reducing the cost.

The reason we are moving towards EVs is that we want to create a cleaner mode of transportation, that’s what the government and the people are saying. Batteries are at the core of it and they have chemicals in them, like the lithium-ion batteries. Do you think there is any environmental concern and if there is how does the overall industry take any measures for this?

The first perspective could be, CO2 emission calculation right from the raw material to the end of the life of the car. Take every stage and map out how much CO2 emitted at every stage. You will realize inherently EVs are much more efficient towards the environment. Even if you still consider at the mining level to the battery manufacturing level, it is still efficient and environment-friendly.

Considering the chemicals that are present in the lithium-ion batteries, how do you safely dispose of it?

98% of lithium-ion batteries are recyclable. Lead-acid batteries which have acids and chemicals are difficult to dispose of. Lithium-ion batteries even at the end of the life of the battery, when the 1st life is over, you can deploy it for second-life applications. After the 2nd life as well, you can practically break down the entire battery into individual metals. Only some degradation happens on the anode and some degradation happens at the cathode. Effectively, all the elements remain in its natural form. At the end of the battery life, you can extract 98% of it and make it into a new lithium-ion battery. There is a whole industry built around lithium-ion battery recycling. A few years ago, the raw materials were overvalued than the finished products. So if the battery is dead, you actually get money out of it because you can extract elements and make a new battery out of it.

What role does technology, Artificial Intelligence, in particular, play when we talk about BMS?

When you think about technology, there is technology at every single level, there are certain technologies which is more valuable compared to others, inherently you have to take the approach to leverage these technologies towards building your EVs. It’s difficult to narrow it down to one technology which we can say is more important. AI is inherently the technology which can help make humans smarter. They can make some decisions for humans with large data provided, AI has a lot of data accessible and can process a lot of data very fast. It can assist you to make a better decision based on a large chunk of data. Similarly, in EV you can come up with personalised patterns of how you could improve the life of your battery to an extent if you use it in a certain way. For example, you get an alert if your phone is dying, or you have apps that tell you how to control or how to change your batteries, these are some recommendations. An EV is effectively a car and the battery. You can study the patterns of how people are using their battery to be able to make smarter choices on future technology. You can come with recommendations, abilities to improve user experience. AI can be used at multiple levels and for us, the most critical usage for AI has to be a high-value use case where it can be leveraged. We believe the highest value use case is at the battery life performance. Because if we improve that, we can improve the overall cost of ownership of the vehicle, the experience of the user. You reduce the cost when it comes to the environmental impact because the battery pack will last 10 years instead of 7 years. So you can have a significant impact in all directions if AI is leveraged into BMS.

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