Four key areas that require government focus to accelerate EV adoption in India

The fall of consumer demand during the pandemic will have an impact on EVs like any other industry, but not without ample opportunities for growth. However, new investments in EV space may see a delay before sentiment turns positive.

By:Updated: Jun 18, 2020 12:59 PM

Electric car

Electric mobility is now in more focus than it ever has been before and it is a global phenomenon as automobile manufacturers rally to introduce efficient electric vehicles. However, the current global situation caused by the coronavirus pandemic has slowed down economic and trade activities, and the automotive industry including EVs is no exception. While there are talks about how India can become the next manufacturing hub, a structured approach and active government stimulus are required to overcome matters like a near-term shortage of essential components. We spoke with Shreyas Shibulal, Founder & Director, Micelio, to look for his opinion on the subject of how India can push its EV adaptability in the post-pandemic era.

micelio Shreyas ShibulalShreyas Shibulal, Founder & Director, Micelio

1. Impact of COVID-19 on the electric vehicle market (will it further slowdown or speed up EV adoption in India?)

I think the COVID-19 pandemic was quite unexpected. And it technically stopped economic activities across the globe. The auto industry including the electric vehicle’s space was no exception. EV sales have plunged to an all-time low in the world’s largest EV hub – China. As a result, I see that the biggest challenge for EV manufacturers will be the near-term shortage of essential components such as Lithium-ion batteries.

However, I believe the post-pandemic world would be different for the auto industry, especially Electric Vehicles. We might get to see certain behavioural change and increased preference for sustainable and mobility options.

The most significant trend emerging from the pandemic is the shift in consumption patterns. While COVID-19 has disrupted the normal course of life to reinforce the significance of health and safety, the lockdown and self-isolation have reiterated the harmful effects of pollution on our environment. A month after the lockdown was implemented, a significant and visible change in the environment was noticeable. The rise of the pandemic and fall of consumer demand will certainly have an impact on EV like any other industry, but not without ample opportunities for growth. However, in the near term, new investments in the EV space may see a short delay before the overall sentiment turns positive.

2. Can India become the next EV manufacturing hub considering the country does not have a lithium ore and battery packs are the most expensive component in an EV?

I strongly believe that India has the right talent and potential to emerge as a global EV hub. A recent World Economic Forum (WEF report on the EV ecosystem also suggested that India has the potential to become the largest EV market in the world. As the demand for EVs goes up in the domestic market, the sector will see increased private and public sector participation to enhance production and match the demand. It is true that at the moment local EV manufactures are dependent on imports for components such as lithium-ion battery packs. However, due to the recent developments in international trade relations, we need to focus on building the required capabilities in-house and reduce our dependence on imports. This will help us move towards a self-reliant India while also fostering international trade relations.

3. There needs to be a structured approach to reducing dependency on China for EV components. Would you like to put your suggestions forward?

I believe the Government of India has been relentlessly working to make India self-reliant while continuing to promote healthy international relations and trade. Last year, for example, the government issued a revised plan for the FAME II policy, this was done to encourage EV and Hybrid electric vehicles in India. The move is aimed at localizing the production of electric vehicle parts in India. These revised guidelines included the list of EV components which will be eligible for subsidies along with the specific deadlines to comply with localization norms.

Unlike countries in Europe, EV infrastructure and manufacturing processes in India are still at a nascent stage. EV companies should partner with an ecosystem of stakeholders such as government, technology providers and manufacturers to set up the right infrastructure and encourage adoption. Establishing policy frameworks that create a balance in EV supply and demand in order to support charging infrastructure, technology development, innovation, and an environment in which both startups and established players can compete and succeed is vital for EV to thrive.

4. Is lithium-ion the only way forward for EVs? Are there any other viable battery types like sodium-ion that can be developed and ease the pressure on acquiring lithium?

There is an alternative to expensive lithium-ion batteries; sodium-ion batteries which have the potential to be cheaper and more easily produced. If we can get past the problem of getting these batteries to work as well as the lithium-ion technology we’re predominantly using, we may have just gotten a huge step closer to this goal.

Recently, a UK based company Faradion has announced to set up their manufacturing plant for sodium-ion batteries. This is a positive move in pushing Sodium-ion batteries over Lithium-ion batteries with exceptional superiority. This will play a significant part in revolutionizing automobile/mobility, storage and mobile sectors across the world.

Also read: How car rental could be your new safety move against COVID-19 after lockdown

5. EV adoption in India needs active stimulus from the government. What can the ministries come up with in terms of policy to assist EV manufacturers?

I believe the Government is strongly committed to reviving the economy and bringing back the growth rates to pre-COVID-19 times. The Rs 20 trillion package is a step in this direction and will provide crucial support to the key sectors of the economy. If you look at EV space, in particular, the government in the last couple of years brought out a slew of initiatives to promote EV adoption in the country. stimulate EV adoption in India.

Further, I believe, there are 4 key areas where the Government should focus on to accelerate EV adoption in India:

a) Capital Access: Financing has been a significant concern for the EV industry as nationalized banks currently do not offer any specific scheme for EVs. Therefore, it is essential that the government creates a framework that enables access to capital for small businesses and startups in the EV segment.

b) Building Infrastructure: To complement the Centre’s support, state governments need to boost measures required for infrastructure including the land allotment for charging infrastructure along with mandating charging infrastructure in malls, housing societies, and office complexes and public parking places.

c) Policy Changes: Another area, EV businesses expect state governments to look at is adopting policies that facilitate a permit-based Public Bicycle Sharing (PBS) system, as opposed to a tendering system. A PBS system would allow multiple players to offer their services instead of restricting the opportunity to a few. In addition, “state governments must mandate municipal authorities to provide demarcated zones to EV players to facilitate public bike-sharing. Also State govt. should ease down the procedural structure for land allotment to set up EV infrastructure, be it for factories, warehouses of EV charging stations.

d) Promoting Mobility as a Service: Currently, India’s shared mobility platforms are mostly limited to internal combustion engines (ICEs) that can cause as much as 25 per cent of India’s pollution, second only to industrial pollution. Hence, incentives to shared mobility platforms that purchase low- speed EVs, including an upfront reduced purchase price on the low-speed EVs. This might help in boosting affordable and eco-friendly transportation options for commuters.

6. Micelio is India’s first seed fund in the field of electric mobility. If you could elaborate on the business model and how it hopes to facilitate India’s road to electric mobility.

The vision of Micelio is to be an enabler of innovation towards clean energy and creating a sustainable mobility ecosystem. It is the only agnostic fund (not connected to any OEM or VC) focused in the EV space to drive solution towards clean energy and e-mobility while prioritizing EVs. Micelio’s investment philosophy is to employ patient capital to grow companies and build a community that is focused on EVs to promote clean mobility.

There are two sides to Micelio: one side is (building the ecosystem) future-oriented, focused towards the strengthening the future of EVs and clean mobility with the Micelio Fund and the Micelio Discover Lab.

The other side focuses on and operates in the current EV landscape to get a deeper understanding of what the industry needs with its sister concerned company – Lightning Logistics. We also have a product company which is working on building an EV form factor with an initial focus on the Indian last mile solutions.

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