Mahindra and Mahindra had until now a monopoly of sorts in the Indian EV market. It is the only carmaker to have commercially launched EVs in India, with the e2o hatchback and the eVerito sedan.
The government has set the clock ticking with a plan to shift completely to electric vehicles (EVs) in India by 2030. It wants only EVs to be produced and sold in the country by then, implying a complete phase out of the internal combustion engine. This is a tall order, and analysts are a little skeptical of this deadline being met. Nevertheless, the dice has been rolled, and such a shift could help address the problem of rising pollution in larger cities. It is also expected to create a lot of jobs in new product segments. Niti Aayog and Rocky Mountain Institute forecast a $300-billion EV batteries market by 2030, in India alone. According to a report by Niti Aayog and Rocky Mountain Institute, battery accounts for approximately a third of the total purchase price of EVs today. This is after a 70% drop in price of battery packs over the last six years, on increased scale of production. The report adds that the biggest challenge to bring down battery prices in India is the low mineral reserves in India. Raising a question about early feasibility, Hemant Luthra, chairman, Mahindra CIE, said, “Has anyone found out where lithium in the world lies? It is lying in China and Australia. If you want more range in your car, you need cobalt, and it is lying in Congo. If China is saying all EVs by 2030 and India is saying something similar, the amount of cobalt required per annum is more than the cobalt that has been dug out for the last 20 years.”
Mahindra and Mahindra had until now a monopoly of sorts in the Indian EV market. It is the only carmaker to have commercially launched EVs in India, with the e2o hatchback and the eVerito sedan. Even as it enjoys a near monopoly in the retail market, there aren’t many takers today. In the first seven months of the current fiscal, M&M has sold a mere 600 units of EVs. That compares to the booming, oil-fuelled, car market in India, which saw more than 19 lakh cars being sold in the same period. Auto makers, especially those who have developed their EV technology overseas with an eye on the more developed markets, are cautious about entering the segment in India. Being an extremely price-sensitive market, they fear that car buyers may be put off by the high price, even though running costs may be considerably low. YK Koo, managing director, Hyundai Motor India, which was originally planning to bring hybrid vehicles to India under its Ioniq brand, has called off its plans after seeing the government’s intentions to back EVs and skip the hybrid phase, which the Centre considers to be an intermediate one. It has rather started working on EVs, although he said EVs are still in the planning stage for the country. Steffen Knapp, director, Volkswagen Passenger Cars India, says EVs may not be a good idea in India yet, mainly due to the costs involved, which currently do not justify the price of EVs. “What price is the customer ready to pay? What is the acceptance level? What is the necessary infrastructure? That is not clear. We could bring a product, but it would only add to the complexity.”
Also, while most two-wheeler makers in India have started working on EVs, not many are very keen to join the race anytime soon. YS Guleria, senior V-P, sales and marketing, HMSI, says the current EV capabilities are not anywhere on par with the traditional internal combustion engine. He blames the short battery life of the current technology. Eric Vas, president, motorcycle business, Bajaj Auto, said the primary issue is that EVs are expensive. He said, “The biggest problem is the economics, which is why they rely too heavily on subsidies. Even today we have electric cars for sometime, but they still dont sell that well.” He attributes the problem to the cost of batteries used in EVs. “I think this is a very fundamental issue with respect to cost of batteries. And the problem may not be very easy to solve,” he said. However, the government remains strongly focussed on increasing adoption of EVs. Energy Efficiency Services (EESL), under the administrative control of the power ministry, recently floated a tender for 10,000 electric sedans, which will be used to replace petrol and diesel cars currently used by the Centre and its agencies over a three- to four-year period. The order was won by M&M and Tata Motors jointly to supply the electric sedans. Tata Motors, which surprised everyone by winning the bid, does not, however, plan to launch the EVs commercially anytime soon. It has not alotted capacity specifically for EVs, but will use some of its existing capacity to fulfil the order. M&M though has dedicated a capacity of 500 units per month.
This order has greatly promoted the electric push in India. Following the order, many key car players, who were earlier reluctant, have gradually started joining the bandwagon. Suzuki Motor, the parent of Maruti Suzuki, this year tied up with Denso and Toshiba to produce lithium ion batteries in India. It has also announced that it will work with Toyota for EVs in India, with plans to introduce the first model by 2020. The entry of Maruti, which holds more than 50% of the PV market in India, is sure to accelerate the pace of growth in EVs in India. Analysts and key industry officials are optimistic about the increase in the country’s adoption rate of EVs. However, they remain worried about the mostly overlooked facet of the EV usage, charging infrastructure.
Vinit Bansal, managing director, EV Motors, a start-up that provides e-mobility solutions, says charging facilities have to be set up concurrently with manufacturing of EVs. “There has to be a policy on whether the government wants private partnership or if it will handle the charging infra by itself. Charging standards have also not been set by the government.” China, which has the same deadline of 2030 for EVs, is much ahead of India in terms of charging infrastructure, said Bansal. “China is not only ahead of India, but of the entire world when it comes to EVs. Looking at the public transport, around 98% of the electric buses are run in China,” he added. He says India too should first start with public transport and fleet vehicles, as the high upfront cost of EVs would put off individuals, especially in a price-sensitive country like India. Knapp believes that promoting EVs without setting up appropriate charging infrastructure in the country could be problematic. He said, “What the government is doing with respect to EVs, the strategy is right. But I have not seen any charging stations around. If suddenly we were to have 100 EVs here, the system will break down in seconds. There is still no stability here.”