Even as the government struggles to set up a clear road map for conversion of commercial and passenger vehicles to electric vehicles, issues such as lack of resources (lithium and cobalt), production facilities, proper charging infrastructure and higher battery prices pose serious challenges to its vision of 100% electrification of public transport and 40% of personal mobility by 2030.
Sohinder Gill, CEO of Hero Electric and director–corporate affairs at the Society of Manufacturers of Electric Vehicles, told FE that the government must set its priority right if it wants the vision to be fulfilled. Instead of giving Rs 85-lakh subsidy for each electric buses, it would help if 18 million two-wheelers produced in the country are converted into electric vehicles with much less incentives. It would also help create an ecosystem of components and battery making that would help cars and buses next.
“Even if 20% of 18 million two-wheelers are converted to EVs, it would mean around 40 lakh vehicles on the road with minimum efforts and incentives. This will start the components industry as well… The 10,000 buses ordered by ESSL would mean a subsidy of Rs 8,500 crore from the government and dependence on Chinese imports,” said Gill.
Electric two-wheelers cost around Rs 40,000 more compared with petrol two-wheelers, but if the industry and the government join hands for a year or two to make prices of electric two-wheelers same, it would allow the economy to save on petrol costs. It has been calculated that an electric two-wheeler owner can save Rs 1.2 lakh in fuel costs over five years (a battery lasts around five years).
So, the higher cost one did shell out for buying an electric two-wheeler can be recovered in less than two years, Gill said. Mahesh Babu, CEO Mahindra Electric said, even if 20-30% of the vision 2030 target is achieved, it will be a big leap for the EV industry. Also, recent trends indicate that battery prices, which constitute almost 40% of the cost of an EV, will see a rapid decline going ahead.
“Costs for current Li-Ion battery family are expected to reduce through till 2030. The battery pack level cost will decline to $100–150/kWh by 2021-25 from the current around $250/kWh. Keeping this trend in mind, the next five years are going to be very crucial for the EV industry. The cost differential gap between EV and ICE (including fuel savings) is expected to be achieved by 2022-25,” Babu said.
“In our view, the EV market is poised for growth, backed by supportive initiatives taken by individual ministries in line with the recommendations from the NITI Aayog. We will be ready with globally-competitive technologies and state-of-the-art manufacturing facilities to supply,” Babu added.
Ravi Pandit, chairman and group CEO of KPIT Technologies, said even as costs of material will go up in the next few years, processing costs for EVs will come down. So, the overall cost of EVs will decline to be at par with combustion engine vehicles by 2025-26. Besides, alternative battery technologies like manganese and sodium-ion which are same in terms of density as lithium-ion, can be game changers as these batteries can be charged in flat 5-6 minutes, compared with six hours for Li-ion batteries.
“Lithium is going to be next oil with high amount of risks, hence the batteries that constitute 40% of the EV cost should be based on material that is available in abundance in nature,” Pandit said.