How it would be if the entire automobile industry in India turns electric? A Country without any air pollution from gases emanating from vehicles, much cleaner atmosphere, with less noise pollution since electric vehicles are quiter to operate than gasoline powered vehicles.
Yes, we can expect such future in the coming decade, where the electric vehicle industry is expected to replace the use of non-renewable fossil fuels.
But are we ready for Electric Vehicles in India?
Though global transportation is moving at a faster pace towards going electric, India is also slowly and steadily joining the movement through its initiatives and GOI has taken an ambitious goal of making 30% of all vehicles in India go electric by 2030. Mahindra, OLA, Tata Motors and now even TESLA have been showing interest to invest in Electric Vehicles Sector in India.
The Earlier adoption of EV's in India was seen in the rise E-Trains and E-rikshaws. In the last decades, diesel auto-rickshaws were pretty normal & now these are highly replaced by the E-rikshaws so much that it became the highest sale of E-rickshaws during 2016-2020.
Currently, the major Electric Vehicles Companies in India are Mahindra, Tata Motors, Hero Electric and now with the Launch of OLA E-Scooters and the announcement of TESLA entering India, the next few years can prove to be a game-changer for making or breaking this sector in India. But there are a lot of challenges to be dealt with by the EV's to achieve the acceptance and flourish in the Indian market, which is as follows:-
1. Uneven Electricity Distribution
A 24-hour electricity distribution is a big problem in India already, but in addition to that a major portion of the energy is produced through non-renewable resources which would worsen further the number of charging stations across the country.
2. Lack Of EV Charging Points
There are only 300 charging points whereas there are 70,000 petrol pumps in 718 districts. Suppose we have charged our car and after running 30kms it goes out ofbattery, and there are no charging stations nearby, then the consequences are definitely going to be a major one.
3. Initial Costs of Owning an Electric Vehicle
The average price of an initial combustion engine is around 4-6 Lakhs in India whereas the cheapest Electric Vehicle also will cost more than 10Lakh. Now if suppose we compare a Maruti Suzuki car with Tesla Car that costs around 60Lakh, the difference is huge. Henceforth we Indians, being so price-sensitive will definitely going to straight away reject because of the high price.
4. Lack of Suppliers of Lithium-Ion Batteries
India has been depending on China for supplying these batteries, these batteries cost around 40% of the total cost of Electric Vehicle and the more we import the higher import duties are going to push up the price of the EV. After the Covid Pandemic, our PM Narendra Singh Modi has emphasized on "AATMA NIRBHAR BHARAT" movement and hence we should focus on avoiding imports from China and look for other alternatives.
5. Possible Disruption of Automobile Sector
With the launch of EV's it will be difficult for the traditional automobile industry to make the transition at a fast pace. Even they should be given the time to steadily move their vehicles from diesel/petrol operated ones to Electric.
6. Lack of Skilled Workforce
We all know that Ferrari cannot be manufactured in India since the components are manufactured in Italy or Germany and so even if these are imported also, it will involve a lot of import duty, skilled manufacturers or assemblers will be required to assemble the components and other issues also. So the GOI should take more steps and support the original equipment manufacturers(OEM's) to grow this sector.
But is it that due to all these challenges we must argue and question about the launch of EV in India? I don't think we should argue on this, after knowing the fact that India ranks in 6th position amongst world's top 10 populated countries and also that India's dependence on crude oil is more than 80%.
There's a report on Indian Electric Mobility Transformation by NITI AYOG which states that it is estimated that EV Sales penetration in India by 2030 would be 70% for commercial cars,30% for private cars,40% for buses and 80% for 2 & 3 wheelers.
Now let's have a quick look at the initiatives taken up by the government to develop the infrastructure for EV's and pass on benefits to EV sector. The Initiatives are:-
- National Electric Mobility Mission Plan 2013
- Faster Adoption and Manufacturing of Hybrid and Electronic Vehicle in India(FAME India) 2015.
- Ministry of IITY's Phased Manufacturing Program 2016.
- National Mission on Transformative Mobility and Battery Storage 2019.
Also, Karnataka Government amends EV Policy to attract EV makers and Tamil Nadu Government grants 100% Vehicle Tax waiver to EV's. All EV's are currently subject to 5% GST which can be around 6 to 8 times less than that of Petrol and Diesel Cars. First-time individual buyers who take a loan can also get benefits upto 1.5Lakhs under section 80EEB of the Income Tax Act.
Some of the recent Initiatives have been
1. Modified Incentive Scheme
To accelerate EV adoption, GOI has introduced new incentive scheme for both manufacturers and car buyers. The department of heavy vehicles changed the 2019FAMEII scheme to offer 50% higher incentives to two-wheeler EV's, whereas for 4 wheelers incentive up to Rs. 1.5Lakh remains the same as before.
2. New Guidelines as on 15/1/2022
EV owners can now use existing power connection at home and offices to charge EV. Any individual or Entity can set up a public charging station(PCS) without licence. Also, the guidelines lay down the target of one PCS in every 3sq-km grid in megacities.
3. E-commerce Company Initiatives
Amazon and Flipkart are launching initiatives to use E-mobility for the last mile delivery to reduce carbon footprints in the country.
CONCLUSION
Hence looking at the current scenario, as a student from a finance background I find this sector to be a very lucrative field for investment as the returns will be much higher in the long run since it is only a matter of time that EV's will become more & more cost-efficient, the battery life will improve, new R&D will take place. The liberalized norms will attract individuals and startups in this sector, which is expected to create livelihood opportunities and lead to mushrooming of PCS just like puncture repair shops- removing range anxiety, the biggest hurdle in the rapid adoption of EV's.
Sources/References
- Times of India Newspaper
- The Economist Magazine
Hope the above article will help everyone to get an insight about the current scenario and the future business prospects of EV sector.
CAclubindia
