Electric Mobility in India

With an ambition to be among the top 3 in automobile manufacturing by 2026 (as per the Automotive Mission Plan 2016-2026), Indian auto industry needs to consider an innovative and pragmatic approach to ride the transformation wave in the automotive sector. E-mobility by far is the greatest opportunity for the Indian industry to participate and emerge amongst the top in the globalized automotive world.

While India is operating in the same global context as other countries who have adopted an EV policy, it has a unique mobility pattern which other countries do not share. While vehicle growth in India is rapid, ownership per 1000 population has increased from 53 in 2001 to 167 in 2015, a key difference between India and other countries and the types of vehicles being used. India uses a large variety of motorized transport on roads and its auto-segments are quite different from that of most of the world.

In India, premium four wheelers (cars) are only 2% of the total sales. However, most advanced technologies are available in this category in global markets. In the near term, India should foster early adoption of vehicles by premium customers which will pave the way for consumer comfort with electrification, raise aspirations for indigenous products and make advanced technology available in the market. The presence of world-class technology will help India build a world-class ecosystem for high-quality component and subsystems usable for all kinds of vehicles.

In the longer term, India should establish technological and manufacturing leadership in the economy segment of the market. The prevalence in India of small vehicles such as two-wheelers, three-wheelers, economy four-wheelers and small goods vehicles is unique among large countries. These small vehicles require a unique set of technological and industrial capabilities. Here, India has an opportunity to take a leadership role in the electrification of small vehicles. India’s potential volumes for these vehicles as the nation grows, lays the foundation for transformational manufacturing and industrial policy. That focusses on the development of technological expertise and industrial capabilities in the production of small electric vehicles which can not only meet domestic demand but can also place India in a position of global leadership. As other countries begin to look at smaller vehicles with appropriate specifications, India can establish a position of leadership based on domestic demand.

Beyond significant domestic demand for smaller vehicles, another aspect of the Indian mobility market is supportive of electrification: its high level of sharing. Shared mobility in India has exploded, changing the way India travels. Taxi aggregators such as Ola and Uber increased from 130 million rides in 2015 to 500 million rides in 2016, leading radio taxis to account for 72% of the overall market. This high penetration of shared mobility in India increases both vehicle utilisation, which plays to the economic advantages of EVs, and also creates natural and large-scale purchases of EVs.

Impact of EVs on Growth and Employment

• Emerging opportunities in charging infrastructure, battery and power industries
• Transformation and careful handholding of auto ancillary MSMEs specialising in Internal Combustion Engine Vehicles (Petrol/Diesel vehicles).
• India’s India’s crude oil import bill at the end of March 2019 is expected to be around USD 120 billion, up by 42% from USD 88 billion in March 2018. Just enabling India’s 170 million two-wheelers to go electric, India can save upto USD 20 billion on the import bill.
• Battery manufacturing industry in India can become bigger than the total amount spent on import of crude oil. This would provide a huge boost to the Indian economy. The revenue loss for government from the taxes on oil sector is expected to be replaced by higher tax revenues in other economic sectors.
• European Climate Foundation has estimated that through reducing oil demand by more efficient electric cars, employment will increase by 500,000 to 850,000 by 2030. Another report estimates that about 2 million additional jobs will be created by EVs by 2050. The report further adds that oil production and distribution has very low employment intensity of just 4 jobs per million Euros value added compared to 24 jobs per million Euros in the general economy. Therefore, any shift in expenditure from buying imported oil to other expenditure choices would generate additional employment. Further, as imported oil is replaced by electricity and batteries, large employment is possible in enhancing power generation and distribution, and in battery manufacturing, including battery recycling.
• Internal Combustion Engine Vehicles (ICEs) are one of the main sources of air pollution globally. They negatively affect both human health and ecology. Emissions from ICE powered motor vehicles are responsible for about two-thirds of air pollution in urban areas. The current ban on older fuel cars in some Indian cities already shows a positive influence on air quality, and this can only further improve with the large scale introduction of EVs.

Summing Up

The achievement of Indian government vision of electrification of vehicles by 2030, though welcome, would depend on how the entire ecosystem develops in the country for supplier base of various components, batteries as well as how the charging infrastructure develops. However there would be lot of challenges to be overcome with onset of electric vehicles such as limited driving range low speed capabilities, high battery costs, lack of adequate electric charging infrastructure and high cost of electric drive train systems. The vehicle manufacturers too would have to craft roadmap entailing specific short–terms and long term goals and make timely investment to enable electric vehicle manufacturing ecosystem develops in time for scaling up electric vehicles manufacturing and availability in the country.