With incidents of fire being reported widely, electric two-wheeler manufacturers are facing a battle of perceptions with more possible customers either postponing or cancelling their decision to buy an EV.
While financiers are citing a massive dip in bookings and enquiries, dealers are saying at least a 10 per cent dip in customers, many of whom are in wait-and-watch mode.
India wants electric scooters and motorbikes to make up 80% of total two-wheeler sales by 2030, from about 2% today, and Modi’s administration is offering companies billions of dollars in incentives to locally manufacture electric vehicles (EVs.)
What is Electrical vehicle?
An electric vehicle (EV) is one that operates on an electric motor, instead of an internal-combustion engine that generates power by burning a mix of fuel and gases.
While some EVs used lead acid or nickel metal hydride batteries, the standard for modern battery electric vehicles is now considered to be lithium-ion batteries as they have a greater longevity and are excellent at retaining energy, with a self-discharge rate of just 5% per month.
Need for Electric Vehicles (EVs) push
To minimise GHG emissions: Transport sector in India is the second largest source of CO2 emissions worldwide. Within transportation, road transport has been the highest contributor to the GHG emission in the country.
To reduce crude oil import bill: Currently, Indian transportation sector accounts for one-third of the total crude oil consumed in the country, where 80% is being consumed by road transportation alone.
To meet Paris agreement goals: To achieve the GHG emission target committed under Intended Nationally Determined Contributions (INDCs), it is inevitable that India transits to greener mobility technologies in transport.
Rising motorization rates: With one of the lowest motorization rates in the world (22 cars per 1,000 people), India is among the fastest growing countries in transportation sector. India has also set the national target of achieving 30% EV sales penetration by 2030.
Economic opportunities: Many start-ups have entered into manufacturing of EVs in past 5-7 years and conventional vehicle manufacturers, both domestic and global, are also launching EVs in Indian marketplace.
Steps taken by India to promote Electric Vehicles
National Electric Mobility Mission Plan (NEMMP) 2020 seeks to enhance national energy security, mitigate adverse environmental impacts from road transport vehicles and boost domestic manufacturing capabilities for Electric Vehicles
FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles) scheme was first launched in 2015 under NEMMP 2020 to enhance hybrid and electric technologies in India
Phase-II of FAME scheme to stimulate the market of EVs in the country, de-licensed the charging infrastructure business and specified guidelines & standards for charging infrastructure for electric vehicle.
Several states (including Delhi, UP, MP, Telangana, and Andhra Pradesh etc.) have notified their EV policies aimed at promoting manufacturing and increasing demand of electric vehicles in their respective states.
India launched E-Amrit portal (at COP26 Summit in Glasgow) as a one-stop destination for all information on electric vehicles.
Recently, Ministry of Power released the guidelines on EV charging infrastructure which addresses the need for adequate availability of charging stations.
In 2019, Ministry of Housing and Urban Affairs notified Amendments in Model Building Bye-Laws – 2016 for EV charging infrastructure.
ISRO has commercialized indigenously developed lithium-ion battery technology and has selected 14 companies for transfer of technology.
NITI Aayog’s initiative to provide a Model Concessionaire Agreement (MCA) document for introducing Electric-Bus Fleet in Cities for Public Transportation on PPP mode on Operational Expenditure (per km basis) Model rather than paying upfront capital cost.
Challenges for EV ecosystem
Lack of a stable policy for EV production: EV production is capital intensive sector requiring long term planning to break even and profit realization, uncertainty in government policies related to EV production discourages investment in the industry.
Technological challenges: India is technologically deficient in the production of electronics that form the backbone of EV industry, such as batteries, semiconductors, controllers, etc.
Lack of associated infrastructural support: The lack of clarity over AC versus DC charging stations, grid stability and range anxiety (fear that battery will soon run out of power) are other factors that hinder the growth of EV industry.
Lack of availability of materials for domestic production: Battery is single most important component of EVs. India does not have any known reserve of lithium and cobalt which are required for battery production. India is dependent on countries like Japan and China for the import of lithium-ion batteries.
Lack of skilled workers: EVs have higher servicing costs and higher levels of skills is needed for servicing. India lacks dedicated training courses for such skill development.
Lack of consumer confidence: recent fire incidents, have lower the confidence of buyers. Sales of electric scooters more than doubled this year, but at least for some prospective buyers, the fires are cause to think twice.
Phased Manufacturing Program, AatmaNirbhar Bharat, and incentives announced by several states in their EV policy should be leveraged to strengthen the battery manufacturing in medium to long run.
Discoms need to actively participate in planning for EV charging infrastructure because of their inherited capability of existing infrastructure, existing consumer base and superior technical skills.
Need policy guidance on standardization of battery for EVs, and strategies to address huge upfront capital requirement for a massive uptake of battery swapping business model.
Financial Institutions should be encouraged to extend their lending facility to electric mobility sector. Creation of non-financial incentives such as priority lanes, reserved parking for EV only vehicle, EV Purchase subsidy over and above FAME II subsidy etc. for better response from consumers.
Online portal and single window clearance system for availing clearances and subsidies/rebate in transparent manner.