evconindia · today, india’s 1.5 million e˜rickshaws make up the second˜ largest collection of...

EVConIndia

Electric Vehicles: Mapping The Indian Terrain

& Charting The Course

October 2019 White Paper

GLOBAL EV INDUSTRY

2018-19 IN THE ELECTRIC VEHICLE INDUSTRY WORLD OVER HAS BEEN REMARKABLY GOOD. THE GLOBAL EV SALES CROSSED 2 MILLION UNITS TO REACH 2,218,490. CHINA’S SHENZHEN BECAME WORLD’S FIRST CITY TO OWN A FULLY ELECTRIC FLEET OF 16,359 BUSES.

Factors such as decreasing battery prices, increasing vehicle range and reduced cost of ownershipfor an EV are attracting investor interest. $19 billion were invested in the US, $21 billion in China and $52 billion in Germany. These investments have only grown since with some studies projecting EVs will command a market share of 50% by 2025, in some countries. The increasing popularity of EVs highlights significant e�orts made jointly by various governments and automotive industry associations to replace highly polluting petroleum-fuelled vehicles with emission-free EVs.

However, more than 70% of EV sales worldwide in 2018-19 happened in the US, Japan, and China with China constituting for more than 50% market sales and Battery EVs accounting for up to two-thirds of global sales.

BYD Auto Co., Ltd. (China), Nissan Motor Company Ltd. (Japan), Tesla Motors (US), and Volkswagen (Germany) are some of the leading players in the EV market. Globally, Nissan Leaf is the top-selling electric vehicle and China is the biggest electric vehicle market with 4% of its auto sales coming from EV.

Global Sales (k)BEV

2 16 22 46 67 107 137 201

397

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1

2

3

4

5

6

7

8

9

10

China

USA

Norway

Germany

France

Netherlands

Korea

Canada

UK

Japan

430.7

116.2

36.3

33.0

24.3

17.8

17.7

13.1

12.7

11.0

+111%

+87%

+74%

+72%

+38%

+118%

+63%

+37%

+62%

-27%

Sales (k) 18 vs 19

Top 10 BEV Marketsby Volume H1 2019

Source : https://www.jato.com/

Electric Vehicles: Mapping The Indian Terrain And Charting The Course The Blue Circle 1

Source : https://economictimes.indiatimes.com/

INDIA’S EV INDUSTRY

INDIA’S EV INDUSTRY TOO HAS SEEN A DECENT LEAP IN FINANCIAL YEAR (FY) 2018-19 - SELLING OVER 7.5 LAKH UNITS, 1.83 LAKH VEHICLES MORE AS COMPARED TO 2017-18.

This growth is in line with the government‘s bid to bring down its oil imports and curb pollution so it can meet its commitment as part of the 2015 Paris climate change treaty.

Many new start-ups have joined the industry in the two-wheelers segment like PureEV, Avan, Garvit and a number of domestic and international car manufacturers like Audi, Hyundai, Kia, and MG Motors announced the launch of their electric cars in the country along with new ventures coming up in the shared mobility sector like Blue Smart and Glyd. Apart from this, a slew of charging stations were installed in many states like Andhra Pradesh, Delhi and Telengana during the year. The charging infrastructure got a boost with the announcement that no license would be required to install EV charging stations.

2018-19 also saw the launch of the much-awaited second phase of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) India scheme or FAME II.

What the scheme proposes Scheme will be e�ective for 3 yearsstarting April 1,2019

₹ 10,000 cr Funds allocated for the scheme

EV's Likely to be subsidised - 1 million Two-wheelers for personal use- 500,000 Three-wheelers- 55,000 Four-wheelers mainlyregistered for commercial purposes.- 7,000 E-buses

2,700 Public charging stations to be set up in metros and other large cities

3km x 3km one charging station per grid of the sizeOne charging station every 25 km along all major highways ₹895 cr Outlay for the first phase

Incentives around the world

China : Carmakers required to earn a stipulated no. of credits by selling 'new-energy vehicles' or face sanctions. Credits can be bought from others with a surplus if one misses its target.

Norway : VAT exemption of 25% and free access to toll roads, public charging and municipal parking.

US : Federal tax credit of up to 7,500 on purchase of electric or plug-in hybric cars

Higher taxes on conventional powertrain cars to subsidise EV's in many countries around the world.


INDIA’S EV INDUSTRY

FAME-India was first launched in 2015 to promote electric mobility by incentivising electric vehicles. In its first phase, it achieved very little. According to reports, about 90% of the vehicles produced from April 1, 2015, to March 31, 2019, as a result of this policy were electric scooters. Large manufacturers ignored the incentives whereas small enterprises used antiquated lead-acid batteries in these scooters instead of modern lithium-ion ones.

Indian policymakers then hit back. They made Bharat Stage-VI standards compulsory to regulate the emission of air pollutants from motor vehicles.

Some say that the e-vehicle growth could have been even higher, but because the automobileindustry had to invest in BS-VI to keep its main breadwinner i.e. ICE vehicles compliant, it dragged its feet in moving to E- format due to the sunk cost in ICEs.

FAME II AIMS TO HAVE 15 LAKH EVS ON INDIAN ROADS IN THENEXT 3 YEARS AND 30% VEHICLES POWERED BY LITHIUM-ION BATTERY IN NEXT 10 YEARS.

The government has also mandated that all three-wheelers manufactured in India would have to be electric by 2023, two-wheelers with an engine capacity of up to 150cc manufactured in Indiashould be electric by 2025, and 30% of cars sold after 2030 should be electric.


E TWO-WHEELERS

INDIA’S TWO-WHEELER INDUSTRY IS THE LARGEST IN THE WORLD, SELLING 21 MILLION VEHICLES EVERY YEAR.

It is this segment which is expected to boost EV growth in the country - provided a�ordable, good performance options are made available for this highly discerning, price sensitive segment. 2008-09, for instance, saw India sell 80,000 electric two-wheelers—most of them bikes with top speeds of 25kmph but high in demand because of the low running cost and because of no driving licence requirement. However, the market did not pick up because these bikes broke down oftenand lead acid batteries had a lower power output and shorter life span.

The sale has again picked up in last 2 years, largely due to Lithium-ion(Li-ion) batteries. In acountry where charging infrastructure is lacking, lead-acid batteries don’t work well as they are heavy and cannot be taken out to charge. A comparable Li-ion battery, though 2.5 times costlier than lead acid batteries, is about two-thirds lighter - 7-9kg and can be easily carried into the house and charged in a room and also swapped with a duplicate set that manufacturers are providing. The life of the lead-acid battery in automotive use is one to two years, while a Li-ion battery lasts four to five years. If the lead battery gets completely drained, its life becomes a fourth of the actual life. In case of lithium, even if you don’t take care of the battery, it will last for five years.

Some of the companies making EV two-wheelers powered by lithium-ion batteries are Ather Energy, Ampere, Hero Electric, Torque, Revolt, Kinetic Green, Smart E, Electrotherm, Twenty-Two Motors and Okinawa. Data shows that 1.26 lakh e two-wheelers were sold in 2018-19. While this is more than double the number sold in 2017-18, it is no match for the 21 million internal combustion engine (ICE) two-wheelers sold in the country in 2018-19. And, 90 per cent of this 21 million are vehicles with engine capacity below 150 cc — the segment government is targeting for conversion to electric by 2025. Second, of the 21 million ICE two-wheelers, only about 75.8 lakh vehicles or 35 per cent are scooters/mopeds, with the rest are motorcycles (bikes).


E TWO-WHEELERS

But the current set of e two-wheelers in the market are almost entirely scooters. More importantly, most of them are low-speed electric scooters with a range of about 25 km/hour. Thus, the situation is turning adverse for large ICE companies like Hero MotoCorp, Bajaj Auto, TVS Motors and Honda-the major two-wheeler players in the below 150 cc segment today - who don’t have an electric bike yet.

.

According to Industry sources FAME II’s launch in April 2019 has been a setback for e 2 wheeler sales. To receive FAME II subsidy its manufacturers must source more than 50% of the components locally and then get eligibility certificates from vehicle testing agencies. Also the benefits are limitedto vehicles equipped with lithium-ion batteries. Out of the 46000 units sold in first six months of 2019, only 2100 were manufactured under FAME-India. Ather Energy, Ampere, Okinawa, Jitendra Electric Vehicles, and Hero Electric are the five manufacturers which managed to get the eligibility certificate for the subsidy scheme. Under the first phase of the FAME-India scheme, 88 models of electric two-wheelers sold by 18 manufacturers were eligible for subsidy. A majority of these vehicles couldn’t meet the new criteria and thus lost financial support from the government.


THESE COMPANIES, HEAVILY INVESTED IN THE IC ENGINE & IN UPGRADING THEIR MODELS TO COMPLY WITH BS-VI EMISSION NORMS, CAN’T AFFORD A SUDDEN SHIFT TO ELECTRIC MOBILITY.

Source : https://swachhindia.ndtv.com/

E THREE-WHEELERS

The first e-rickshaws appeared in India about a decade ago when small manufacturers imported ready-to-assemble kits from China to produce vehicles mainly to haul cargo.

TODAY, INDIA’S 1.5 MILLION E-RICKSHAWS MAKE UP THE SECOND-LARGEST COLLECTION OF ELECTRIC VEHICLES IN THE WORLD, AFTER CHINA.

The country now sells more electric three-wheelers than the conventional ones that run on petrol, diesel or CNG. Sales of electric three-wheeler segment has grown 21 percent during 2018-19 to 630,000 as against 520,000 sold in 2017-18.

However, reports say that more than half of the these 3-wheelers are technically illegal and nearly all of the rickshaws are powered by lead-acid batteries underneath the passenger seats. And the electricity used to recharge them is often stolen.

In the country’s northern cities, where e-rickshaws are concentrated, the vehicles are replacing auto-rickshaws, the better-known three-wheelers which run on diesel, gasoline or natural gas.

FY 2018-19

FY 2017-18

Two Wheelers

1,26,000

54,800

Electric Vehicle Sales In India


Four WheelersThree Wheelers

5,20,000 1,200

6,30,000 3,600

Total

5,76,000

7,59,600


Although auto-rickshaws are safer and faster, a ride in one costs three to ten times more than a ride in an e-rickshaw. Infact, these e- rickshaws, with their slow speed and rickety design and prone to accidents, were banned in 2014 by Delhi High Court but the government stepped in and legalized e-rickshaws in 2015. A subsidy of 30,000 rupees, or about $425, is now o�ered to drivers who buy new ones.

THOUGH AN ELECTRIC THREE-WHEELER HAS A SMALLER DRIVING RANGE OF AROUND 130 KM FOR A FULL CHARGE, AS COMPARED TO 190-200 KM ON A FULL TANK OF PETROL, THE OTHER ADVANTAGES SUCH AS CHEAPER ENERGY SUPPLY ARE PUSHING ITS SALES.

As their popularity has grown, Indian companies have tweaked the original Chinese designs. New brands like Saarthi, one of the biggest manufacturers of e-rickshaws in the Delhi area and havingeligibility certificate under FAME II, have emerged and along with this an ecosystem of parts suppliers and neighbourhood parking lots where drivers can store and recharge their vehicles overnight.

Ola is experimenting with e-rickshaws that can exchange lithium ion batteries quickly so there is nodowntime for drivers. It has built a battery-swapping station just outside of Delhi and has raised $250 million from Japanese conglomerate SoftBank to invest in electric vehicle technology.

Uber has partnered with SUN Mobility where SUN Mobility will o�er swappable smart batteries and quick interchange stations to select original equipment manufacturers (OEMs) for building E-autos. Mahindra & Mahindra, a top producer of commercial vehicles, has teamed up with SmartE, a startup, to build a market for premium e-rickshaws that run on lithium-ion batteries. SmartE, whose roughly 1,000 e-rickshaws make up the largest fleet of such vehicles, has a contract with Delhi’s metro system to place its vehicles in prime locations. The startup rents lithium-ion e-rickshaws to drivers, charging and maintaining them at its own lots.

Little-known companies like Kalinga Ventures to giants like Bajaj Auto, TVS Motor Company and Italian company Piaggio, about 10 companies are involved in developing electric three-wheelers with many of them in advanced stages of launching them in due course.

E THREE-WHEELERS

ALSO THESE VEHICLES MAY ACTUALLY NOT BE AS GREEN AS THOUGHT. EACH OF THEBATTERY-OPERATED VEHICLES NORMALLY HAS FOUR LEAD-ACID BATTERIES THAT REQUIREREPLACEMENT EVERY 5-6 MONTHS. FOR A CITY LIKE DELHI, THIS MEANS ITS 1.5 LAKHE-RICKSHAWS PRODUCE 8-10 LAKH DISCARDED BATTERIES ANNUALLY.


E THREE-WHEELERS

While the demand is going up, sales are getting restricted due to unpreparedness of the registration authority.

THE REGIONAL TRANSPORT OFFICES (RTOS) OF SEVERAL STATES DO NOT KNOW HOW TO REGISTER AN ELECTRIC THREE WHEELER, COMPLAIN MANUFACTURERS.

There are other issues too. Utility companies complain about charging lots stealing power using illegal connections. India’s hot climate also punishes electric batteries. They lose their charge more quickly in India than in cooler countries, and they can overheat and shut down.

A recent study has found that almost 90% of these reached the informal sector that has no proper retrieval system. They mostly end up at scrap units, where the process to recover lead through melting pollutes not only the air, but also the soil and water.

Source : https://www.eqmagpro.com/


E FOUR-WHEELERS

THE EV CAR SALES IN INDIA GREW THREE-FOLD TO 3,600 IN THE YEAR ENDED MARCH 2019 BUT STILL ACCOUNT FOR ABOUT 0.1 PER CENT OF THE 3.3 MILLION DIESEL & GASOLINE CARS SOLD IN THE COUNTRY OVER THE PERIOD.

China's electric car sales, meanwhile, rose 62 per cent in 2018 to 1.3 million vehicles.

One reason for slow growth is that while there are several electric scooter manufacturers in the country, including Ather Energy, Hero Electric and Okinawa, there are only two car makers that build and sell electric cars — Mahindra & Mahindra and Tata Motors (both with eligibility certificates underFAME 2). The Japanese, market leaders in the Indian market, are yet to do so.

Tesla finds import duties prohibitive. Several global firms believe electric is not the best solution for a country where the primary source of power generation is coal, and where infrastructure is a big impediment. Instead, they have been pushing for hybrids as the most plausible solution.

Though government has cut goods and services tax (GST) on EVs from 12 per cent to 5 per cent, and on EV chargers from 18 per cent to 5 per cent, the fact that FAME II scheme does not provide any incentive for private buying of EVs or for plug-in hybrids is not helping either.

FAME II: Hits And Misses

• Sets aside ₹10,000 crore to subsidise EVs

and battery infrastructure

• Bene�ts are spread over three years giving

continuity to the policy

• Manufacturer bene�ts not clear

• No incentives for private 4-wheelers

• Battery costs remain high

• Low incentives for hybrids


FAME II: Hits And Misses

• Sets aside ₹10,000 crore to subsidise EVs

and battery infrastructure

• Bene�ts are spread over three years giving

continuity to the policy

• Manufacturer bene�ts not clear

• No incentives for private 4-wheelers

• Battery costs remain high

• Low incentives for hybrids

E FOUR-WHEELERS

ABOUT 55% OF ALL THE PASSENGER VEHICLES SOLD CURRENTLY IN THE COUNTRY COST LESS THAN $8,000 (RS 5.6 LAKHS), WHICH IS MUCH CHEAPER THAN THE COST OF A BASIC ELECTRIC CAR.

Even with the steep fall in battery prices highway-capable EVs with a range of 200 miles will not be able to achieve upfront cost parity with these low-priced vehicles.

REPORTS FURTHER WARN THAT 60 PER CENT OF PEOPLE DON’T HAVE THEIR OWN PARKING SO THERE IS NO WAY THEY CAN DO CHARGING. THEY WON’T EASILY ADOPT EV.

For the government too, adopting EV cars for its own use has not been an easy ride. As per the world’s largest single EV-procurement tender floated in September 2017, 10,000 cars were to replace the government’s conventional energy car fleet. The state has only procured 1,000 cars from that lot from Energy E�ciency Services Ltd. (EESL) most of which are lying unused because of lukewarm response from its users. EESL is now looking to lease these unused EVs to cab companies in India. It has already an agreement with electric mobility startup – Blu-Smart mobility – for 500 EVs, has made o�ers to Ola Cabs and Meru cabs and is planning to reach out to Uber, in India.

There are other concerns too. An EV 4-wheeler has 30-50 moving parts, while a regular petrol or diesel vehicle has more than 2,000. For this reason, when fully adopted, EVs will kill most auto component firms.

INDIA WOULD ALSO NEED TO RESKILL A LARGE NUMBER OF MOTOR MECHANICS AS THEY WOULD NOT BE ABLE TO REPAIR EVS BECAUSE OF THE SOPHISTICATED ELECTRONICS. ROADSIDE MOTOR GARAGES WILL SUFFER.


SHARED AND FLEET MOBILITY

Taking advantage of government’s incentives for commercial fleet under FAME II scheme, Walmartowned e-commerce firm Flipkart aims to replace nearly 40 per cent of its existing last-mile fleet of delivery vans with EVs by March 2020. Zomato announced that it will be converting 40% of its delivery fleet into bicycles and e-bicycles in the next two years. Swiggy is piloting EVs in 10 cities across the country, as part of its e�orts to be more sustainable and environmentally friendly for the future.

DMRC( Delhi Metro Rail Corporation), through its partnership with the micro mobility start-up Yulu, has deployed a fleet of 250 electric bikes across nine metro stations in Delhi. Since these e-bikes come with a top speed of 25 kmph no driving license is required for their operation. Before Delhi, Yulu has already made its mark in cities like Bengaluru and Navi Mumbai.

SHARED MOBILITY PLAYERS HOWEVER, ARE SCEPTICAL WHERE 4-WHEELERS ARE CONCERNED. OLA HAD TRIED TO OPERATE ELECTRIC CARS IN NAGPUR, BUT WITH LITTLE SUCCESS GIVEN INADEQUATE INFRASTRUCTURE, HIGH COSTS AND POOR REALISATION AMONGST THE INDUSTRY FOR THE NEED TO ADAPT BATTERY TO HIGH TEMPERATURES.

The Indian government has sanctioned 5,095 electric buses to 64 cities or state transport corporationsfor intra-city operation, 400 electric buses for intercity operation and 100 electric buses for last-mileconnectivity to DMRC under Fame II scheme. The buses are expected to run about 4 billion kilometresduring their contract periodand are expected to save cumulatively about 1.2 billion litres of fuel overthe contract period.

There are challenges of course. The capital cost of switching to e-vehicles.

THE PROCUREMENT COST OF E-BUSES RANGE FROM RS 1.7 CRORETO RS 2.3 CRORE EACH, THREE TIMES THAT OF CNG BUSES, PLUS COST OF CREATING NEW INFRASTRUCTURE LIKE CHARGING STATIONS AND MANAGING THE OPERATION OF THESE BUSES.

China Europe India US Rest of the world


Then there is the question of reliability, longevity and safety of the battery technology and the costs of creating the manufacturing infrastructure for the same in India.

Under the FAME scheme, about 60 per cent of the fleet’s cost is borne by the Centre. The rest of the cost is to be borne by the state government and their transport corporations, which also seems to be a key bottleneck, as most of them are deeply in the red.

The leading e-bus player in India is China’s BYD Auto Industry Co. Ltd, which has a tie up with Goldstone Infratech Ltd, which assembles these buses in India. Though Indian companies like Mahindra do plan to have their own products on the road soon, it is Olectra-BYD that is getting the orders. Delhi, however, is using buses manufactured by PMI Electro Mobility Solutions which has a tie up with Chinese company Foton. Its competitor, also on trial in Delhi, is JBM Solaris Electric Vehicles Ltd. powered by “fast-charging lithium batteries”.

SHARED AND FLEET MOBILITY

China’s Lasting DominationGlobal municipal e-bus �eet

Source: BloombergNEF’s “Electric Vehicle Outlook 2019”

15M

10

2018 22 26 30 34 38 2040

05


BATTERY, POWER AND CHARGING STATIONS

BatteryIt turns out that not only does India not have oil, but it also lacks cobalt and lithium, two key metals for new battery technologies. Worse, most reserves are located in a few countries. Short supply has made both expensive.

THE BATTERY ACCOUNTS FOR 70% OF THE COST OF TWO WHEELERS AND 50% OF CARS.

China, always a long term planner, has secured a supply of essential metals with purchases of mines in Congo, Bolivia, Chile and Australia. It controls half the cobalt mines in Congo and with generous state support, its firms today command over 60% of global battery market share. Realising this, other countries are investing in developing next-gen batteries that would replace Lithium-ion batteries. Panasonic, Tesla, Toyota and Chinese manufacturers are at the forefront of research. Use of fuel cells is another big idea. General Motors and Airbus are part of the global Hydrogen Council which plans to push a transition to fuel cells.

India’s state-run oil refiner Indian Oil Corporation Ltd, in partnership with an overseas start-up, is setting up a 1 Giga Watt (GW) plant to make batteries using a non-lithium ion raw material available locally.

Meanwhile, Indian government is aiming to subsidise creation of battery capacity. Zero-duty imports would be allowed for lithium, iron and cobalt to power the advanced cell chemistry in place of the traditional lead batteries.

To take advantage of the subsidy as well as the massive opportunity in fleet operators’ batteryrequirements and replacement market (of inferior lead acid batteries in over 4 lakh 2-wheeler EVs and 2.5 million e-rickshaws), companies ranging from auto component manufacturers to power and energy solutions providers including Exide, Exicom, Amaron, Greenfuel Energy Solutions, Trontek, Coslight India, Napino Auto & Electronics, Amara Raja Batteries, Trinity Energy Systems, Versatile Auto Components have rolled out their plans to make lithium-ion batteries locally.

Source : https://economictimes.indiatimes.com/

Govt to subsidise50 CWH of battery

ZERO IMPORTduty on lithium,iron & cobalt.

BENEFIT OF entiredepreciationin one go

NO SUBSIDYafter six quartersof default in scaling up andincligenisationlevels

Max 10 players canset up facilities ofmin 5 GWH capacity

India will need 600GHW of batteriesin 10 years starting2020

Estimated subsidyoutgo; 700cr a yr

INCENTIVES

PENALTY

ROADMAP

2020Awardcontracts

2022-25Scale upproduction

2022Commenceproduction

2025Full-scaleproduction

Subsides On The Anvil To Boost Battery Manufacturing In India



Leading vehicle manufacturers too have evinced interest in the space. While Maruti Suzuki’s parent company Suzuki Motor Corporation (SMC) has tied up with Toshiba and Denso to set up the country’s first lithium-ion battery manufacturing facility in Gujarat at an investment of Rs 1150 crore, Mahindra & Mahindra has forged an alliance with South Korea’s LG Chem to make lithium-ion batteries in India.

However, all this e�ort might be too late.

DUE TO A GLOBAL RUSH TO SET UP LARGE BATTERY MANUFACTURING UNITS, ALREADY AN ENORMOUS SURPLUS PRODUCTION CAPACITY EXISTS AND IT MIGHT BE IMPOSSIBLE FOR INDIAN DOMESTIC MANUFACTURERS TO MATCH THE PRICES OF SUBSIDISED IMPORTED BATTERIES.



PowerCurrently, India has surplus electricity generation capacity and an additional 50,000 MW is in the pipeline. So electricity for EVs would not be a constraint. However, unfortunately it is coming mainly from coal-fired power plants. And moving from fossil-based energy to renewables will not be easy for India. Even for China, despite it’s large-scale interventions in building solar and wind powerinfrastructure, most of the energy required for its EVs comes from the grid that is essentially coal-based.

Concerted action and policies that rethink electricity’s ecosystem and pricing, can make EVs both greener and cheaper to run.

GOVERNMENT COULD TAKE CUE FROM DELHI METRO, WHICH THROUGH AN OPEN ACCESS AGREEMENT WITH A SOLAR ELECTRICITY PLANT IN REWA, MADHYA PRADESH, WILL SOON SOURCE ENOUGH POWER TO MEET ALMOST 80% OF ITS DAYTIME ENERGY REQUIREMENTS.

Renewable energy (RE), primarily wind and solar supplies about 6.6% of generation today, on average. As RE grows, through ambitious government targets of 175 gigawatt (GW) of RE by 2022, its share may become almost 20%.

ACCORDING TO OLA MOBILITY INSTITUTE‘S RECENT STUDY, FOR EVS TO MAKE ECONOMIC SENSE TO CUSTOMERS, CHARGING THEM SHOULD COST LESS THAN A THIRD OF WHAT IT DOES NOW.

Also more than half the retail cost of petrol is taxes, which would need to be covered via other means if the country moves to EVs. It is unlikely one can (or should) tax electricity at the same rate.

More importantly, if 80% of India adopts EVs, the total power demand could touch 100 Terawatt-hour or about 5% of the total electricity demand of India by 2030. This is expected to put immense pressure on the electricity grids, already under stress due to the huge subsidies to the agriculture sector, high rates of theft, and pilferage.



India is home to over 4 lakh registered electric two-wheelers and rickshaws but in the absence of charging infrastructure, many of their drivers have been illegally siphoning power.

THE POWER SECTOR LOSES MORE THAN $16 BILLION A YEAR TOTHEFT — MORE THAN ANY OTHER COUNTRY IN THE WORLD.

Further, the electricity grids and sub-stations would need overhauling to have a dedicated capacity for the EV industry.



Charging StationsLack of a robust charging network is one of the biggest obstructions to electric vehicles adoption in India.

ONLY 10 PER CENT OF THE LATEST SUBSIDY PROGRAM IS ALLOCATED FOR CHARGING STATIONS DESPITE INDIA HAVING ONLY AROUND 350 PUBLIC EV CHARGERS.

In comparison, USA had 16000 and China over 400,000 charging points.

Fortunately, the technology for charging stations is available and the investment for setting up a charging station is modest so scaling up should not be an issue. Government has recently invited bids for setting up 1,000 EV charging stations with a minimum of 6,000 chargers under the FAME II subsidy scheme. Setting up stations in cities will be open to all companies while only central utilities will be eligible to deploy such infrastructure on highways. It wants to initially cover seven metros, satellite towns connected to the metros and capital cities of all states, among others.

Government has also announced revised guidelines under which: Private charging at residences and o�ces has been permitted. Any individual or entity is free to set up public charging stations provided they meet technical, safety and performance standards as well as all protocols outlined by various authorities.

At least one charging station is to be made be available in a grid of 3 km x 3 km in cities and one at every 25 km on both sides of highways/roads.

All mega cities and expressways connected to the mega cities to be taken up for coverage, other big cities to be covered in the second phase. For inter-city travel fast charging station for long range and/or heavy duty EVs like buses/trucks etc. to be installed at every 100 km.

Bureau of Energy E�ciency (BEE) is nominated as the central nodal agency to facilitate installation of charging infrastructure.

Global companies such as Fortum, ABB, Delta Electronics, Ather Grid, Exicom Power Solutions and EESL are expected to be the main players in the category.

INSURANCE AND FINANCE

FINANCING OF EVS IS STILL A BOTTLENECK AS SINCE THEY ARE A NEW ITEM ON THE LIST OF THE BOOK-KEEPERS, THEIR DEPRECIATION AND RESIDUAL VALUE ARE NOT WELL ESTABLISHED LIKE CONVENTIONAL VEHICLES.

EVs generally cost more to repair after getting into a wreck than conventionally powered rides so auto insurance quotes for electric cars are generally found to be 21 percent higher, on average, than comparable gas-powered models. In India, to incentivise sales of electric vehicles (EV) government has made EV motor TP premiums cheaper than those for regular vehicles. At a time when an insurance price increase is a factor for a dip in auto sales, cheaper TP rates would mean a direct impact on the buying behaviour.

THE PREMIUM RATES FOR EVS ARE 15 PERCENT CHEAPER THAN THAT OF REGULAR VEHICLES.

The own-damage motor covers are also priced cheaper for EVs than the regular vehicles. The new union budget now o�ers a deduction in income tax on the interest on loans taken to buy an electric vehicle. That is anyone planning to buy an electric vehicle and who takes a loan for the same will be getting a tax deduction on their income, based on the interest on the loan amount, to a total of Rs 1.5 lakh. SBI is o�ering green car loan (electric vehicle) which is a discounted loan of electric vehicles pricing 20 basis points lower than its existing auto loans and the borrowers are being o�ered a longer repayment period.

EV companies too are providing loan or lease options on their websites.

There are EV specific finance companies such as startup Autovert, which are focussed on leasing for EVs. Autovert, for example, also lets the buyer own the vehicle for a short period before refinancing the down payment for another one with newer features. In the future, the vehicle and battery components will be separate and customers can pay for the miles and battery separately. Atpresent, Autovert works with Ather and at least 10 percent of the EV company’s vehicles are leased through this startup.



INVESTOR INTEREST

Earlier it was di�cult in this sector for product-led start-ups to raise investments. The requirement of a lot of upfront capital expenditure in the initial stages, products’ long journey from conception to market readiness, a weak eco-system and charging infra for EVs, lack of synergy with the power sector, possible backlash from the auto sector and competition from the international market and absence of immediate return on investment were proving detrimental.

However, in the recent past, the government’s support and incumbents’ active interest in the EV eco-system has bolstered consumer interest. Firm business plans, the long-term outlook for electrification of mobility and increased investment in the industry has reinforced PE, VC faith in the growth potential.

ACCORDING TO REPORTS, ELECTRIC TWO-WHEELERS WOULD BE A PARTICULAR ATTRACTION FOR INVESTORS. SHARED E-SCOOTER SERVICE PROVIDERS ACROSS THE WORLD GOT $4 BILLION FUNDING DURING 2017-18.

The entire PE focus is expected to shift towards India and they will cast their nets as widely as possible and invest in start-ups that have promising technology, to see if they can have a Tesla for two-wheelers in India, another unicorn for the market.

Micelio Fund, for instance, is focused solely on clean mobility. Ola Electric Mobility unit in March this year raised Rs 400 crore ($58 million) from investors, including venture capital fund Tiger Global and Matrix Partners. It also raised $300 million from Hyundai Motor and Kia Motors and formed a strategic partnership with the South Korean duo to help build India-specific EVs.

PowerCurrently, India has surplus electricity generation capacity and an additional 50,000 MW is in the pipeline. So electricity for EVs would not be a constraint. However, unfortunately it is coming mainly from coal-fired power plants. And moving from fossil-based energy to renewables will not be easy for India. Even for China, despite it’s large-scale interventions in building solar and wind powerinfrastructure, most of the energy required for its EVs comes from the grid that is essentially coal-based.

Concerted action and policies that rethink electricity’s ecosystem and pricing, can make EVs both greener and cheaper to run.

GOVERNMENT COULD TAKE CUE FROM DELHI METRO, WHICH THROUGH AN OPEN ACCESS AGREEMENT WITH A SOLAR ELECTRICITY PLANT IN REWA, MADHYA PRADESH, WILL SOON SOURCE ENOUGH POWER TO MEET ALMOST 80% OF ITS DAYTIME ENERGY REQUIREMENTS.

Renewable energy (RE), primarily wind and solar supplies about 6.6% of generation today, on average. As RE grows, through ambitious government targets of 175 gigawatt (GW) of RE by 2022, its share may become almost 20%.

ACCORDING TO OLA MOBILITY INSTITUTE‘S RECENT STUDY, FOR EVS TO MAKE ECONOMIC SENSE TO CUSTOMERS, CHARGING THEM SHOULD COST LESS THAN A THIRD OF WHAT IT DOES NOW.

Also more than half the retail cost of petrol is taxes, which would need to be covered via other means if the country moves to EVs. It is unlikely one can (or should) tax electricity at the same rate.

More importantly, if 80% of India adopts EVs, the total power demand could touch 100 Terawatt-hour or about 5% of the total electricity demand of India by 2030. This is expected to put immense pressure on the electricity grids, already under stress due to the huge subsidies to the agriculture sector, high rates of theft, and pilferage.


IMPORTS FROM CHINA

In the financial year 2018 alone, Chinese exports to India touched $4.3 billion, up 27% over FY13,with no sign of slowing down in the future.

India imports ten times more auto components from China than it exports. The imports from China are mainly for EV components as India does not have a well established EV parts making ecosystem in India. Non-EV parts are imported mostly for tactical reasons like gaps in local capacities and cost benefits.

Given Indian government’s push for electrification and China’s leadership in EVs (60% of global volumes) and battery technology, imports from China on EV components are expected to only go up. Despite import duties, Chinese components for EVs will still be more competitive than makingthem in India. Also many component makers also import because they are unable to get the required quality in India.

Experts say India doesn’t have mandated standards for products sold in the aftermarket, making it attractive for sub-standard, low-priced Chinese components to find their way into the Indianmarket. Though quality standards are on the cards for aftermarket products and government has mandated local content for EVs in the recently announced FAME-II policy for e-mobility, imports from China are not expected to drop in the coming years.

The problem does not end here. India is set to join the RCEP (Regional Comprehensive Economic Partnership) agreement with ASEAN and another six countries including China, which could havea significant adverse impact on the domestic component industry in India as it will provide China with a long awaited duty-free access to the Indian market.

INDIA, THE WORLD’S THIRD LARGEST AUTOMOBILE MARKET WILL RELY MORE ON CHINA FOR COMPONENTS AS THE ELECTRIC VEHICLES MARKET GROWS.


THE WAY FORWARD

Though the result for FY 2018-19 shows an exciting growth compared to the previous year, the industry continues to be concerned about the future of electric vehicles post implementation of the new FAME II from April 1, 2019. There is a need of corrective measures and supportive policies under the second phase of FAME to pick up the pace.

FOR EXAMPLE, THE CURRENT INCENTIVES IN FAME II ARE BASED ON THEIR BATTERY SIZE, WHICH HAS ACTUALLY MADE LOW-POWERED ELECTRIC TWO-WHEELERS COSTLIER BY RS 10,000 TO RS 12,000.

However, there are other better options like battery swapping, which would make the vehicles cheaper, lighter and more economical to use on a large scale. The Government could also consider reducing GST on charging / battery swapping services from 18% to 5% (same as that for public transport services).

Government also needs to look at subsidy for manufacturing of EVs minus the battery, support for which is missing under FAME II.

IF THE BATTERY COMES SEPARATE FROM THE VEHICLE, THERE IS NO SUBSIDY FOR BOTH – NEITHER THE VEHICLE NOR THE BATTERY.

Smaller towns’ markets could be considered for increasing EV penetration — where consumers are likely to have more space than the city residents to charge their vehicles. Most people in these towns don’t have to look for commercial garages for parking.

Government should also not lose sight of the fact that millions of jobs could be at stake if there is a sudden move towards electric vehicles. Internal combustion engines (ICE), which are used in most cars today, have more than 2,000 moving parts, while an electric vehicle has about 50, resulting in fewer breakdowns. Among the parts that will see demand dry up once EVs dominate in India, are engines, transmission, aluminium castings, cylinder blocks and cast iron. These will give way to an electric motor run by batteries.

Charging StationsLack of a robust charging network is one of the biggest obstructions to electric vehicles adoption in India.

ONLY 10 PER CENT OF THE LATEST SUBSIDY PROGRAM IS ALLOCATED FOR CHARGING STATIONS DESPITE INDIA HAVING ONLY AROUND 350 PUBLIC EV CHARGERS.

In comparison, USA had 16000 and China over 400,000 charging points.

Fortunately, the technology for charging stations is available and the investment for setting up a charging station is modest so scaling up should not be an issue. Government has recently invited bids for setting up 1,000 EV charging stations with a minimum of 6,000 chargers under the FAME II subsidy scheme. Setting up stations in cities will be open to all companies while only central utilities will be eligible to deploy such infrastructure on highways. It wants to initially cover seven metros, satellite towns connected to the metros and capital cities of all states, among others.

Government has also announced revised guidelines under which: Private charging at residences and o�ces has been permitted. Any individual or entity is free to set up public charging stations provided they meet technical, safety and performance standards as well as all protocols outlined by various authorities.

At least one charging station is to be made be available in a grid of 3 km x 3 km in cities and one at every 25 km on both sides of highways/roads.

All mega cities and expressways connected to the mega cities to be taken up for coverage, other big cities to be covered in the second phase. For inter-city travel fast charging station for long range and/or heavy duty EVs like buses/trucks etc. to be installed at every 100 km.

Bureau of Energy E�ciency (BEE) is nominated as the central nodal agency to facilitate installation of charging infrastructure.

Global companies such as Fortum, ABB, Delta Electronics, Ather Grid, Exicom Power Solutions and EESL are expected to be the main players in the category.


THE WAY FORWARD

SOURCES.

THE ICE POWERTRAIN CONTRIBUTES TO OVER 60% OF THE EMPLOYMENT GENERATION IN THE AUTO COMPONENT SECTOR, AND A SWITCH TO 100% ELECTRIC COULD IMPACT UP TO 5.6 MILLION JOBS BY 2025-26.

Finally, as a way forward in manufacturing, there are broadly 3 parts to an EV - the battery, the electronics and electrical systems, and the rest of the vehicle. India already has significant manufacturing skills and capacity for the rest of the vehicle. Batteries are a tough challenge since India today lacks the required resources supply chain. This leaves the electrical and electronics portion for innovation and scaling.

• Hindu Business Line• Bloomberg• Times of India• Economic Times• NDTV• Business Standard• BloombergQuint (Space)

• Hindustan Times• Brookings• Markets and Markets• News18• India Times• Fair Observer

• Swarajya Mag• The News Minute• Live Mint• YourStory• Moneycontrol• Mercom India

Exclusive Seminars & Conferences

Industry Focused Roundtables

Sign up our Expert Panel

Digital Media PublicationFeaturing Leaders

Research & Resources

Access to like-minded Industry Leaders & Communities World Over

www.evconindia.comwww.thebluecircle.co+91 981 884 [email protected]

Making LeadersFuture Ready

Join Our Ecosystem

evconindia · today, india’s 1.5 million e˜rickshaws make up the second˜ largest collection of...

Documents