The Electric Evolution: Is India on the Right Track to Becoming an Electric Vehicle Hub?
May 16, 2018
By Shantanu Nandi Majumdar
Over the past 12 months, the government of India has been steadfastly advocating a move to phase-out petrol and diesel cars completely and transforming the country into an all-electric market by the year 2030. The industry awaits further clarity on the government’s position with regards to the availability of charging infrastructure, investment and incentive guidelines, and the role of state governments to support the launch of electric vehicles (EVs). That said, nearly all manufacturers that participated in the recent Delhi Auto Expo had at least one electric vehicle on display.
The intended shift to EVs would not only help cut down on fuel bills and reduce emissions, but would undoubtedly change the face of the automotive industry and transform India into the leading electric vehicle market in the region and, perhaps, the world.
The question remains, however, is India on track to becoming an EV hub? The following are major concerns with the adoption of EVs:
- Batteries are expensive: The high cost for battery packs makes an EV option more expensive than the same vehicle fitted with an internal combustion engine.
- Limited charging stations: At present, there are very few charging stations in India, which makes long-distance travel almost impossible and limits the use of EVs strictly to the cities. Dealerships do not have any charging stations on their premises and charging points in high rise buildings are very limited.
- Inventory is low: With fewer EV models available at dealer showrooms, the consumer choice has also been very limited.
Furthermore, with more than half of the automotive suppliers in India focused on engine and transmission systems, the auto component industry is likely to take a significant hit. But there are opportunities to counter these challenges. The consumer market appears to already be in place, and growing, with 30% of first-time car buyers in India under 30 years of age. This is attributed to rising income levels, easily available credit and high aspirations of the younger generation. Similarly, diesel vehicles continue to fall out of favor with consumers and consumers are increasingly experimental with trying new body styles.
Many eyes remain on India to lead in this space, not only due to the strong presence of many of the world’s leading automotive brands, but also because the government clearly voiced its support. With Malaysia recently announcing its plan to lean on expertise from India in developing its own auto industry, it is clear India will continue to lead the EV evolution in the region and automotive manufacturers are paying attention.
Hyundai and Maruti Suzuki are already gearing up for EVs, announcing their intention to introduce their first electric vehicles in India by 2019 and 2020, respectively. Suzuki also announced plans to set up a lithium ion-battery factory. Tata Motors recently delivered the first 250 Tigor vehicles to EESL in Phase 1. Mahindra & Mahindra is also ramping up its EV division and is expected to launch electric variants of its popular SUVs – the Scorpio and the XUV 500.
The recent initiative by the government to set up EV charging stations at parking lots of railway stations is likely to generate greater interest and acceptability. For any major disruption to a long-standing and well-established industry to be successful, a strong and coherent strategy must be implemented. One of the key focus areas will be on setting up electric vehicle charging infrastructure throughout the country. The state of Karnataka, for instance, has already made it mandatory to have charging points and pods in all high-rise buildings.
While the EV fleet and charging networks across the world have grown concurrently, it has led to the emergence of different charging standards in different regions because every car has a different charging system and not all models of different manufacturers can be charged at any station.
Platforms to develop battery cell technologies, innovative software and re-use of batteries, telematics to provide location data on EVs, and the strategic placement of charging points at coffee shops, restaurants, malls, etc. will help ease the challenges of charging EVs outside key hub spots.
With shared-mobility services bringing an additional disruption to the industry, and as the shift toward EVs gains nation-wide momentum, the potential for mobility services business is huge – possibly as large as the core automotive business itself. In developed countries, mobility services are viewed as a hedge against the trend of young people moving to cities and abandoning car ownership. But the trend could manifest in India too, given the traffic conditions and rising pollution levels.
India’s automotive industry is headed for an inflection point where the above trends may converge. Given the government of India’s support for the electric evolution, it is crucial India’s automotive industry and consumers remain at the core of all relevant plans to ensure that India stays on the right track to becoming an EV hub.
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Shantanu Nandi Majumdar is Regional Director, Automotive Practice at J.D. Power Singapore and is fascinated by the new technologies that are installed in vehicles today. He feels that the instant torque, raging speeds and higher efficiencies of EVs would attract race heads in future.
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