Electric Vehicles or EVs, as they are commonly called, are vehicles that run on electric power, either partly or fully. EVs are environment-friendly and have low running costs due to lesser moving parts.
As the chants for electrification get louder and louder across the world, it makes sense to examine the topic a bit more closely. We shall see what is the EV situation in India and globally.
Vehicle electrification: A brief history
The concept of EVs is older than International Combustion Engines (ICEs). Scottish inventor Robert Anderson created the first electric carriage in the 1830s. Its battery was not rechargeable and required replacement every time it ran out. However, electric-powered vehicles continued to be in use in the USA and some parts of Europe. New York had a fleet of electric taxis in the 19th century and battery swapping stations.
With the advent of ICEs, a major roadblock of frequent battery charging/swapping was removed and ICEs gained popularity the world over. Thereafter, there was sporadic research on EVs whenever crude oil flared or geo-political tensions mounted. However, for a large part, ICEs rule the roost.
It was not until the turn of the century that EV development found serious interest from companies and Governments. Companies such as Toyota (Prius), Nissan (LEAF), and Tesla (Model S) took the EV chapter ahead and “glamorized” EVs. Here’s a look at the EV evolution:
So why has the world started looking at EVs as the technology of the future? Aren’t we happy driving petrol/diesel-driven vehicles? Following are some reasons:
Reduces climate change
Effects of fossil fuels such as global warming, mass extinction of species, and growing weather calamities have forced lawmakers across the globe to look at cleaner alternatives
Lowers import bill
Countries such as India don\’t have any significant crude reserves and have to import fossil fuel for their energy requirements. India incurred a crude import bill of $101bn in FY20 requiring to import 82% of its total crude needs. Hence, there is growing interest in technologies that look away from crude oil dependency – electric vehicles being one of them.
Reduces pollution levels
According to WHO, India is home to 14 of the world’s 20 most polluted cities. A major reason for high pollution levels is fuel emissions.
Advancing renewable energy technology
Over the past few years, strong advancements in wind and solar energy have brought down the cost of these forms of energy. This has stirred interest in EVs.
While an IC vehicle has hundreds of moving parts, an EV has less than 30. This means less wear and tear and a low cost of ownership.
EVs make much lower noise compared to conventional vehicles since there’s lower friction between moving parts. In fact, EVs are so silent that some OEMs add false sounds to make them safe for pedestrians!
Incentives for buyers
Governments in India (State and Central) are looking at ways to incentivize buyers to go in for EVs. They are offering lower vehicle tax, tax incentives, buyback
India’s EV Policy
The NITI Aayog, India’s policy think-tank, has given several suggestions to the Government of India for EVs. Accordingly, the following policy has been enacted:
- Reduce primary oil consumption in transportation.
- Facilitate customer adoption of electric and clean energy vehicles.
- Encourage cutting-edge technology in India through adoption, adaptation, and research and development.
- Improve transportation used by the common man for personal and goods transportation.
- Reduce pollution in cities.
- Create EV manufacturing capacity that is of global scale and competitiveness.
- Facilitate employment growth in a sun-rise sector
The government adopted the Faster Adoption and Manufacturing of Hybrid and EV (FAME) scheme in 2015, with an allocation of Rs. 895cr, which provided subsidies for e-2Ws, e-3Ws, hybrid and e-cars, and buses.
The FAME II scheme, which came into effect from April 2019, had proposed spending of Rs. 10,000cr. It was to be used for upfront incentives on the purchase of EVs (to the extent of Rs. 8,600cr and for supporting the deployment of charging infrastructure (Rs. 1,000cr).
Source: Department of Heavy Industries, Ministry of Heavy Industries and Public Enterprises, Government of India
THE EV Ecosystem
Source: Avendus Capital Pvt Ltd
- Policy: The FAME II policy is India’s first step towards boosting EV penetration in India, though a lot needs to be done. The Government has taken baby steps by introducing e-buses for public transport in some cities. EVs for private use will go up once there are incentives, subsidies, and other such measures.
- Batteries: Battery cost is nearly 40% of the cost of the vehicle, hence reducing the same is key to increasing EV adoption. Raw materials for battery manufacturing – mainly Lithium and Cobalt – are not available in India, hence raw material dependency will continue (currently India imports crude). Currently, Indian companies only assemble imported battery packs, do not manufacture batteries.
The Lithium-Ion Situation in India
Source: Times of India
- OEM: Most OEMs are focused on specific sub-segment of the automobile space. 2Ws have seen the most momentum, given that nearly 79% of the Indian auto market (by volumes) comprises of 2Ws. E-3Ws have started by way of e-Rickshaws while e-4Ws are gaining prominence in shared mobility.
- Grid: There are two major issues that grids have to address
- Ability to handle peak load
- Grid composition must be ideally dependent on renewable generation rather than coal-dependent generation.
- Charging Infrastructure: India will need to simultaneously develop home charging and public charging infrastructure to boost EV adoption.
FAME I added 314 charging stations in India, FAME II 2,867