The Electric Dream

Updated: Aug 8, 2018

The motivation to write my first #EV related article emanated from an encouraging response to my recent LinkedIn post.

I often dream of a future when I would walk down the streets in Delhi and wouldn't know when a car passed by; nor would the pungent exhaust fumes break my reverie under the clear blue skies. How wonderful would be it to see a night sky laden with stars again. It seems distant today, but not impossible; hard but not unachievable.

What will it take to realize the electric dream? I am a novice in this domain, but having repeatedly heard the skepticism against Battery Electric vehicles (#BEVs) I am submitting my infant ideas.

Be smart, automakers

We have a thriving Auto and Components Industry in India, contributing 7.1% to GDP and employing nearly 30 Million people. But it's being challenged, not just from unexpected players (JSW Energy announced c. USD 600M investment in electric car unit) but also by itself. The lethargy is apparent, needing considerable push from the Government. One of the reasons often quoted against BEVs is the cost differential between a traditional car and an equivalent BEV. (I see people yawning now when the Bloomberg report on 2025 price parity is quoted). Without questioning the veracity of this statement, let's see how we can produce few BEVs.

Goods and Services Tax (GST) rate on BEVs is 12% and on the high-end SUVs is 50% - that’s 38% lying on the table right there. In addition, the ratio of Battery cost/Total vehicle cost is bound to be lower for high GST cars (for the oomph element of the high-end cars). Putting these two together, it might even be possible to produce an Electric SUV cheaper than a corresponding diesel version. Add to it the customer experience of an electric car and it seems like a product ready to be sold like hot cakes.

Make in India

The Honourable Prime Minister Modi's call to Make in India has 2 aspects: 1) Domestic consumption be produced domestically 2) India be used as a hub for exports. The second typically follows the one. However, we are struggling with even the 1st case in emerging industries. For example, our Solar capacity is completely dependent on imports from China. How do we ensure that the EV component market doesn’t meet the same fate?

  1. Demand creation with long-term visibility: Energy Efficiency Services Limited (EESL) tender to procure 10,000 cars was a momentous first step. While it does a world of good in creating a demonstration and the buzz, it does little for promoting domestic component manufacturing. Remember, a car is just a sum of its parts. Similarly, some states have also started to come out with their sporadic e-Bus tenders. Instead of these distributed efforts, a long-term pooled demand coupled with existing domestic content requirement norms could provide an impetus to domestic manufacturing.

  2. Promote component manufacturing: Faster Adoption and Manufacturing of (Hybrid) & Electric Vehicles (FAME-India) scheme has been providing financial incentives to BEV Original Equipment Manufacturers (OEMs). The scheme is due to expire on March 2018 and possibly FAME-2 will replace it. This presents an opportunity to re-evaluate whether OEMs are the relevant recipients of a FAME-like scheme. Presently, no one is manufacturing Li-ion cells in India (even other components like motor, power electronics, etc. are being imported; Suzuki though announced an investment to come online in 2020). OEMs import components, assemble them into cars, sell it and avail FAME subsidy. What does it do for domestic component manufacturing? However, if the component manufacturing is incentivised instead of OEMs, it could sow seeds of indigenous manufacturing. We would not want to replace Oil imports with component imports.

'Electricity is Everywhere'

While deliberating on charging infrastructure at the Electric mobility policy discussion organized by Andhra Pradesh Economic Development Board, Roland Dimai from Refcon mentioned a very simple point: "Electricity is everywhere" (At least in urban India where the early adoption of EVs will happen). Combine this with the facts that personal cars are parked for ~95% of the time, fast chargers can cost anywhere between 30,000 to 50,000 USD (and have higher impact on grid), battery swapping increases capital cost (there is talk about technical and logistical challenges too), and we can't afford any extraneous investment - slow home-based charging seems a very attractive solution for personal city driving. However, we don’t have space in our homes! What we possibly need is a street charging solution. Also on a related point, I had written in a recent post that Auto companies could look at forming consortiums to develop charging infrastructure.

Electric Mobility is a no-brainer for our country, which imports 82% of its oil and air pollution is a menace. As Victor Hugo once said, "Nothing is more powerful than an idea whose time has come". I believe the time for BEVs is now. Do you?