India hits the e-mobility accelerator
India hits the e-mobility accelerator
The conversation around electrification in India has just got louder by a few decibels. The reason? The introduction of a piece of legislation that has, for the first time, piqued everyone’s interest, end customers included. It is called the Faster Adoption and Manufacturing of Electric Vehicles – commonly known as FAME II. And it aims to see thousands of electric vehicles (EVs) hit India’s roads.
When FAME II was announced by India’s Finance Minister Arun Jaitley on February 27, 2019, it wasn’t widely welcomed. In fact, right from the moment it was launched, it divided opinion.
“The main objective of the scheme is to encourage faster adoption of electric and hybrid vehicles by way of offering an upfront incentive on the purchase of EVs and also by way of establishing a necessary charging Infrastructure for electric vehicles. The scheme will help in addressing the issue of environmental pollution and fuel security,” said Jaitley.
This sounds good, doesn’t it? But some captains of industry were not necessarily impressed, while some prominent names in the industry claimed that much more was needed if the country was to remain on track to achieve its electrification goals. But others hailed it as a much-needed boost for electrification in India, claiming that this piece of legislation would help the country to achieve complete electrification.
Fast-forward two years and the world is a totally different place. With the outbreak of the Covid-19 pandemic, vehicle sales are lower than they were. People aren’t buying regular cars, let alone electric ones. So where does that leave India in its journey to total electrification?
To answer this and understand more about the Indian e-mobility space, we caught up with Sohinder Gill, director general of the Society of Manufacturers of Electric Vehicles (SMEV) and CEO of Hero Electric Vehicles India. We asked him what impact Covid-19 has had on India’s mobility space.
“The on-ground reality is that it has particularly taken a backseat, particularly due to Covid-19,” he says. “Some categories like two-wheelers, three-wheelers, low-speed three-wheelers are better placed. Cars are not doing anything at all, and the same applies to buses, because of lack of resources. That said, a lot has been happening on the policy front. One after the other, many state governments are announcing lots of measures to attract manufacturing into their states, or simply trying to promote electric vehicles directly or through infrastructure.”
Pre-Covid, the industry witnessed a lot of positive market trends related to e-mobility. For instance, the attractive prices of electric two-wheelers completely hooked the price-sensitive Indian customer, for whom affordability and value for money are key decision-making factors.
According to Gill, as things begin to settle down, this trend will be on the rise for the next two to three years.
30% electric by 2030
Since it’s been two years since FAME II was launched, we were curious to know what the industry sentiments were.
“FAME II was good when it came to localisation, self-dependence and trying to move the market to new higher performance levels, bigger batteries and higher range levels,” explains Gill. “That said, it was premature as the market was in its very nascent stage. Instead of nursing the market at that point, obstacles were put in our path. For example, if you were not 100% localised within the next couple of months, you would not get subsidised.
“Similarly, if your vehicle performance is below a particular speed or a range, you won’t get a subsidy. The maximum subsidy would be capped at 20%, which means affordable vehicles would never get 20% as they would fall short of that MRP tier. Those were the things that were good to implement, but maybe after a few years. That’s where they went wrong.
“We all know that e-mobility will happen, because there are so many distinct advantages of EVs – such as low maintenance, a smooth ride, low running costs, long vehicle life and many other things. The question is how quickly you want to make it happen. Government intervention is supposed to quicken the pace, because there are also two national objectives of the country from the FAME II point of view – reducing air and exhaust pollution and the reliance on crude oil. The government’s steps to quicken the pace were faltered by the policy intervention which was unkind to us; it has not accelerated the pace, rather deccelerated it.
“There is a common view that if you at least accelerate the electric mobility and adoption of electric mobility the way we want to in these low-hanging fruits like two-wheelers, three-wheelers and buses, India can become 30% electric by 2030. It means we need to really front-load the subsidies to the first few million customers so that the vehicles can be seen and experienced. Once you have done this, only then can you sharply taper off the subsidies.”
Gill isn’t particularly worried about the charging infrastructure in the country, as he believes that the government has been quite active in this sphere.
No range anxiety
Range anxiety hasn’t been a deterrent for Indian customers. But infrastructure-wise, one of the things he said really caught our interest. This happened when we were speaking about inter-OEM cooperation, and while Gill noted that there hasn’t been much of that, mobility technology companies like Ola are exploring battery-swapping technology with the hopes of introducing it to the Indian market.
While battery swapping hasn’t been a huge success in international markets, for the price-sensitive Indian market it might just be a game-changer. “Another recent collaboration is rapid charging models for two-wheeler batteries between Hero and another company, which has developed a rapid charging solution,” adds Gill.
Internationally, start-ups have introduced some major disruptions in traditional industries and the Indian automotive industry is no exception. That said, Gill believes that automotive is not an easy game. “Start-ups looking to venture into e-mobility need to break electric mobility into bits and pieces. Then they should concentrate on the areas where they feel they can create a differentiator – probably technology-related.”
Meanwhile, it seems as though EV manufacturers have just scraped the tip of the iceberg in India. “Our entire EV market, including commercial vehicles, is just 156 000 units. That number is nothing compared to the millions of other automobiles sold. The numbers are not there, of course, but electric two-wheelers are doing well and getting better. Out of the 156 000 EVs sold, 150 000 were two-wheelers. And if things were not disturbed by the pandemic, we would have expected the number to double by next year,” Gill recently told Autox.com.
In 2020, more than 21,5 million vehicles were sold in India. Gill is talking about the market being 30% electric by 2030. Clearly, there’s still lots of untapped EV potential in India…