This article has been republished, with permission, from EcoTalker, HERE.

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Often hailed as a solution to rising pollution in the urban areas, the adoption and use of Electric Vehicles is rising steadily across the world. Backed by technological advancements and government subsidies, an increasing number of vehicle manufacturers are entering the EV market.

In 2017, Transport Minister Nitin Gadkari took the automobile industry by storm when he announced that he intended for India to move to 100% electric cars by 2030.  That was a rather assertive target set by Mr Gadkari and his BJP-led government which they eventually attenuated by bringing it down to 30%. The new proposal is to have only electric three-wheelers operating in the country by 2023, and only electric two-wheelers by 2025.

In its report, NITI Aayog expects electric vehicle penetration in India to reach upto 80% by 2030 for two-wheelers, and 30% for private cars. It has also estimated that the sale of EVs will help save about Rs 3 lakh crore on account of the import of crude oil to meet the growing demand. It has projected that while 79% of the battery pack can be indigenised, only 21% minerals will need to be imported. In addition to this, battery manufacturing in this large scale would generate about 10 lakh direct and indirect jobs. To attract investors, it has proposed complete tax exemption on the capital expenditure during the first year and other concessions besides making land and other clearances available.  If we talk about the Budget 2019-20, the finance minister proposed an additional income tax exemption of ₹1.5 lakh for purchasers of electric vehicles. She also said that the GST rate on electric vehicles would be lowered to 5%. We feel that the government has mainly two dominant objectives here- to control pollution and take the lead in an emerging industry.

Needless to say, this shift of government policy and market conditions in favour of EVs is not without its critics. Venture capitalist Vinod Khosla famously put it- “Electric cars are coal-powered cars. Their carbon emissions can be worse than gasoline-powered cars.” Indeed, nearly 80% of electricity in India is generated from fossil fuels, and with India set to achieve only 76% of its renewable energy target by 2022  the growth of renewables is slower than expected.

This bags three questions- (1) Are electric vehicles worth the hype? (2) What changes in the Indian landscape must accompany the growing EV adoption? (3) What are the factors influencing the penetration of electric vehicles in India?

 

Advantages

Proponents of electric vehicles claim that the “zero-emission” electric vehicles will considerably reduce pollution in the cities, and make their air more breathable, while decreasing the operating cost because of a higher energy efficiency. A study of electric two-wheelers, published in 2015, provides a deeper insight into their potential economic as well as environmental impact.

Most of the electricity in India (roughly 80%) is generated from fossil fuels such as coal, in thermal power plants. The electricity used by electric vehicles in India will therefore have a carbon footprint. The exact carbon footprint of an electric vehicle can only be assessed by taking into account the carbon emissions from these thermal power plants required to produce electricity for the EVs. The carbon dioxide emission for an electric two-wheeler operating on the road, a study concluded, was at least comparable to that of the conventional scooters using fossil fuels. However, since carbon dioxide and pollutants are emitted at a considerable distance from the urbanized residential areas, the direct negative health effects due to breathing the air polluted due to automobile exhausts could be reduced.

Furthermore, the two-wheeler EV variants were found to be roughly 5 to 7 times more energy efficient than conventional scooters, and were found to be 6 to 8 times cheaper to operate (INR per kilometre).

While this can potentially translate into lower fares, and higher margins for public and private transportation services, the downsides include limited speeds and limited travelling distance. Since e-rickshaws are less bothered by these constraints, an increasing number of people are using them. However, for a significant environmental impact, the growth of renewables must keep pace with the growth of the EV market. Recently, 10 solar e-rickshaws were handed over to IIT Delhi, as a part of the corporate social responsibility initiative of Central Electronics Limited (CEL), a central government enterprise. This transition from bicycle rickshaws greatly reduced human effort at practically no electricity or environmental cost. Whether such a product is scalable, however, remains to be seen.

 

Obstacles

A big disincentive in the fast adoption process could be from a consumer’s point of view, the cost of EVs is a very big entry barrier, especially in a value-conscious market like India. Most EVs in India provide a range of 110 km (on a full battery) and are in the INR 6-10 lakhs price bracket, which does not offer any cost advantage when compared to higher segment cars with comparable pricing.

However, the Government is hoping that consumers will overcome the cost hurdle through the subsidies being offered. But the hard fact is that even if that happens, it’s not possible to race past the inadequate infrastructure. For EVs to run smoothly, India will need assured excess power supply that can be fed to charging stations throughout the country.  At present, what looks like a big leap, considering the frequent power outages experienced in many parts of the country, especially during summer. Picturing the infrastructure requirement, one can’t help but remember the long queues in front of CNG stations, and the productive hours wasted waiting in queues for gas.

There is also the question of creating a market for EVs. Even those who plan to make such vehicles are reluctant participants because of the high costs and lack of profit. Existing standard lithium-ion batteries use expensive materials such as cobalt, bumping up price. That being said, other hurdles may continue to sabotage EV prospects.

The Bharat Standard-VI (BS-VI) emission norms that will be implemented across India by 2020; this is another possible EV growth decelerator. Automakers in India have been busy recalibrating vehicles to meet the new standard, and have already made significant investments to meet the deadline. This translates into divided bandwidth, and the inability to invest fully in the EV growth story, especially given the torpid demand for vehicles since 2018.

 

Conclusion: Improvise. Adapt. Overcome.

While suffering from speed and distance limitations, electric vehicles are far more energy-efficient and cheaper to operate than conventional vehicles. Its carbon footprint depends on the source of electrical energy. Since thermal power plants have a high carbon footprint, the electricity used to charge the EVs must come from other sources. Thus, for a positive environmental impact, a transition to EVs must be accompanied by a transition to renewables. Investments in R&D to improve battery life and speed of the vehicles is another important aspect, and institutions like the Centre for Battery Engineering and Electric Vehicles, IIT Madras can play a significant role in this development.

Inadequate infrastructure for emerging EVs, high prices, and the sunk cost of existing infrastructure can serve as potential barriers to the penetration of electric vehicles. Hence, the EVs must be phased out systematically through incentives. While China imposed a restriction on the sale of conventional vehicles in crowded cities and mandated a certain portion of manufactured vehicles to be electric, other countries have resorted to milder policies of subsidies and investment in infrastructure. In the Indian context, such investment can serve as a basis to boost investor confidence in the scope of the EVs, and therefore accelerate its market penetration.

The success of the EV revolution in India depends not only on the penetration of the EVs in the market, but also on its transition to cleaner sources of energy, and the subsequent impact on the environment and the economy.

Photo by Noya Fields on Flickr.