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Automotive Product Finder Magazine | How real is electric vehicle dream
How real is electric vehicle dream
The EV transition in India
Kia Motors unveils Carnival – a new BS VI-compliant offering
The automobile industry is an important driver of economic growth in India and one of the successful sectors in which India has high participation in global value chains. Indian automakers have developed deeper and broader set of competencies that stand them in good stead for the long run. The growth path of this sector has been distinct in accordance with the unique economic conditions of the country, and allows for interesting analysis among emerging nations. In this article, Saon Ray and Smita Miglani discuss electric vehicles and batteries and challenges.
India is world’s second largest two wheeler market, fifth largest passenger vehicle market and 7th largest commercial vehicle market. In the year 2018, India was the world’s fourth largest automobile market.
The automobile manufacturing policy in India is governed by the Automotive Mission Plan 2016-26, which lays down the achievements and targets of the industry by 2026. As the global automotive climate shifts towards clean and eco-friendly alternatives to combustion engines, the Indian Government also has been passing regulations and encouraging electric vehicles in the country. There are three major government initiatives with regard to electric vehicles and mobility. These are the National Electric Mobility Mission Plan (NEMMP) 2020, Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME), New Green Urban Transport Scheme (GUTS), 2017. The National Electric Mobility Mission Plan 2020 (NEMMP) aims to encourage indigenous hybrid and electric vehicles production through government-industry collaboration The aim is to put 6 million electric and hybrid vehicles per year on the road by 2020. It is estimated that a cumulative outlay of USD 2.15 billion is required for this initiative.
The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India aims at incentivizing the use of E- Vehicles across all vehicle segments ranging from two wheelers to light commercial vehicles and buses. The four focus areas of this scheme are technology development, demand development, pilot projects and charging infrastructure. Following this, Energy Efficiency Services Ltd. (EESL) has invited global bids for 10,000 electric sedans as a part of its phase one of the scheme. It has also floated tenders for 3000 alternating current (AC) charging points and 1000 direct current (DC) ones. The objective of the New Green Urban Transport Scheme (GUTS), 2017 is to promote low carbon sustainable public transport system in urban areas. The scheme will be executed with the help of private sector including assistance from the central and state governments under a seven-year mission with a total cost of USD 11 billion (Ray and Miglani, 2018).
Apart, from the NEMMP 2020 to address the issues of energy security, vehicular pollution and growth of domestic manufacturing capabilities, there is a proposal by the Niti Aayog to push for full conversion to electric vehicles for three-wheelers by the year 2023 and two-wheelers with engine capacity of 150cc or below by 2025. The ‘Niti Aayog: India Leaps Ahead’ programme lays greater emphasis on electric transport and will augment the FAME scheme of the Indian government. State governments are embracing alternative fuel technologies and providing incentives to people to adopt electric vehicles. Andhra Pradesh, Telangana, Karnataka and Uttar Pradesh have proposed incentives for manufacturing of batteries in their EV draft policies (E&Y and Assocham, 2018).
However, some experts and the industry have advised that India should take time to implement the plan since affordability of the vehicles is going to be a problem. Last month, the Prime Minister has signaled towards going in towards having a mix of petrol and electric vehicles.
The growth of EVs will have immense change in the automotive value chain, particularly on the manufacturing systems. An EV is relatively simpler to build with only 20 parts as against the thousands of parts in the ICE vehicle. Also, the disruption will be uneven across components: with negative impacts on the engine parts, clutch and radiators; neutral impacts on steering systems, seats and shock absorbers. The positive impacts will be on electric motors, batteries and microprocessors (E&Y and Assocham, 2018). The most critical component of the electric vehicle is the battery which accounts for approximately 70 percent of the cost of two wheelers and 50 percent of cars. While lithium-ion batteries are conventionally expensive, indigenously made Li-ion batteries will lower the cost of electric vehicles. The ‘Make in India’ initiative of the Government is encouraging in this regard. In her budget speech, the Finance Minister announced an outlay of Rs. 10000 crore for phase of Phase II of the FAME scheme. To incentivize e-mobility, customs duty on certain parts of electric vehicles was exempted. Also, there was a proposal to reduce the GST rates on electric vehicle from 12 to 5% and this has come into effect from August 1, 2019.
Examining the electric vehicle battery value chain, there are seven steps involved: component production, cell production, module production, assembly of modules into battery pack (including an electronic control unit and a cooling system), integration of the battery pack into the vehicle and reuse and recycling of the battery (BCG, 2010). The first four are the required for the manufacture of battery packs for use by OEMs. The current technology in use for batteries is the lithium- cobalt oxide, which has safety risks. For a reasonably long life span for the cells, automotive applications, require monitoring, balancing, and cooling systems to control chemical release of energy and prevent thermal runways. Other battery chemistries include use of lithium-nickel-cobalt-aluminium, lithium-nickel-manganese-cobalt, lithium-manganese-spinel, lithium-titanate and lithium-iron-phosphate. More research is going on in each of the battery technologies outlined above in China, Japan, the United States and Western Europe with the objective of replacing more expensive metals (like cobalt) with higher quantities of cheaper substitutes (like nickel and manganese). However, each of the technologies will have its own advantages and disadvantage (like the lithium-iron-phosphate battery is safer at the cell level but provides lower specific energy). There are at least six dimensions along which each of the technologies can be compared: safety, life span (measured in terms of number of charge-discharge cycles and battery age), performance, specific energy (how much energy the battery can store per kilogram of weight), and specific power (how much power the battery can store per kilogram), and costs (BCG, 2010).
Projections point towards achieving a US$ 300 billion market by 2030 and 4.7 Gwh of storage market by 2022. The plan is to have more than 30 percent of India’s vehicles powered by a lithium-ion battery. However, it has been projected that with these plans, the import dependency of a car will increase to 70 percent compared to 10-15 percent currently. On account of non-availability of raw materials to make the battery locally in India, most of these will have to be imported. Since domestic production capacity is going to be limited for these vehicles and a costly affair too, import dependency for lithium, cobalt, nickel and manganese from countries like Bolivia, Chile, Congo etc. are likely to increase in future.
About the author:
Smita Miglani and Saon Ray, Senior Fellow works at Indian Council for Research on International Economic Relations (ICRIER), New Delhi.
Passenger Vehicle Market
New Green Urban Transport Scheme
National Electric Mobility Mission Plan (NEMMP) 2020
Faster Adoption And Manufacturing Of Electric Vehicles
Energy Efficiency Services
Electric Vehicle Battery Value Chain
Indian Council For Research On International Economic Relations
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