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Automotive Product Finder Magazine | Electric Vehicles will revolutionise automobile industry
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With electric vehicles (EVs) penetration in passenger cars to touch only 6 per cent by 2030 but grow rapidly thereafter to touch 28 per cent by 2040, making India the fourth largest passenger EV market in the world, says Amitabh Kant, CEO, NITI Aayog, while discussing the growth trajectory of the Indian EV market due to the government initiatives. In this interview with Pushkar Oak, he discusses the way forward for the EV industry and how EVs will revolutionise the automotive industry.
Do you think that current policies accommodate clean and green fuels and encourage people to shift towards green and clean fuels?
India is deeply committed to INDC targets of Paris pact to reduce its 35 per cent of its CO2 emissions from 2005 level by 2030. In this, clean & zero-emissions mobility will play a crucial part as the transport sector accounts for nearly 18 per cent of GHG emissions globally and nearly 40 per cent of PM 2.5 pollution in India. Many initiatives on the policy front have targeted towards building the industry. India is home to 14 out of 20 most polluted cities of the world according to a WHO report. The policies of Government of India are aligned with the Paris pact and are aimed to clean up our cities. In this context, the government has taken up number of steps to promote electric mobility country-wide. The Union cabinet has approved the scheme titled ‘Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME II) for promotion of electric mobility in the country.
The scheme with total outlay of Rs 10,000 crore over the period of three years will be implemented with effect from April 1, 2019. The Union Cabinet has also approved setting up of a National Mission on Transformative Mobility and Battery Storage, to drive clean, connected, shared, sustainable and holistic mobility initiatives. NITI Aayog has prepared a concessionaire Agreement for Public Private Partnership (PPP) in Operation and Maintenance of Electric Buses in cities through Operating Expenditure (OPEX) Model. Exemption has been granted to all Battery Operated Transport Vehicles and Transport Vehicles running on Ethanol and Methanol fuels from the requirement of permits. Ministry of Finance has rationalised the custom duty rates all categories of electric vehicles- 2W, 3W, 4W and buses.
In the budget 2019 the Government has announced additional income tax deduction of Rs 1.5 lakh on the interest paid on loans to purchase EVs. Government has moved the GST Council to lower GST on EVs from 12 per cent to 5 per cent. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle. The budget provided for exemption of customs duties on certain parts of electric vehicles and capital goods used for manufacturing of lithium Ion cell. In order to boost economic growth and Make in India, a Scheme is to be launched to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants for lithium storage batteries and solar electric charging infrastructure.
Such global companies are to be given investment linked income tax exemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.
Will electric vehicles (EVs) revolutionise the automobile industry?
Electric vehicles will truly revolutionise the automobile industry. We are moving from an era of 2000 parts of an automobile to 20 parts. Moreover, the electric vehicles will be driven by the frontier technologies like artificial intelligence(AI), IoT etc, thus creating a paradigm shift in the way automobiles are manufactured.
In Electric vehicles, the total cost of ownership (TCO) parity has been achieved with ICE, across all vehicles (with different time ranges). Thus, it makes economic sense for the customer to shift towards EVs. To complement this, Government is taking up multiple steps to expedite the uptake of EVs. Automobile firms in India (& across the world) have recognised this trend, and are shifting towards it.
What changes on the policy front are needed to attain this? Apart from policy what things can be done to achieve this by the government?
In India, there are nearly 2.5 crore vehicles which are sold annually. Out of which, 78 per cent are 2 wheelers and cars comprise 15 per cent of annual sales. This is unlike any other western country where the majority of sales are driven by 4 wheelers. Thus, India can move towards electrification of 2 wheelers, 3 wheelers and buses in a much faster way due to their attractive TCO proposition. India must ensure that the transition to electric vehicle is complemented with ‘Make in India’ where the EV, along with its components are manufactured in India. We have missed the opportunity in sectors such as solar cells, mobile phones & telecom equipments. EV is a sunrise sector, which presents a huge opportunity. In this regards, NITI Aayog is spearheading the initiative to setup ‘Giga-factory’ battery cell manufacturing plants in India. This will give huge impetus to battery storages, to be used in EV, stationary storage for grid stabilisation and consumer electrics. Through this initiative, India will produce batteries not only for domestic market but also for global markets, which are technologically advanced and export competitive.
Which states in India are advancing in the electric vehicle category?
All the 36 states and union territories have shown immense enthusiasm towards electric mobility. It shows their commitment to improve quality of life of their citizens and spur manufacturing in their state/ union territories. In this regard, at least 22 states have come up with their detailed State/UT strategy for transforming mobility which lays down the clear roadmap for shifting towards clean, shared and connected mobility.
As a think tank, what do you think will be the drivers of the electric vehicles?
The biggest driver of electric mobility will continue to be technological innovation. This has driven down battery costs (one of the costliest component of EV) by more than 90 per cent, to less than $170/KWH. This has drastically brought down the overall costs of EV. The amounts of rare minerals used in the manufacturing of battery have been decreasing eg. Recently, we moved from NMC 611 to NMC 811, which uses much less cobalt in its manufacturing.
The other key drivers include adaption by fleets and shared mobility users, who can reap the benefits of lower operating cost of EVs faster. This along with favorable policy ecosystem will surely place India at the helm of global EV revolution.
How is government planning to cope with the demand that will rise with implementing EVs across the nation?
In this aspect, Central Electricity Authority (under Ministry of Power) is conducting multiple studies to access the power impact of EV charging on the grid, especially in respect of peak load management. The preliminary results show that even with a high EV penetration by 2030, the grid would be able to manage. It is also looking at measures like Time of Day (ToD) tariff to incentivise users to charge electric vehicles during non-peak hours.
Along with this, to allay the fears of range anxiety, the government is actively deploying a network of charging infrastructure across the cities. For this, a corpus of Rs 1000 crore has been earmarked under FAME II.
How will the EV industry evolve over the years to come & what opportunities Indian industry has for EV?
In India, there are nearly 2.5 crore vehicles which are sold annually. This number is expected to be more than triple by 2030. According to a recent Morgan Stanley report, India’s transport Evolution (2018), from now till 2030, every second car of the world would be sold in India. So, the opportunity in terms of size and scale provided by the Indian market is huge. The growth trajectory of electrification in different vehicle segments (viz. 2W, 3 W, 4W, buses and trucks) would vary. The government has held extensive consultation with vehicle manufacturers, components supplier and other stakeholders in regards to electrification of vehicles. The components manufacturer would see a shift in the way they operate. There would be a new range of component suppliers which can cater to the needs related to battery, EV powertrain and other electronic and software components, along with the tradition components suppliers. Given the size and scale of Indian markets, every component manufacturer would have the opportunity to grow.
EV revolution in India (& across the world) has been led by startups and small automakers which are technologically innovative and agile. In India, there are a number of startups like Ather, Tork, Revolt Motors, Sun mobility and Smart E which are leading the way in electrification of 2 W and 3 W in the country. Along with electrification, these firms have come up with innovative business models for faster uptake of vehicles.
Will EVs introduction wipe-away the service stations as EVs will require very low maintenance? EVs require lower maintenance compared to traditional ICE vehicle. But, the recent examples have shown that EVs require some maintenance, which would require service station network across the country. The nature of service station may also change, as it would have to cater to not only traditional automobile components, but also to new age tech products which are a mix of electronics & IT, eg BMS (battery management system) What benefits will be transferred to the EV industry? What future does EV industry hold?
Electric vehicles have non-negative externalities on the environment, considering their zero tail pipe emissions. These have the potential to clean up our cities and also help us in our commitment to Paris pact. Government has rolled out a benefit of Rs 10,000 crore in FAME II towards electric vehicle segment. The benefits would apply across various segments.
Companies like Tesla have built their EVs from scratch on their own. This includes, setting up of Giga factories. On the other hand, companies like Hyundai which has recently launched Kona, depends on its vast network of supplier to manufacture its vehicle. In India, how this evolves, it is yet to be seen. In my understanding, there would be a space for both kinds of manufacturing. Considering the scale of Indian market, there would be a natural push towards third party manufacturing also.
Battery Operated Transport Vehicles
Ethanol And Methanol
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