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Automotive Product Finder Magazine | Electric vehicles: In need of capital and R&D incentives
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According to a new market intelligence report by BIS Research, titled- ‘India Electric Vehicle (EV) Ecosystem Market - Analysis and Forecast 2019-2030’, the India EV ecosystem includes three major sectors, namely electric vehicle market, battery market, and charger market. These markets are expected to grow at CAGRs of 53.64 per cent, 58.86 per cent, and 59.58 per cent, respectively, during the forecast period. This article discusses what efforts and steps are required for EV industry to achieve penetration and become a mass product, thereby, reducing emissions and carbon footprint.
The electric vehicles market is currently going through transformations and changing trends, evident in the automotive industry. In 2019, a total of 1,309 units of electric cars were sold in the first eight months between April and November of FY 2020, falling microscopic in front of 18.8 lakh passenger vehicles sold, according to industry data.
Furthermore, the growing environmental concerns, coupled with strong push from the government to replace 30 per cent of the total vehicle population by electric vehicle, are anticipated to propel the electric vehicle market in coming 10 years.
In addition, strict government policies to reduce the carbon footprint across India, have been another major factor that is expected to create lucrative opportunities in the Indian EV market for the decade to follow.
According to Ajeya Saxena, Lead Analyst, BIS Research, “The government target for 30 per cent adoption of electric vehicles by 2030 is expected to be majorly driven by the electrification of two-wheeler, three-wheeler, and commercial vehicles in India. Lower rate of adoption of electric vehicles in the passenger vehicle segment is expected to have a limited impact in achieving these targets.”
There is a need to do a bit more than what is already in place. To an extent government has achieved its goals but adoption does not reflect positively over these initiatives. With GST cuts, the benefits are well received by EV manufacturers but should also be passed on to consumers with reduced cost of having an Electric Vehicle.
Access to capital and R&D
In India, EV startups have been leading the investions and are developing products across the available technologies. Though government has extended finances to consumers for having an EV but lacks the same on the manufacturing, R&D front.
Nations like China and Norway have government facilitated technology development and R&D facilities to conduct research for new breakthroughs in EVs. During their initial stage, their respective governments have invested rigorously to make the EV sector more independent.
Considering India, such initiative will be very complex while encouraging technology development will be more reliable and worthy. Today, almost all major automakers in India have invested in start-ups. Apart from these, there is no help for others to explore more options. “R&D Centres and facilities form the basis for any industry on a nascent phase. As per government, it was to set up a Giga factory which would help foster battery development for EV and will help bring down the cost of EV, as most of the cost in an EV accounts to battery,” believes Shalendra Gupta, CFO, Altigreen Propulsion Labs.
Indigenous technology and capacity
From long, India’s manufacturing is based on recreating and manufacturing over the technology developed globally. Current market conditions invite for native or the original development of technology that can address Indian concerns. According to CleanTechnica, India imported $1.23 billion worth of lithium-ion batteries in 2018-19, six times higher than in 2014-15. Unlike China, nor lithium in India is widely available neither possess resources of it. This welcomes India to churn out more options while addressing batteries in EVs. “Going back to drawing board, India should consider developing a reliable solution based on other alternatives. This is because Lithium imports will leave Indian automobile import-dependent, which is alarming for any industry today. In order to achieve economies of scale, new materials shall be studied with huge institution base in India under PPP to bring out more cost-effective technology which can be implemented as a mass technology,” points out Gowtham Sivabalan, Director, Frost & Sullivan India.
Support infrastructure & shared mobility
Shared mobility is expected as one of the major drivers and is credited for early adoption of EVs, R&D investments and initiatives. Working with the government, OLA, a shared mobility operator has more than 200 electric vehicles and is consistent in setting up charging stations for its electric fleets across the cities today. The government body, EESL has plans to lease out these EVs to private cab aggregators like Ola, Uber and Blu Smart for commercial purposes. With this move, EESL is looking to promote eMobility, while generating a demand for it through central ministries and public sector undertakings.
According to an EY knowledge paper, the Indian ride sharing market is projected to grow at a CAGR of 33.86 per cent, by value, from an estimated USD 552.0 million in 2018 to USD 4,251.7 million by 2025. The e-hailing segment is estimated to be the largest, by value. It is projected to reach USD 3,358.9 million by 2025 from an estimated USD 427.5 million in 2018, at a CAGR of 34.24 per cent. The car rental segment is estimated to be the second largest and is expected to grow from an estimated USD 97.8 million in 2018 to USD 488.9 million by 2025, at a CAGR of 25.84 per cent.
State Governments and local government bodies can help pass on some benefits to promote green rides which may include electric powered, hydrogen-powered or LPG-powered mobility with some discounts in taxes. Such initiatives will help develop an ecosystem gaining trust from the consumers.
India is in need of more policies and regulations that provide tax breaks and financial assistance to both EV manufacturers and customers. Doing so will encourage EV adoption by bringing down the cost to the end-consumer, thus incentivising more individuals to purchase an EV.
If we consider FY 2019, the total sales of electric vehicles in India went over 7.5 lakh units. Of these, 6.3 lakh units of electric three-wheelers and 1.26 lakh units of electric two-wheelers were sold. Only 3,600 units of electric passenger vehicles were sold in FY 2019. But looking at the general health of the auto industry, it will be miracle if the total number of EVs sold in FY 2020 is better than FY 2019.
In a nutshell, there is a need for more effort on the policy front and even on the manufacturing front. EVs can only be a success if both go hand-in-hand. Factors like more investments, open FDI, domestic development of battery for EVs, and schemes from the government to encourage adoption will lead to higher adoptions and better market demand.
R&D Centres and facilities form the basis for the industry on a nascent phase. As per government, it was to set up a Giga factory which would help foster battery development for EV and will help bring down the cost of EV, as most of the cost in an EV accounts to battery.
Shalendra Gupta, CFO, Altigreen Propulsion Labs
Altigreen Propulsion Labs
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