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Electric Vehicles: As Government Pushes For Faster E-Mobility Adoption, Auto Industry Raises Concern Over The Rush

While government says electrification of vehicles will be helpful in providing energy security and improving environment, industry bodies and manufacturers argue that the industry is currently facing multiple challenges in transition in terms of technology, manufacturing capability, infrastructure and finances

Electric Vehicles: As Government Pushes For Faster E-Mobility Adoption, Auto Industry Raises Concern Over The Rush
  • The government of India has set the target of at least 30 per cent of vehic
  • NITI Aayog has proposed the transition to start with producing and selling
  • Auto industry roots for a well laid out roadmap for electric vehicle rollou

New Delhi: India has the fourth largest automotive industry in the world and is on its way to becoming the third-largest by 2021, according to IHS (Information Handling Services) Auto Database. With a large fleet of vehicles, little wonder then that vehicular pollution is a huge concern for India. According to The Energy and Resources Institute (Teri), vehicular emissions like Carbon Dioxide, Nitrogen Oxides, and Sulphur Oxides among others, contribute about 28 per cent to the country’s particulate pollution. India is home to 15 out of 20 most polluted cities in the world, as per World Air Quality Report, 2018. To take on the problem of vehicular pollution Electric Vehicles (EVs) emerged as a more environment-friendly alternative as these are powered by battery and are emission free. Therefore, in a bid to promote green vehicles, the government of India and its think tank NITI (National Institute for Transforming India) Aayog have been formulating ways to push faster adoption of EVs for a while now. As part of these efforts, NITI Aayog had recently proposed phasing out of conventional fossil fuel vehicles by producing and selling only electric three-wheelers by 2023, e-two-wheelers by 2025 and e-cars by 2030, chiefly aiming to reduce greenhouse gases, while simultaneously cutting the petroleum import bill and running cost of vehicles. For this, it has asked two and three wheeler manufacturers to present a concrete plan for the transition to electric mobility at the earliest. However, the auto industry has voiced concerns regarding this proposal and pointed to the many obstacles as well as requirements that such an ambitious target would entail for the country in terms of technology, manufacturing capability, infrastructure, and finances.

Also Read: GST Council May Reduce Tax On Electric Vehicles And Their Components To Push Manufacturing And Sales

Also Read: Budget 2019: Impose Green Cess On Polluting Vehicles, Reduce GST On Electric Vehicles, Demands Industry

Talking about government’s ambitious proposal, Ram Venkataramani, President, Automotive Component Manufacturers Association Of India (ACMA) told NDTV that fast-tracking the rolling-in of e-mobility for two and three wheelers by 2023 and 2025 respectively could be disruptive for the auto industry which is currently striving to meet the April 1, 2020 deadline of upgrading its vehicles from the current emission standards of Bharat Stage IV (BS IV) to less polluting standards of BS VI. He asserted, “The auto industry in India is facing one of the severest challenges at this juncture. While on one hand it is faced with the daunting task of meeting stringent deadlines of transitioning from BS IV to BS VI and a host of safety norms, on the other hand, poor vehicle sales for close to a year now has the industry worried. It is to be noted that India is the only country in the world to have by-passed a generation of technology (BS V) as its commitment to producing vehicles with better emissions and auto industry has geared up for this. When it comes to electric mobility, some auto companies have already announced their upcoming EVs and the others are contemplating the transition and studying the market and the technology. Expecting a roadmap for complete transition would be ‘too soon’ as of now.”

Earlier, Bajaj Auto, TVS Motor Company, Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI) had also said in a statement that any plan to ban internal combustion engine three-wheelers and two-wheelers to adopt EVs by 2025 would be “unrealistic” and “ill-timed” and derail auto manufacturing in the country.

Also Read: Adopting Electric Mobility Gets Easy As These E-Scooters Are Now Upto Rs.27,000 Cheaper Under FAME II

Here are the major challenges facing the auto industry while transitioning to electric mobility

1. Rapid Transition Will Increase Imports Which Would Increase Costs To Consumers

As per industry players and associations like Society of Indian Automobile Manufacturers (SIAM) and ACMA, due to lack of adequate local production of batteries and other EV components, the rapid transition would imply an increase in imports making raw-material procurement costly and thus making EVs even costlier for masses which are already more expensive than conventional vehicles.

Emphasising on building a long-term road map for a smooth and gradual transition and localisation of production, Mr. Venkataramani said,

Whilst the auto component industry whole-heartedly supports the Government of India’s intent of ushering in e-mobility and has already started to prepare for it, a hundred percent transition in the next few years would translate into destroying the existing eco-system of this industry. Undue haste, without giving adequate consideration for localization, could lead to rising imports; a phenomenon already, rapidly gaining ground with increasing electronic content in vehicles. Therefore, a practical approach for the government would be to create a stable, long term road-map in consultation with the industry to ensure a smooth evolution rather than a disruption.

Also Read: Setting A New Benchmark, India’s Electric Vehicles Sale Crosses 7.5 Lakh Units Mark In Financial Year 2018-19

2. Lack Of The Required Charging Infrastructure

Some of the major players in the auto industry have highlighted the lack of adequate charging infrastructure is one of the biggest hindrances on the path to a complete transition to EVs. According to RC Bhargava, Chairman, Maruti Suzuki India Limited, while Maruti will be ready with its electric car by 2020, the country is not yet ready for e-mobility revolution. He said,

Apart from the issue is of affordability of the EVs, the price of running such vehicles would be beyond the reach of their owners. This is because a large portion of EV owners do not have a stable car charging infrastructure near them. They would need to look for public charging stations which are yet to become a common site. Also, since the battery is still priced quite high in the county, it will be very difficult for EV owners to buy a new battery. Thus, a proper study needs to be done to ascertain the best option – fully electric vehicles or other alternates like hybrid vehicles and CNG (Compressed Natural Gas) that can answer all key concerns and also cater to government’s target of cutting fuel costs and carbon emissions.

A spokesperson of SIAM also pointed out that the government is yet to establish a robust charging infrastructure. There is a lack of a plan from the government on this crucial component of EV use without which e-mobility will not succeed. In a recent instance, Jammu and Kashmir government that procured 20 e-buses in Srinagar from Tata Motors, did not install enough charging points and so due to the lack of the corresponding infrastructure, the buses are yet to be put into operation. He said,

Currently, there are fewer than 500 public electric vehicle chargers in India. How can these cater to the charging needs of millions of new electric vehicles? China has more than 3 lakh but isn’t planning to ban internal combustion engines. Moreover, power cuts are very common across India and last for hours. How will we manage to set up a dedicated supply of electricity to charging stations within five years especially during the peak hours when the demand for electricity is highest during the day?

Also Read: Electric Vehicles: India Should Prioritise Two-Wheeler Electrification, Says A Study

3. Lack Of Finances

According to a spokesperson from SIAM, none of the stakeholders in the auto industry –manufacturers, government, banks, and suppliers – have an adequate experience of EVs to work towards a complete shift of two and three wheelers by 2025. In the current scenario, as per SIAM, raising finances for the investment in the electric technology would be difficult due to lack of faith in the technology caused by the lack of experience of the electric technology. This means that the auto industry needs to rethink its entire business model which would lead to a policy-induced disruption, said the spokesperson. Amidst the confusion about generating the capital and planning investment, SIAM said,

It is not practical for the industry to provide a roadmap today. There is fear of the unknown. We first need to build an eco-system for EVs to generate enough trust among automakers and financial institutions for investing in the technology.

While the established automobile makers consider the move impractical from a financial perspective as electric vehicle today make up less than three percent of total market share, startups like e-two-wheeler manufacturers such as Ather Energy, and Okinawa and e-car producer Mahindra Electric that have a head start in EV space, even with their limited resources are happy for this policy push. A spokesperson from Society for Manufacturers of Electric Vehicles (SMEV), an association representing manufacturers of EVs and EV components in India, said

Most EV and EV component manufacturers, currently are startups. With conventional automakers entering the EV space in the next ten years, localisation of EV production would increase and charging infrastructure would be automatically strengthened to complement the increase in the number of EVs. This will make EVs more practical and affordable which will be helpful for the current startups as by then these would have become established brands in terms of market share and technology.

In his tweet, Amitabh Kant, CEO, NITI Aayog also pointed out that while it is easy for the startups to execute e-mobility, a lot of rethinking around their business model is required by the established players. He said,

Startups are agile & quicker in terms of execution. They are starting with a clean slate & their go-to-market is different. In contrast, established players have to rethink their entire business model.

Also Read: Electric Vehicles: As India Embraces Green Technology, These 5 Brands Are Set To Launch E-Cars In The Country

Way Ahead

According to Mr. Bhargava, the major reason for EVs to be still unpopular among the masses is that these vehicles are priced high and so not affordable for a majority of the population. For tackling this, there is a need to increase local production of EV parts and batteries, decrease imports, strengthen charging infrastructure, better financial support to manufacturers and increase purchase incentives for EVs in all segments- three-wheelers, scooters, and cars. He suggested bringing back the FAME (Faster Adoption and Manufacturing of Electric vehicles) subsidy for private electric cars which were revoked with the launch of the second phase of the EV incentivising scheme. FAME II provided for subsidising two and three wheelers and only commercially used e-cars. Mr. Bhargavae said, “The government should provide incentives for CNG vehicles and should also come out with a scrappage plan for vehicles to incentivise customers to buy new vehicles. EVs are a long-term approach.” Auto industry bodies SIAM and ACMA have also asserted that instead of rushing, the government should follow a well laid-out roadmap and a practical time frame for the roll-out of EVs in the country. It has also urged the government to incentivise vehicles running on less polluting fuel like CNG.

India’s Electric Vehicle Push

To boost EV sales in the country, the government has recently announced its decision to waive off registration charges for new EVs. It has also proposed waiving off the road tax for EVs which could result in making ownership of EVs at least six per cent cheaper. Earlier, to promote the green vehicles and make them stand apart from the conventional vehicles, the government approved green number plate bearing numbers in white fonts for private e-vehicles and yellow for taxis.

Under FAME II, the government has also targeted strengthening the charging infrastructure by installing 27,000 charging stations across the country in the next three years.

Also Read: India’s Push To Go Electric: How Is The Country Pushing For E-Mobility

NDTV – Dettol Banega Swachh India campaign lends support to the Government of India’s Swachh Bharat Mission (SBM). Helmed by Campaign Ambassador Amitabh Bachchan, the campaign aims to spread awareness about hygiene and sanitation, the importance of building toilets and making India open defecation free (ODF) by October 2019, a target set by Prime Minister Narendra Modi, when he launched Swachh Bharat Abhiyan in 2014. Over the years, the campaign has widened its scope to cover issues like air pollutionwaste managementplastic banmanual scavenging and menstrual hygiene. The campaign has also focused extensively on marine pollutionclean Ganga Project and rejuvenation of Yamuna, two of India’s major river bodies.

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