Economy

Electric Vehicles – Current Efforts and the Roadmap Ahead

The Indian government has been instrumental in leading the transition from combustive engine vehicles to a more sustainable form of transportation. It has set ambitious targets to phase out petrol and diesel run vehicles by 2030, and aims to have all vehicles run by batteries by then. NITI Aayog, along with different pertinent ministries, has been addressing different facets of rolling in the new phase of automobile industry. There have been many incentives, policies and programmes aimed at reducing the high costs of manufacturing and production on the industry side and incentivising consumers to boost demand on the consumption side.

The foremost programme of relevance is the National Electric Mobility Mission Plan or NEMMP 2020. Under the programme released in 2013, the Government of India intends to achieve 5-7 million sales of electric vehicles by 2020 and 4,00,000 battery electric vehicles (BEVs) nationwide. NEMMP 2020 is a comprehensive scheme which stimulates sales of EVs by encouraging investment in the manufacturing sector, especially the automobile industry, improving charging infrastructure, and demand creation incentives. A major area of concern of the NEMMP 2020 is the promotion of research and development (R&D) in technology, especially in battery technology, battery management, etc in order to make EVs more efficient and accessible.

In order to supplement and accelerate the NEMMP 2020,  Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) was commenced in April 2015. FAME’s four focus areas were technology, demand creation, pilot projects, and charging infrastructure. The first phase of FAME, Phase-I, focuses on market creation through demand incentives for several vehicle segments like two-wheelers, three-wheelers auto, passenger four-wheeler vehicles, light commercial vehicles and buses, especially public transportation. The primary focus of this phase is electrification of public and shared transportation by support through subsidies.

The main objectives of NEMMP and FAME are to achieve national energy security, lessen the adverse impact of transportation on the environment, and the growth of manufacturing and technology of the automobile sector within the nation.

However, these steps remain inadequate to achieve the set targets. Such a big transition requires a colossal investment in industrial policy and the current narrower efforts might be counteractive and negatively affect the automobile industry rather than benefit it. The public policies and incentives in the form of rebates and subsidies are on a very small scale and do not push the consumers to purchase more EVs or reduce the costs significantly. The efforts towards improved infrastructure need to scaled up on behalf of the government and given more importance as they are vital for the success of EVs. Another aspect that is overlooked in many policies is the import and export of EVs and their parts. As of now, India relies on China, the global leader in the manufacturing of electric vehicles, primarily for components and imports ten times more than it exports. This is a bad sign not only for local automobile companies but also the growing trade deficit of India.

In order to achieve a sustained increase in the use of electric vehicles, it is important to learn from countries who are leading in successfully transitioning away from fossil fuel run vehicles and the mechanisms implemented by these countries to do so. Two countries that stand out as leaders in the electric vehicle boom are Norway and China.

Norway is one of the very few regions that has broken the two percent barrier for EV sales as Norway provides exceptionally large demand-focussed incentives in the form of tax breaks and subsidies. The taxes on these vehicles have been reduced to such an extent that the purchase price of an EV is practically equal to that of a conventional vehicle. China, on the other hand, invested an exorbitant amount into the electric industry to make it thrive. The Chinese government has spent nearly $60 billion in the last decade to create an industry that manufactured electric vehicles and this investment has led to China being the global leader in sales of electric vehicles, particularly two-wheelers, with 99% of the world’s 250 million electric two-wheelers present in China. The two countries demonstrate the importance of public policy that focuses on both the supply and demand side of electric vehicles in the market.

Learning from others, India’s first and foremost priority should be pumping in a vast quantum of investment in order to improve the existing infrastructure. It should not be limited only to charging infrastructure, but should address a wider scope like road conditions, private parking spaces and safe battery management and disposal. Infrastructure for the EV industry is multifaceted and each avenue must be addressed, as they are interrelated and depend on one another. Improving one infrastructural concern of the industry while disregarding the others will not have the desired effect in promoting EVs. Hence, investment in this sector must be raised tenfold.

Indigenisation is key to the successful shift to electric vehicles. Simply put, indigenisation is the process of producing a product entirely within a country itself. India imports most components due to the lack of availability of resources or technical knowledge within the nation. However, a report by the Council on Energy, Environment and Water (CEEW) reported that India can achieve a 5.7% higher value addition if it completely indigenises powertrain components and battery pack assembly, hence highlighting the importance of domestic production. In order to do so, India must develop and increase its manufacturing capacities in electronics and electrical components and push for research and development and reskilling of human capital.

One of the biggest barriers to electric vehicle adoption is consumer mentality and awareness. Indian consumers are often hesitant or unwilling to purchase electric vehicles given its high cost and complicated technology and are unaware of the long-term benefits of these vehicles, not only to the environment but also to themselves. It is crucial to change the opinion of consumers regarding EVs, raise awareness of the need and benefits of EVs and provide more incentives to purchase EVs over IC engine vehicles. Without a change in perspective, the growth of EVs will continue to stagger, regardless of any improvement in infrastructure.

Technology in EVs has grown exponentially over the years and will continue to do so for the years to come. However, it is important to have a comprehensive plan to make EVs more accessible, equitable and sustainable. Keeping in mind the entire ecosystem of EVs, consisting of the market, technical, political, infrastructural, social and environmental aspects, India has a long way to go before electric vehicles are the most prevalent mode of transport in society.

Contributed by Prerana Bhat and Sanjana Rout

Picture Credits: business-standard.com



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