Indian EV eco system

 

India's EV Policy The NITI Aayog, India's policy think-tank, has given several suggestions to the Government of India with respect to EVs. Accordingly, the following policy has been enacted: Reduce primary oil consumption in transportation. Facilitate customer adoption of electric and clean energy vehicles. Encourage cutting edge technology in India through adoption, adaptation, and research and development. Improve transportation used by the common man for personal and goods transportation. Reduce pollution in cities. Create EV manufacturing capacity that is of global scale and competitiveness. Facilitate employment growth in a sun-rise sector Government adopted the Faster Adoption and Manufacturing of Hybrid and EV (FAME) scheme in 2015, with an allocation of Rs. 895cr, which provided subsidies for e-2Ws, e-3Ws, hybrid and e-cars and buses. The FAME II scheme, which came into effect from April 2019, had a proposed spending of Rs. 10,000cr. It was to be used for upfront incentives on the purchase of EVs (to the extent of Rs. 8,600cr and for supporting deployment of charging infrastructure (Rs. 1,000cr).

Source: Department of Heavy Industries, Ministry of Heavy Industries and Public Enterprises, Government of India

The EV Ecosystem

Source: Avendus Capital Pvt Ltd

Policy: The FAME II policy is India's first step towards boosting EV penetration in India, though a lot needs to be done. The Government has taken baby steps by introducing e-buses for public transport in some cities. EVs for private use will go up once there are incentives, subsidies and other such measures. Batteries: Battery cost is nearly 40% of the cost of the vehicle, hence reducing the same is key to increasing EV adoption. Raw materials for battery manufacturing - mainly Lithium and Cobalt - are not available in India, hence raw material dependency will continue (currently India imports crude). Currently Indian companies only assemble imported battery packs, do not manufacture batteries.

Source: Times of India

OEM: Most OEMs are focused on specific sub-segment of the automobile space. 2Ws have seen the most momentum, given that nearly 79% of Indian auto market (by volumes) comprises of 2Ws. E-3Ws have started by way of e-Rickshaws while e-4Ws are gaining prominence in shared mobility.

Source: Trade Brains

Grid: There are two major issues that grids have to address Ability to handle peak load Grid composition must be ideally dependent on renewable generation rather than coal dependent generation. Charging Infrastructure: India will need to simultaneously develop home charging and public charging infrastructure to boost EV adoption. The government has been pushing for EVs through introduction of Fame I & II policy with a major focus on charging infrastructure. The government, under FAME II policy approved setting up of 1633 fast charging stations and 1003 slow charging stations across 62 cities, 24 states and union territories in Jnuary 2020. FAME I added 314 charging stations in India, FAME II 2,867

Source: FADA

Customers: EV adoption in India is highest in the public transport (buses) and shared mobility. E-2Ws have been the next ones to begin adopt since cost differential between ICE 2Ws and EV 2Ws is lower than 4Ws. Lithium ion price reduction - the biggest enabler While demand for Lithium is expected to increase with growing EV adoption, prices, surprisingly have continued to fall continuously. Over the past ten years (2010 - 2020), Lithium prices have dropped 88%. This is due to the following reasons: Annual supply of Lithium is expected to grow from 2,15,000 tonnes in 2019 to 7,15,000 tonnes in 2025. This will be led by new supply from Argentina, Australia and Chile. Three new mines are set to come up in North America in next couple of years, taking its share in global supply to 5% by 2025. New mines and increased production have brought a glut of material to market, hammering lithium prices.

Volume Weighted average of lithium ion battery price (USD) Lithium production to triple between 2019 and 2025 Lithium Reserves by country (In Million Metric Tons)

While lower Lithium prices is music to ears of Auto OEMs, it is bad news for miners of the metal. Lower prices means that investments into mining may become less profitable, reducing the pace of new investments. The pandemic reduced demand for EVs, hereby depressing prices further. However, the free fall in Lithium prices is expected to get arrested by 2022. Several global companies have delayed or postponed expansion plans due to depressed demand currently. Some examples of postponed projects are: Chile's SQM, the world's second-largest Lithium producer, postponed key expansion at its Atacama salt flat operations from the end of 2020 to late 2021. Australian company Wesfarmers delayed its investment decision on the Mount Holland project in Western Australia by a year, to early 2021. World leader Albemarle postponed its project to buy 1,25,000 tonnes of processing capacity. It also revised a deal to buy into Australia's Mineral Resources' (ASX: MIN) Wodgina lithium mine and said it would delay building 75,000 tonnes of processing capacity at Kemerton, also in Australia. (Source: Mining.com) China's Tianqi Lithium Corp., the country's top producer of the battery metal, also postponed commissioning the first phase of its flagship plant in Kwinana, as it struggles to pay back debt. (Source: Mining.com) Reference: Research and Ranking -Prashant Gorakhnath Patil

ELECTRIC VEHICLE

  Most of us, like many other inventions, had not heard about cars powered by electricity before. If one would tell us about electric vehicles becoming the future of mobility probably a decade ago, we perhaps would not believe it. However, it's turned into a reality now. E-vehicles are sitting in the driver's seat and driving the Automobile sector towards growth.

Vehicle electrification: a brief history

Electric Vehicles or EVs, as they are commonly called, are vehicles which run on electric power, either partly or fully. EVs are environment-friendly and have low running costs due to lesser moving parts.

Surprisingly, the concept of EVs is older than Internal Combustion Engines (ICEs). Scottish inventor Robert Anderson created the first electric carriage in the 1830s. Its battery wasn't rechargeable and required replacement every time it ran out. However, electric-powered continued to be in use in USA and some parts of Europe. New York had a fleet of electric taxis in the 19th century and battery swapping stations.

With the advent of ICEs, a major roadblock of frequent battery charging / swapping was removed and ICEs gained popularity world over. Thereafter, there was sporadic research on EVs whenever crude oil flared or geo-political tensions mounted. However, for a large part, ICEs rules the roost.

It was not until the turn of the century that EV development found serious interest from companies and Governments. Companies such as Toyota (Prius), Nissan (LEAF) and Tesla (Model S) took the EV chapter ahead and "glamorized" EVs. Here's a look at the EV evolution:

The EV Journey

    Source: Research Gate

India's Affair With EVs is Older Than You May Think

Source: Electricvehicle.com

Source: Wikipedia.org

Most of you would have first heard of Electric vehicles when Reva was launched in 2001. REVA which stands for "Revolutionary Electric Vehicle Alternative", was launched by a Bengaluru based automaker RECC (Reva Electric Car Company) founded by Chetan Maini. It was a joint venture between (JV) between the Maini Group of Bengaluru and Amerigon Electric Vehicle Technologies (AEVT Inc,) of the US. In 2010, RECC was acquired by Mahindra & Mahindra.

However,the first EV to launch in India was Lovebird in 1993. Loverbird was manufactured by the Eddy Electric. The vehicle was first uncovered at the Delhi Auto Expo. The vehicle managed to impress the Indian government at the launch and soon received a green signal from the authorities.

But a two-seater Loverbird, didn't receive as much love as expected from the Indian car buyers. Due to a slew of problems like, the battery used in the car at that time would take 8 hours to charge and the power failures and deficiency on the part of proper electric supply, sales volume didn't ever cross a three-digit figure. Following the low sales number, the government soon withdrew subsidy for buying EVs. This made EVs heavy on Indian consumers' pockets.

Fast Forward A Few Years Later
India is charged to achieve the status of a global hotspot for electric mobility. The Indian automobile industry currently ranks 5th in the world and is set to become the 3rd largest by 2030. The requirement of mobility is going to change drastically in the near future catering to over 1.3 billion population. The past modes of transport and infrastructure will not be able to serve the needs.

Considering this aspect, the government is working towards developing a mobility option which Shared, Connected and Electric as one report by Innovation Norway quotes.

Under the Make In India programme, the manufacturing of e-vehicles and auto parts is expected to increase the share of manufacturing in GDP to 25% by 2022. Currintly 82% of India's oil demand is sufficed by imports from oil rich country. Adoption of EVs, as per several estimates, is projec

Moreover, the price of electricity as fuel could fall as low as Rs. 1.1/Km, helping an electric vehicle owner save up to Rs. 20,000 for every 5,000km traversed.

Why EVs - advantages

So why has the world started looking at EVs as the technology of the future? Aren't we happy driving petrol/diesel driven vehicles? Ma be not. Following are some reasons:

1. Climate change - Effects of fossil fuels such as global warming, mass extinction of species and growing weather calamities have forced lawmakers across the global to look at cleaner alternatives.


2. Import bill - Countries such as India don't have any significant crude reserves and have to import the fossil fuel for their energy requirements. India incurred a crude import bill of $101bn in FY20 requiring to import 82% of its total crude needs. Hence, there is growing interest in technologies that look away from crude oil dependency - electric vehicles being one of them.


3. Pollution level - According to WHO, India is home to 14 of the world's 20 most polluted cities. A major reason for high pollution levels is fuel emissions.


4. Advancing renewable energy technology - Over the past few years, strong advancements in wind and solar energy have brought down the cost of these form of energies. This has stirred interest in EVs.


5. Low maintenance - While an IC vehicle has hundreds of moving parts, an EV has less than 30. This means less wear and tear and low cost of ownership.


6. Quieter operation - EVs make much lower noise compared to conventional vehicles since there's lower friction between moving parts. In fact, EVs are so silent that some OEMs add false sounds to make them safe for pedestrians!


7. Incentives for buyers - Governments in India (State and Central) are looking at ways to incentivize buyers to go in for EVs. They are offering lower vehicle tax, tax incentives, buyback.

Reference: Research And Ranking

-Prashant Gorakhnath Patil