Battery-operated future

Strategic sourcing would be critical to ensure manufacturing competitiveness of EVs

The Indian electric vehicles (EV) will see the entry of several new players in the two- and three-wheeler segments which between them constitute around 95 per cent of it. Chinese firms such as BYD Auto Co. Ltd will supply electric buses to some state transport firms and Mahindra, with an early mover’s advantage in the four-wheeler segment, plans to make 60,000 electric vehicles annually from 2020.

In 2012, the National Electric Mobility Mission Plan (NEMMP) 2020 was established, under which an incentive scheme, Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) was launched, to reduce the cost and encourage their penetration into the market.

The FAME scheme offers a subsidy on the retail price of passenger cars, ranging from Rs 11,000 to Rs 24,000 for mild hybrids, from Rs 59,000 to Rs 71,000 for strong hybrids; and from Rs 60,000 to Rs 1, 34,000 for EVs. Subsidies are also available for two- and three-wheelers, light-commercial vehicles and buses. The Government of India and some state governments also provide tax incentives that treat hybrid and EVs preferentially over conventional technologies.

The absence of an EV supply chain in the country demands an urgent investment in research and development (R&D) and manufacturing capabilities. The transformation from internal combustion engine (ICE) vehicles to EVs will lead to profound changes across the automotive value chain, including technology, manufacturing systems, distribution and aftermarket service and support. EVs are less complex to manufacture as compared to ICE vehicles with far fewer moving components.

The battery cost constitutes more than 50 per cent of the value of the vehicle itself, resulting to the weakening of the control for original equipment manufacturers (OEMs). With new technologies emerging in the battery segment, OEMs need to heavily invest and promote indigenous R&D in this regard to keep up with the demand for cost effectiveness and better operating ranges for EVs.

India is aiming to have at least 15 per cent of the vehicles on its roads to be electric in the coming five years. This will be one of the main steps taken towards reducing pollution and keeping a check on the crude oil imports. The EV market is growing worldwide, fuelled by stricter environmental measures, technology improvements and cost reduction in energy storage. With over 3 million passenger cars sold in the previous fiscal, the segment is expected to scale new heights in the near future.

According to a survey conducted in Bengaluru, 87 per cent of vehicle owners were ready to buy EVs if that would help to reduce pollution. However, cost and maintenance of these vehicles are still the key concerns. A series of backflip on policies and a non-existent charging infrastructure are big challenges in increasing the market penetration.

India is completely dependent on imports for nearly all of the critical minerals that go into manufacturing batteries. Strategic sourcing of critical minerals would be the key in enabling manufacturing competitiveness in EVs. Electric vehicles provide a great opportunity for the industry, academia and the regulatory authorities to collaborate for a sustainable future.