Fast bullet train, slow car

There are many reasons to be excited about Tesla’s Model 3 electric car, but there are two main ones: A 300-plus km driving range on a single charge and a price point ($35,000) that is seen as much more affordable than its earlier $100,000-plus models.

The driving range of electric vehicles (EV) being procured by India under its first large tender is about a third of Tesla’s Model 3, and the price is about half, at a little over $17,000 (about Rs 11 lakh). It is unclear why a government, which is investing in a superfast bullet train at one end, has chosen a less-than-the-most-advanced electric vehicle option.

The results of the 10,000-vehicle tender were announced last month. Energy Efficiency Services, a venture of four government-owned companies best known for its bulk procurement of LEDs and their subsequent price slide, is attempting the same aggregation model for electric vehicles. 

Two companies bagged the EV order: Tata Motors will supply 350 vehicles and Mahindra Electric 150 by November 2017. The other 9,500 cars are to be supplied next year.

These cars will form part of the fleet of select government-owned companies. Since their usage price per month will be lower than that of conventional vehicles, it is a win for the users. Their deployment will also encourage the setting up of electric vehicle chargers, for these cars will not get very far without that.

Is it possible that the focus on keeping the price (and power specifications) low might take away the “whoa” factor from electric vehicles and dampen future demand? Shouldn’t the focus be on the latest and most advanced technology when buying a laptop, a phone or an electric car? Shouldn’t there be more clarity on where these cars will actually charge? India has less than 500 EV charging points. There were 363,000 public charging points globally in 2016, with more than half in China, while the US had the second-largest base, according to Bloomberg New Energy Finance data.

There are buyers keen for Tesla cars in India. Tesla also seems to be interested in selling, and possibly manufacturing, in this country. Here is what Elon Musk said in a tweet in June: “In discussions with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built.” 

Tesla has, however, made the first move in China, the world’s largest market for vehicles, and for electric vehicles. A report in The Wall Street Journal earlier this month indicated that the company had reached an agreement with the Shanghai government to set up its own manufacturing facility there. 

The next step in mobility is self-driving vehicles, which are already being live-tested on roads. If India is to be in step with the rest of the world in that space also, it will need an overhaul of its road traffic, which will likely be far more challenging than getting EVs on the road.

The author is editor, Global Policy, for Bloomberg New Energy Finance; vgombar@bloomberg.net