The electric vehicle party

The govt wants 'most, if not all' vehicles to be powered by electricity by 2030

There is going to be an electric vehicle (EV) party across the world, and India does not want to be left out. So it has set a rather ambitious — some would say audacious — target. The government wants “most, if not all” vehicles in the country to be powered by electricity by 2030. There are three things required to make this vision a reality: A large enough number of electric vehicle models, adequate charging infrastructure and policy support. India is currently lagging in all three.

 Electric vehicle models: Most car majors of the world have launched or are launching electric models. The top selling models include the Nissan Leaf, BMW i3, Tesla Model S, Renault Zoe and BYD’s e6. Volvo has announced that from 2019, every car it launches will have an electric motor. The first unit of the much anticipated Tesla Model 3 sedan hit the road earlier this month. 

India has limited electric vehicle models available.  There are a couple of options from Mahindra Reva Electric while Maruti Suzuki has affordable mild-hybrids on offer. These cars, in addition to the Toyota Camry hybrid, are eligible for incentive payments under the government’s scheme for faster adoption and manufacturing of hybrid and electric vehicles, referred to as FAME. Tesla is yet to start selling in India.

Showrooms of Hero Electric, selling electric two-wheelers and three-wheelers are visible across states, and Hero does have a handful of competitors in the segment such as Electrotherm. But unit sales are a small fraction of the total vehicles being sold in India. 

 Infrastructure: Electric mobility would require battery charging or swapping facilities on the roads, at workplaces and in residential areas.  China has identified electric vehicles and batteries as major strategic industries and has set a target to install almost five million EV charging poles by 2020, and 12,000 charging stations. It supports the industry through various monetary incentives. In India, it would be a challenge to find a charging point today, since there are just a few hundred installed, but companies are gearing up to provide the service. The National Thermal Power Corporation (NTPC) is likely to be a large investor in this sector, seeing it as a means of creating demand for power. “This is a big potential growth area for us. We intend to go full speed on the charging business,” NTPC Chairman and Managing Director Gurdeep Singh told Bloomberg New Energy Finance in an interview. The policy support for such a venture is unclear at the moment.

 Policy: The cost of electric vehicles is high, largely due to the battery. Bloomberg New Energy Finance expects lithium-ion battery costs to decline to about $100 per kilowatt-hour by 2026, from $273 last year. Policy interventions are typically being made to reduce the cost of the e-vehicle or batteries, support the roll-out of charging infrastructure and also to aid local manufacturing. India’s current set of policies do not match its 2030 ambition. Perhaps the electric vehicle policy for later this year, promised by Road Transport and Highways Minister Nitin Gadkari will provide the right set of incentives. 

Some companies are choosing not to wait. Taxi aggregator Ola announced plans to have a fleet of 200 electric vehicles running in Nagpur, sourced from Mahindra, Kinetic, BYD and TVS. Maruti Suzuki is exploring incentives available for setting up an integrated manufacturing facility for the battery pack in India.  

Globally, sales of electric vehicles will likely cross the one million mark this year, against 695,000 sold last year. The biggest market for EVs is China, followed by the US.

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