Green Dreams And The Journey Ahead
It’s raining EVs. Existing auto manufacturers and new tech firms are out there - busy announcing and launching electric vehicles (EVs) - be they two-wheelers, three-wheelers or four-wheelers. Startups too are emerging with potential solutions to green mobility challenges.
India is committed to reducing its carbon footprint and plans to have 30 per cent of cars, and the majority of the two and three-wheelers in the EV category by 2030. Lot of forecasts, predictions and research reports have been compiled by now, on the state of the Indian EV sector. The outcomes denoted in much of these could actually vary from the reality in a few years. The Indian demographic shape, socio economic base, economic development, availability of EV infrastructure would impact these. It is expected that India’s green mobility (especially EV) would be largely led by the two-wheeler and three-wheeler green transition.
Globally, the EV trend is picking up traction. It is estimated that by 2040, one in three cars sold will be EVs. Electric vehicles are also shaping what competences the automobile firms will need, and not surprisingly, it is new technologies that stands out. Many legacy automobile manufacturers have been slow to the EV game and have to deal with their stakeholders’ cultural preparedness in their transition towards the EV mindset. Electric vehicles are changing the face of the Indian automobile sector. Automobile brands who built their entities on mechanical engineering capabilities, had to build or rebuild competencies around technology. The engineering capabilities include battery technology, developing user interfaces, software capabilities, and product design expertise.
*Early Challenges
The journey to a higher proportion of EVs, compared to the conventional IC engine vehicles won’t be easy. It will need certain aspects to be solved for, towards a large scale adoption of EVs.
*Cost of EVs
The cost of an EV purchase is a prime determinant for consumers. If the vehicle were to be used long term, then the cost of ownership, including maintenance, running costs and spares add up to consumer worries. While the government offers incentives to EV ownership, it is not a deal sweetener to move consumers from conventional fossil fuels to EVs.
*Battery Cost
In EV ownership, the battery cost is critical. An average Lithium ion battery is expected to last about seven to eight years. If battery decay starts during the car ownership, say after four or five years, then the consumers could find it unaffordable to maintain the battery life within their usual budget. Also the hassle of recharging battery to keep it fully charged could be cumbersome (just imagine charging your phone constantly to keep it active).
*Charging Infrastructure
Currently lower availability of EV charging units or stations across the country needs to be supplemented with additional units. Also for individuals to adopt EVs, residential projects and office locations need to start offering EV charging points within their premises. At least in cities where the concept of multi-storied apartments is common, these have to be taken up seriously and quickly, before lack of charging facilities act as an EV deterrent.
*Range Issues
With current battery technology enabling much lower distance coverage (range that the EV can travel in one charge), it is a consumer worry. Electric vehicles are capable of infra city usage while with current range, they struggle to offer inter-city or longer drives. With improved battery storage capabilities that is expected to evolve with technological innovation, and the additional charging units expected to come up across India, this worry will abate.
*Standard Charging Units
Each EV brand has its own charging port design. Standardising it would be a positive for consumer acceptance. Post standardisation would also help in charging units functioning effectively.
Battery Technology Needs Research
Currently, the cost of a battery could account for up to 50 per cent of a vehicle’s overall production cost. Raw materials for a battery pack include various metals like lithium, nickel and cobalt. These are needed for lithium ion battery cells. India imports these and much work is now happening on the battery substitution projects.
One of the most significant barriers to EV adoption is the battery manufacturing process and supply chain. To enable EVs, new mining and supply networks are required. The lithium-ion battery is the most common and frequently utilised EV energy source.
India is pushing ahead with setting up domestic production facilities. The battery manufacturing and battery storage industry is at a growth stage and the government offers incentives for setting up such units. With the usage of emerging technologies, battery costs will reduce in the future.
A to I of Go green
Ambition
Battery
Charging infrastructure
Digital tech
Efficiency of range
Financing the shift to green
GoI policy encouragement
Homogenisation of technologies used
Internet of Things
Supporting our green transformation will need a regulatory blueprint, which has to be firm and supportive. In this, India’s Net Zero 2070 is ably supported with policy impetus across sectors. We also need to keep in mind these: contours of social inclusion, sustainable financing means, demographic needs of sustained and increased livelihood.
While the private investing space has been bullish on the EV space, the traditional banking sector has been slow in warming up to it. Their approach to EV business lending and to moving towards assessing sustainable businesses has been slow. Financiers have to quickly accept that green financing is not an option or choice that they can ignore anymore.
In the wider context of green financing, an RBI Bulletin of January 2021 mentioned, “In sum, green finance in India is still at the nascent stage. Green bonds constituted only 0.7 per cent of all the bonds issued in India since 2018, and bank lending to the non-conventional energy constituted about 7.9 per cent of outstanding bank credit to the power sector, as on March 2020.” The report also mentioned that the development of green financing, funding of environment-friendly sustainable developments are not without challenges, which may include false compliance claims, misuse of Green Loans and most importantly, maturity mismatches between long-term green investment and relatively short-term interests of investors.
India will need to build four lakh charging stations by 2026 to cater to 20 lakh EVs. Currently various types of charging station projects are underway, including oil retailing majors setting up their own EV charging units, private sector jumping into the opportunity, etc. This would need financing avenues to open up.
Electric mobility can be an efficient catalyst in assisting India meet its Sustainable Development Goals (SDGs). By 2070, the population of the world is expected to be around 10.4 billion people, with India housing around 1.6-1.7 billion individuals. India will be an essential element of the world’s sustainable future. India, over the past few years, has displayed polity urgency in laying the foundations for a stronger resilient India that can lead itself and the global dialogue towards inclusive development. No development can be inclusive, if we cannot take along the primacy of nature, and our commitment and efforts in reducing any damage to natural resources, as well as our behaviour and value systems.
It is natural for cynics to call this EV revolution slow. Their hypothesis is that we will need to generate higher electricity supply through fossil fuels, to cater to the incremental demand from EV usage. In this aspect, India took the lead by expanding and is still continuing to expand its renewable energy sources. After all, EV in a nutshell is more of a battery storage game and not the power generation one. One of the aspects that we need to evolve policy and execution plan is circulation, reuse and disposal of EV batteries over their decaying life cycle. As a large consumer market, we will be generating much more of E-waste and would need to dispose of them carefully, while preserving nature and public health.
In this entire EV race, we still don’t see a clear market leader, yet. While the initial euphoria and capex deployments have happened, clear winners will only emerge after three to five years. The premise that legacy companies have advantages over the newer EV players may not hold water, or rather battery in this sector! Innovation, R&D, product experience will help winners emerge.
