Open Forum
New Delhi, 16
February 2022
Electric
Vehicles
IS THE
SHIFT IMMINENT?
By
Dhurjati Mukherjee
Electric vehicles are
causing a buzz. Not only aren’t these being promoted to tackle the looming environmental
crisis, but the consumer’s choice is slowly changing. The demand, be it four or
two wheelers, is steadily picking up. From environmental perspective, the EVs are
the future of the auto industry in India as in many other countries.
The thrust has been
clearly noted in the recent Union Budget with the government policy of battery
swapping expected to give a boost to the domestic EV industry, specially for public
transport, as it will provide an affordable solution to the charging issue. Industry
stakeholders said the policy will help develop the infrastructure needed to
make EVs improve their use in public transport as also for general users.
In fact, the
government’s EV policy ‘Scheme for Faster Adoption & Manufacturing of
(Hybrid & Electric Vehicle in India’ has seen a big boost from Rs 800 crore
to Rs 2908.28 crore in the budget for 2022-23. E-mobility is all set to get a
major impetus with the announcement of a battery swapping policy with the
provision of land for establishing charging stations at scale. The target obviously,
would be to have more EVs on the road in the coming years.
That India is
destined to be a manufacturing hub for electric vehicles within the next five
years was forecast by Union Road and Transport Minister Nitin Gadkari, stating that
several countries no longer want to deal with China following the COVID-19
crisis. Gadkari asked Indian automotive companies to boost their EV technology
and also to focus on finding alternatives to lithium-ion battery tech to help
make India the next global manufacturing hub for electric vehicles. “I am
confident that in five years, India will become the number one hub for
manufacturing electric buses, cars and two-wheelers. There is also a blessing
in disguise that a majority of countries are not interested in dealing with
China anymore. So, now there is a huge potential for India,” he had pointed out
at a webinar titled ‘India’s Electric Vehicle Roadmap Post COVID-19’.
So far China has been
on top in terms of EV production globally by producing over 80 percent of all
EVs. It has the fourth largest reserves of lithium in the world, hence giving
it a monopoly in the lithium-ion cell market. Lithium-ion battery packs
are currently used the most for powering from small electric two-wheelers to
electric commercial vehicles.
It may be recalled
that the government launched the National Electric Mobility Mission Plan 2020
in 2013 to enhance fuel security as also to address vehicular pollution through
the promotion of hybrid and EVs. The government launched the Faster Adoption
and Manufacturing of Hybrid & Electric Vehicle scheme under NEMMP, 2020 in
2015-16. The scheme was to make hybrid and EVs as the first choice for buyers
instead of internal combustion engines and reduce liquid fossil fuel
consumption in the country.
Since April, 2019,
the outlay of the scheme (FAME-II) has been enhanced to Rs 100 billion for a
period of three years, mainly to offer upfront incentive on the purchase of EVs
and also to establish the necessary infrastructure for electric vehicles.
Though higher EV sales had not picked up initially, from early 2021 the trend
is changing as a lot of manufacturers of four wheelers and two wheelers have
entered the market.
Recently, the
governments of Tamil Nadu, Punjab, Telangana, Maharashtra, and West Bengal
invited the auto company Tesla to set up shop in their respective States. This
open invitation was a response to company founder Elon Musk’s tweet that
Tesla was “facing a lot of challenges” launching their EVs in the country. The
enthusiasm with which the five States have rolled out the red carpet for Tesla
isn’t surprising. Estimates pegged
the market opportunity for the electric vehicles sector in India to be
worth approximately $206 billion by 2030. Despite contributing less than
one per cent of all vehicle sales in the country, overall EV sales are
rising with over 50,000 new registrations each month.
Governments are thus keen to set
up shop and manufacture domestically. However, these companies would rather
sell completely built units (CBU) made outside the country. Subsequently,
Tesla, Audi and Hyundai have urged the Modi government to cut import
duties and help bring down prices and generate demand for EVs in
India.
However, the
government remains unmoved and maintains the 100 per cent import duty on CBUs
manufactured abroad. Instead, it has been pushing for greater localisation of
EV manufacturing through multiple policy measures FAME-II. Additionally, it has
launched several production linked incentive schemes for manufacturers in the
automobile, components and advanced chemistry cell battery sector to
develop indigenous supply chains for critical EV components. To boost
sales, it has also launched several consumer-centric incentives such as
tax exemptions, subsidies and interest subvention schemes, intended to trigger
a mass demand for EVs.
For EVs production the
most important raw materials such as lithium, cobalt and nickel, which are
used to make lithium-ion (Li-ion) battery cells, are not available in the
country. Consequently, Indian manufacturers must rely heavily on
imports of battery cells from China, Japan, Korea, and Taiwan and assemble
them into battery packs. Though there is optimism and encouraging response from
investors under the PLI scheme to manufacture ACC batteries domestically, most
bidders are expected to start manufacturing only from 2025. It is thus
quite natural that India’s import-driven strategy, for domestic assembly of
critical battery packs, will continue for a few more years.
Additionally, the
manufacturing of electric motors and power electronics requires critical raw
materials, deep technological expertise, and large capital investments to
manufacture – all of which India lacks. Thus, import dependency has been the
only option for domestic manufacturers to secure critical parts for EV
assembly.
Besides, domestic EV
manufacturers are exposed to increasingly volatile global supply chains and
higher costs due to Covid-related disruptions and the US-China trade
war. The prices of lithium carbonate and lithium hydroxide have risen by over
400 percent and 255 percent respectively since beginning of 2021. Similarly,
prices of praseodymium and neodymium oxide, used to make magnets for electric
motors, have almost doubled in the past 15-16 months. As a result, some
manufacturers hiked prices of their EVs to counter the rise in raw
material cost.
Some technical
experts have suggested that electro-chemical energy in the form of metal air
batteries could be the choice of the future, at least for India. Metal air
batteries can match the driving range of conventional internal combustion
engine vehicles and reload full energy to full energy capacity in less than
five minutes.
Significantly, much research
has taken place on such batteries during the period 2014 to 2020. Unlike
conventional batteries, metal air batteries utilise oxygen from the atmosphere
at the cathode. These have higher energy density (energy per unit weight)
compared with lithium batteries. Aluminum can be used as the anode of metal air
batteries as the country has abundant bauxite deposits in the country. The
road to progress is certain only if the Government does not put any brakes and
aids the EV manufacturers to achieve its target.---INFA
(Copyright, India News & Feature Alliance)
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