India’s ambitions to make electric vehicles (EVs) mainstream in the wake of rising fuel import bills and hazardous air pollution are being met with hurdles. In the words of Nitin Gadkari, minister for road transport and highways, “India will become a world leader in electric vehicles in the next two years.” But a bumpy road lies ahead.
The Indian government has pressed the pedal to the metal by urging automobile manufacturers to ramp up electric vehicle manufacturing, but the proportion of these is still hovering around 2% of total sales. Price sensitivity of consumers, lack of awareness about cost benefits, range anxiety (driver’s fear that his or her electric vehicle will run out of charge before reaching the intended destination) in city traffic and highway driving have contributed to the sluggishness in the uptake of electric vehicles so far. But a blend of safety issues and missing infrastructure is creating further speed bumps for the industry that’s preparing to take off.
Before delving into the challenges that lie ahead of India’s EV dreams, let’s understand the regulations and policies in play that are helping accelerate this process.
Whose jurisdiction is it anyway?
In the last decade, several ministries of the central government along with individual think tanks have formed policy frameworks to support India’s mobility transformation. However, there is “no clear central coordinating agency,” according to the Council on Energy, Environment, and Water (CEEW), a research institute in New Delhi.
Further on, 19 out of 28 states in India have their own EV policies designed to provide supply-side incentives for manufacturers over and above the federal incentives. There is a lot of buzz about these policies—but is it adding up?
Of these, the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme is presently underway and in its second phase, which will last till 2024. The ambitious scheme was launched in 2015 to provide an impetus to the domestic EV industry and attempts to reduce the high upfront costs for passengers across electric buses, passenger cars, three and two-wheelers by up to 40 per cent. The subsidy amount can consequently be claimed by the original equipment manufacturer (OEMs).
Anumita Roychowdhury, member of the World Economic Forum’s Global Future Council on Clean Air observes that “the scheme has brought price parity in a lot for electric two-wheelers,” against their conventional models that are powered through internal combustion engines (ICEs). FAME has thus managed to make a dent in the overall transformation but is there scope for improvement?
India’s EV policy ecosystem is designed to overcome cost disabilities. But “the missing piece of the puzzle is EV mandates,” says Sumati Kohli, consultant at the International Council on Clean Transportation (India).
She adds that sales mandates on OEMs coupled with purchase mandates for delivery fleet owners, ride-hailing fleet operators, government institutions, etc. will further stimulate the transition. Leading EV markets such as Europe and California have leveraged a combination of financial incentives and mandates, resulting in significant scaling up EV uptake.
The current EV trends in India reveal they are mostly being used for commercial operations, for example, by e-commerce delivery companies like Amazon or by ride-hailing giants like Uber, observes CEEW. For delivery personnel who mostly use two-wheelers, a single charge fulfils their daily trips making the overall cost of operation favourable, in spite of the high acquisition price.
Safety and reliability issues
India is powering through a green revolution with its policies and ambitious climate agenda. Except the ‘vehicles’ it is choosing to achieve that are going up in flames. A spate of fires – primarily in electric scooters but now also in cars – has put the country’s master plan to de-carbonise its transport in jeopardy.
“It is definitely a negative sentiment for consumers and some may even defer their decision to purchase in the short term,” says Gaurav Batra, Senior Automotive Analyst at EY GDS Knowledge.
As the world’s third-largest emitter of greenhouse gases, India is at a crucial juncture in its transformation towards electric mobility. NITI Aayog, the country’s federal think tank has laid out a vision to convert 70% of commercial cars, 30% of private cars, and 80% of two-wheeler sales to electric by 2030. The erosion of public trust in this technology would only exacerbate problems for an industry that is already in its nascent stage.
Batra adds that these accidents will necessitate the requirement of rigorous validation at the design stage itself. “Regulators may want to place stricter checks so that no product is introduced without adequate verification and in a hurried fashion.”
Some reasons that have been ascribed to these fire incidents are thermal management and inappropriate quality standards for the battery pack modules. Thermal management, which experts reckon is one of the most important attributes of an EV, is the regulation of battery temperature especially when it's charging.
Batteries account for 40% of the total cost of an EV. They are in turn made up of cells that form 60% of the battery pack’s cost. “A complete self-reliance on battery packs is a utopian concept,” says Saloni Jain, research analyst at CEEW. Speaking on Zoom, she adds that India is still heavily reliant on exports for the battery cells as minerals like cobalt that are required to manufacture them are largely unavailable.
In the past few months, social media has been abuzz with videos of electric scooters catching fire. Some incidents have also reported fatalities. These accidents coincided with India facing its worst heatwave in 122 years, and have since prompted several people to wonder if there’s a link between the two.
EVs are powered by lithium-ion batteries which carry a fire risk with them. Akshay Singhal, CEO of Bengaluru-based nanotechnology company Log9 Materials told The Economic Times in an interview earlier this year that India has been importing battery packs that aren’t conducive to its environment and weather conditions. On the other end of the spectrum, Vivekananda Hallekere, co-founder of Bounce Infinity, an electric two-wheeler manufacturer, says ambient temperatures have nothing to do with batteries catching fire and cites the packaging and design of the battery pack as the culprit behind this.
Nevertheless, some stakeholders reckon that the earlier this happens, the better it would be for companies to improve. Citing that the market isn’t mature yet, Dev Ashish Aneja, assistant vice president of automotives and electric vehicles at Invest India, the federal investment promotion and facilitation agency, says any new industry will face these “teething issues” when going through a transformation and disruption phase.
In response to a recent battery fire incident, Bhavish Aggarwal, founder of SoftBank-backed Ola Electric said that EV fires “will happen”, as they do with all global products but are “much less frequent” than ICE fires. Ola Electric is one of India’s largest electric two-wheeler manufacturers by market share. Several Ola scooters have caught fire in recent months, as a result of which the company has had to recall several vehicles. One, however, wonders how this casual behaviour will help in tackling such a dangerous matter.
Electric vehicle fires are new to India but have been happening around the world. Tesla, the largest EV company globally in terms of sales has been facing fire incidents in its cars for a while now. Hyundai, Mercedes, and General Motors too have had to recall thousands of vehicles following these accidents. Lithium-ion batteries also make EV fires incredibly challenging to put out, heightening the risk for drivers. “These fires burn hotter, burn longer and take more water,” Emma Sutcliffe, project director at EV Fire Safe told CNBC recently.
Scarce charging infrastructure
India has over one million electric vehicles, but only about 2,000 public charging stations for them to use. A robust public charging ecosystem is imperative to improve the penetration of four-wheelers – which currently constitute only 3% of the total EV sales (FY22).
Unlike two-wheelers, electric cars cannot be easily charged at home by their owners necessitating the need to have more public charging points. Additionally, it will go a long way towards easing a driver’s range anxiety. A multitude of factors like weather conditions, battery type, and driving style determine how far an electric vehicle can go in a single charge, but the fear of “running out” before reaching one’s final destination is an issue that is becoming worrisome for EV owners across the world.
Batra observes that “charging infrastructure may not be a stumbling block for the EV shift in two-wheelers because of home and portable charging systems, but for a four-wheeler, it is critical to come up with these systems in commercial and residential public spaces to ease the range anxiety.”
Ratnesh Mishra, who works in the hospitality sector in central India says he has to think not twice but “10 times” before taking out his swanky Tata Nexon electric car for an inter-state travel owing to “very poor charging infrastructure”. The 24-year-old who lives in Bhopal adds that the city only has three or four chargers – and the state a meagre 10. This makes it difficult for him to plan long-distance road trips.
Charging infrastructure for four-wheelers requires a strong 7–10-kilowatt system, which naturally entails a lot of investment. Under the FAME scheme, Rs 1,000 crore (£104,426) was allocated for the expansion of the charging infrastructure to help out this under-developed network. Some key oil marketing companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and Indian Oil (IOCL) are also helping set up close to 20,000 EV charging stations across cities and highways in the next few years. But the question is – will it gain fruition in the short term? For NITI Aayog’s 2030 vision to be realised, the skewed ratio of India’s electric vehicles to its charging infrastructure will have to improve manifold.
Another uptake barrier that is slowing the pace of India’s EV transition is the long charging downtime duration. Although point charging has been the most common technique for electric vehicles, battery swapping has emerged as an alternative intervention that offers the potential to overcome this roadblock.
The Government of India recently announced a battery swapping policy as part of the Union Budget this year. Still, in its draft stage, the policy is pushing for exchanging discharged batteries for charged ones – a move it believes will offer three key advantages—time-saving, space-efficiency, and cost-effectiveness. According to the NITI Aayog, battery swapping de-links the vehicle and the battery and thereby leads to a reduction in the upfront cost of the vehicles.
Sumati Kohli of the International Council on Clean Transportation (ICCT) India says: “Battery swap stations for electric two-wheelers [which form the bulk of India’s total EVs] have relatively small spatial requirements, enabling ease of establishment in densely populated areas.”
More importantly, since electric vehicles with swappable batteries are sold without pre-fitted batteries, the consumer enjoys significant cost savings on the upfront purchase price. For electric two-wheelers, 26-38% of the purchase price can be defrayed by decoupling the battery pack from the vehicle, Kohli stresses.
The specific cause of fires in electric vehicles hasn’t yet been conclusively established, and the draft policy for battery swapping to tackle range anxiety and inadequate charging infrastructure is also in its nascent stage. As India’s EV story eagerly awaits a successful take-off, the coalition of interventions to confront these roadblocks will go a long way in helping India achieve its electric mobility dream.
This story is the third of a multi-part series: ‘Inside India’s Booming Electric Vehicle Market’. Read the first part, Has India been a latecomer to the EV party?, and the second part, How far can electric vehicles go in solving India’s environmental problems?