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Business News/ Industry / Manufacturing/  Delhi Auto Expo: India chases electric mobility dream

New Delhi: If you walked into the Delhi Auto Expo, you would be forgiven for thinking there’s a green vehicles revolution sweeping India.

One of the highlights of day two at the Expo on Thursday was electric and hybrid vehicles, with heavy industries minister Praful Patel inaugurating an Electric Mobility Theme Pavilion.

At least 15 Indian-made electric and hybrid products are on display, a radical shift from previous editions of the auto show.

Some of these cars are Maruti Suzuki India Ltd’s Swift RE, Toyota Kirloskar Motor Pvt. Ltd’s Camry Hybrid, Tata Motors Ltd’s Iris and Magic, TVS Motor Co. Ltd’s electric scooter and electric three-wheelers and Mahindra and Mahindra Ltd’s e2o and Maxximo.

But walk out of the Auto Expo and you would be lucky to spot an electric car for miles around in the national capital.

Ironically, that would include the Indian-made two-seater electric car Mahindra Reva—nearly unseen on Indian streets but increasingly ubiquitous in central London.

More and more policymakers see electric and hybrid vehicles as a necessity in Indian cities.

A report by Yale and Columbia universities last week called Delhi the world’s most polluted city. And things could get worse in the absence of green solutions: car penetration levels in India are only 1/15th those of the US. With the average disposable income rising steadily, automakers are expecting to penetrate deeper in the market.

“The debate on who pollutes more can go on and on. The point that we pollute is what matters," said Ambuj Sharma, additional secretary, department of heavy industries. Sharma is in charge of India’s ambitious plan of putting five-seven million electric vehicles (EVs) on the road by 2020, under a government-promoted National Electric Mobility Mission (NEMM) announced in 2010.

India is likely to see strong production growth across all segments by 2020, according to an Automotive Component Manufacturing Association of India-EY Vision 2020 study.

Passenger vehicle sales are projected to rise to five million units by 2015 and to more than nine million by 2020, from around two million now, driven by domestic demand and the export of small cars.

“We need to get prepared before the situation worsens," said Sharma.

Three years after the launch of NEMM, things have moved only at a snail’s pace, reflected in the fact that instead of implementing it across the nation, the government now wants to try it out in Delhi on a pilot basis.

“This (electric and hybrid vehicles) is a very important chapter for Indian auto industry. This is something which is new. We can be on par with global powers," said minister Patel at the Expo opening. “Apart from development of battery technology, I think we are capable of making what goes into an electric car."

According to Vinod Dasari, vice-president, Society of Indian Automobile Manufacturers (Siam) and managing director, Ashok Leyland Ltd, India’s energy consumption is likely to increase 70% in 10 years.

“The gap between domestic crude oil production and consumption is widening, leading to increase in imports and consequent impact on trade deficit," he said. “Therefore, it is imperative that industry get ready for alternative fuel technology."

Yet, experts believe Indians’ obsession with “value for money" may be a hindrance to the growth of the EV segment.

The biggest factor, according to Navin Munjal, is the initial purchase price driven by expensive batteries and motors used in EVs. EVs in India use lead asset batteries, imported from China, which are at least one-third of the cost of the vehicle. “India is not likely to start manufacturing batteries for EV in the near future if sales do not increase drastically, and expensive batteries contribute to the purchasing price; so it’s a vicious cycle," said Munjal, managing director of Hero Electric.

For EV sales to pick up in India, the government may need to provide incentives to customers.

“There has to be incentives for sales to pick up," said Sharma. “In India, value for money is tremendous, so if there is a major difference in the initial cost, any plans to increase sales of EVs will not work," he said.

EV sales in developed markets have been driven by green enthusiasts who would not mind paying a little bit more for something that would cause a lesser impact on the environment.

Besides, electric and hybrid cars are cheaper in the long run.

Nissan Motor Co. Ltd’s electric car, Leaf, is the largest selling car in the world to run on battery. It costs $33,000 (around 20 lakh), in the US and its battery cost is at least half the car’s price.

In India, the department of heavy industries has undertaken studies on how sales of hybrid cars had been incentivized around the world, including the US, the UK, China and Germany.

A major incentive to increase EV sales is subsidies, and there have been scattered attempts by the government on that front.

In the UK, the Toyota Prius—a hybrid of electricity and petrol—is one of the most common cars used by government departments, including senior ministers, members of parliament and civil servants.

India, too, planned to give tax-breaks to buyers of such vehicles, as reported by Mint in February 2012.

But the plan is yet to materialize.

To be sure, in 2010, the ministry of new and renewable energy (MNRE) did introduce a 95 crore subsidy for EV buyers. Under the scheme, subsidies of up to 20% was to be given on ex-factory prices of EVs, translating into discounts of 4,000 for low-speed, and 5,000 discount for high-speed electric two-wheelers; and nearly 1 lakh for electric cars.

EV sales jumped nearly 70% in the following year. But after the scheme expired, there was a major drop in sales to about 3,000 units a month with not a single electric car being sold in April and May in 2012.

According to Sohinder Gill, director (corporate affairs), Society of Manufacturers of Electric Vehicles, 45,000 EVs were sold in India during the last fiscal and another 25,000 are expected to be sold this fiscal. Around 85,000 units were sold in 2011-12.

Other hindrances may include safety as lithium-ion batteries are prone to catching fire, poor post-sale service and the absence of charging points.

“There needs to be major infrastructure development around electric cars, including grid patterns and fast charging points where batteries can be charged to up to 50% capacity," said Sharma.

There are major constraints on the supply side, too, as not enough firms are producing EVs in the 5-10 lakh bracket. “This year, Tata is likely to come out with an Indica EV, and Toyota’s Camry (launched in 2013) is way too expensive," Sharma said. The Camry costs between 25.27-29.75 lakh in India.

Anumita Roychowdhury, executive director at the Centre for Science and Environment, agrees EVs are still high cost and low volume. But “they represent the technology pathways to zero emissions, needed to cut excessively high local pollution in our very polluted cities. So far, limitations of battery technology in terms of range (how far the car can travel before the battery runs out of charge), battery replacement and its costs, battery composition and safe disposal, energy efficiency of battery, and infrastructure constraints have narrowed the scope of its application".

Battery technology needs to evolve more to improve energy, power density/efficiency, increased useful life, and use of environment-friendly substitutes for harmful lead and cadmium, Roychowdhury said, adding that the trajectory of zero-emissions vehicles will become clearer after some of these uncertainties are resolved.

“This is the policy challenge. EV regulations will have to address these barriers and the fiscal incentives that the government is crafting must be linked with performance benchmark of the EV technology."

Roychowdhury said it isn’t clear, even from global experience, how much mainstreaming of this technology is possible. “However, at the current stage of development and from environmental and health perspective, Indian cities can deploy them more creatively—by combining zero emissions technology and public transport strategy.

“There is growing interest in its potential application in short-range public transport and para-transit (auto-taxi) systems in polluted and congested parts of cities. Planned deployment of small/medium buses and autos on zero emissions in targeted areas of cities can be a win-win for our polluted cities. Public policy can play a role in this. Also, two-wheelers which are part of the Asian pollution dilemma can benefit from this technology."

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Updated: 07 Feb 2014, 01:24 AM IST
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