Quite unexpectedly, India finds itself at the cusp of a once-in-a-lifetime opportunity, one that could have a profound influence on how we live. Under assault from dangerously high levels of pollution, our roads need a vehicular revolution on par with the one in the early 1990s that changed the way we communicate. With the advances in electric vehicle (EV) technology reaching a tipping point, there is a chance for India to leapfrog into an age of clean and efficient mobility.
The similarities with the early 1990s, before the onset of the telecom revolution, are uncanny. Then, as now, there was a huge pain point. Phones-starved Indian customers needed a reliable and on-demand communication network. The desperation of that generation, which had to wait years for the cranky telephone services provided by the state-sector monopoly, parallels our current need for a reasonably-priced, non-polluting vehicle. A favourable government dispensation which opened the sluices for a flood of private investment along with a global surge of technological innovation in cellular telephony were the other factors that spurred the telecom boom. Lured by the promise of a virgin market there was also a rush of multinationals including heavyweights like AT&T Inc., Deutsche Telekom AG and France Telecom (now Orange SA).
It isn’t very unlike what we are seeing today with leading EV manufacturers like Tesla Inc. and Toyota Motor Corp. evincing interest in the Indian market. Just this week, Mint broke the story about Nissan’s impending plans to bring its best-selling EV Leaf to India. Earlier, Suzuki Motor Corp., the parent of India’s largest car maker Maruti Suzuki India Ltd, announced that it would form a joint venture with two Japanese firms, Denso Corp. and Toshiba Corp., to produce lithium-ion batteries for electric vehicles in India.
This follows the introduction of the “Faster Adoption and Manufacturing of Hybrid and Electric Vehicles" or FAME scheme by the government in 2015 for promoting hybrid and electric vehicles. Further sweeteners have come from the transport ministry looking to hire electric cars for its officials and also pushing the same for public transportation.
All that is needed now is a few entrepreneurs with the audacity and the chutzpah to take advantage of the unfolding opportunity. Already there have been a few tentative explorers like Lithium and Ather Energy, but they have been too small and as yet too peripheral to make a difference. The real game changer will come when well-funded investors with technological backing from leaders in the business create a series of options for customers. As always happens in any new business, volumes and low prices will drive each other.
Currently it is the battery which at nearly 50% is the largest component in the cost of an electric vehicle. But that cost has been rapidly declining with advances in technology. Already the lithium ion batteries used by most EVs have dropped 73% in cost over the last six years, according to Bloomberg data.
India does not have any lithium deposits, with Chile, China, Argentina and Australia heading the list of countries with the largest lithium reserves in the world. While that does present an obstacle to setting up a viable battery manufacturing plant for EVs in the country, it also means that companies must look for other options to power such vehicles. And there are many such options in R&D labs across the world. For instance, Stanford University has created an aluminium battery that could slash charging times such that a car could be fully charged in minutes.
The global market for EVs is witnessing intensified competition. Volkswagen is launching a fully electric cross-over model in Shanghai next week to take on pacesetter Tesla which has partnered Panasonic in building the world’s first Gigafactory to manufacture lithium batteries for its range of electric vehicles and Powerwall systems. China, the world’s largest market for EVs, is pushing ahead in spreading the benefits from adopting EV technologies. Already a number of Chinese cities, including Shanghai and Beijing, have announced plans to transform their taxi fleets to electric vehicles.
With India’s passenger car ownership expected to grow manifold over the next 15 years, this is the moment to change the trajectory of how these vehicles will be powered. Will a new generation of Indian entrepreneurs seize the moment?
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
Click here to read more from The Corporate Outsider.