The Centre should encourage state transport units to accommodate more electric vehicles in their respective fleets and promote hybrid vehicles besides electric ones to boost domestic production of critical components like lithium batteries, electric motors and others, said Kenichi Ayukawa, managing director, Maruti Suzuki India Ltd.
The Ministry of Heavy Industries has been trying to push automakers to invest in domestic manufacturing of electric vehicles and spare parts to avail the subsidy under the Faster Adoption and Manufacturing of Electric and Hybrid vehicles. In March, the government earmarked a ₹10,000-crore subsidy for promoting electric mobility in India. The ministry has now adopted a time bound approach to gradually increase domestic production of electric vehicles and related parts.
According to Ayukawa, the largest factor which can help localization is volumes. Generating economies of scale is more important than the subsidy itself.
“In cars, the components like battery, motor, inverter etc. are common to electric vehicles, strong hybrid electric vehicles and plug-in hybrid electric vehicles. If we also encourage hybrid vehicles then the volume of these core components goes up," said Ayukawa while delivering his speech at the Electric vehicle Localisation Conference organised by Automotive Component Manufacturers Association of India.
The central government initially was not keen on offering subsides to hybrid vehicles but intense lobbying by Japanese manufacturers convinced the government to offer incentives to strong hybrid vehicles.
“We are looking at a market for electric vehicles worth are ₹50,000 crore in the next three years. At a macro level, we should look at how India can be a net exporter of components, said A R Sihag, secretary, department of heavy industries.
As the union government has been pushing for more localisation of spare parts, ACMA organised this one day conference to showcase the investment made by component manufacturing companies in the electric vehicle space.
The Centre has been urging manufacturers to invest in setting up manufacturing capacities of electric vehicles in the domestic market.
“From the various notifications of the government, it is clear that the policy direction is progressively towards Make in India and minimum imports. Our cars are almost completely localized, the residual imports are mostly electrical parts and so for further localization of our cars is very important," added Ayukawa.
Most start-ups and component manufacturers investing in developing products and related items for electric vehicles are facing challenges from rapid change in technology in this segment which call for more funds for investments in research and development.