Focus on transforming India into an EV manufacturing hub on lines of Detroit

The National Democratic Alliance (NDA) government should aim to develop India into a manufacturing centre for electric vehicles (EVs) and related components on the lines of the US automotive hub of Detroit, according to the Economic Survey 2019 presented on Thursday.

This would accelerate adoption of electric mobility in India and ensure the development of a proper ecosystem for such eco-friendly vehicles.

The Survey also takes note of the lack of charging infrastructure for EVs and the need to invest in battery technology because sales of EVs will follow once a robust network is built for charging them and their battery costs controlled.

The focus on EVs stems from the government’s focus on curbing rampant pollution in the major cities and to cut oil imports. India is the world’s third-largest oil importer and home to some of the world’s most polluted cities.

According to the Survey, road transport contributes around 90% of the total emissions in the transport sector in India. Given the large dependence on oil imports, it is imperative to shift the focus to alternative fuels to support mobility in a sustainable manner.

“Appropriate policy measures are needed to lower the overall lifetime ownership costs of EVs and make them an attractive alternative to conventional vehicles for all consumers” the Survey noted.

The Union government has already sanctioned ₹10,000 crore to incentivize EV manufacturing through the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

In the Economic Survey as well, the NDA government has underscored its intention to focus on setting up adequate charging infrastructure for promoting such vehicles. The lack of charging stations is one of the key factors behind the marginal sales of EVs in India.

The Survey also highlights the need to set up charging infrastructure on roads and highways across the length and breadth of the country, saying this would help drive sales of EVs. The market share of such vehicles usually increases with the improved availability of charging infrastructure.

“Another major impediment is that of the time taken for completely charging EVs, compared to conventional vehicles. Even fast chargers can take around half an hour to charge an electric car while slow chargers could take even 8 hours,” the Survey said.

In May, the NITI Aayog and some other ministries started working on a proposal to ban two-wheelers with less than 150cc internal combustion engines, and three-wheelers by 2025 and 2023, respectively. The auto industry has been given two to four weeks to come up with a plan for a transition.

“The market share of electric cars is around 2% in China while it is around 39% in Norway, whereas the Indian market share of electric cars is a meagre 0.06%. Electric two-wheelers comprise a major part of EV sales, with sales of around 54,800 in 2018, and electrification of two-wheelers and buses has picked up pace in recent years,” the Survey added.

One of the biggest hurdles for adoption of electric mobility has also been the high cost of lithium-ion batteries and sourcing of lithium and cobalt.

Citing the example of China, the Survey said India needs to invest in lithium-ion battery technology to rein in the cost of electric vehicles. “Since the battery is the heart of any EV, development of appropriate battery technologies that can function efficiently in the high temperature conditions in India need to be given utmost importance,” the Survey noted