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INDIA ON THE CUSP OF EV REVOLUTION

INDIA ON THE CUSP OF EV REVOLUTION

By TA News Bureau:

An electric vehicle revolution is waiting to happen in India, which has already announced phasing out of petrol and diesel cars by 2031. But there are many issues that need to be addressed before that can happen. In this interview Puneet Gupta, Associate Director, Automotive Forecasting at IHS Markit, explains the challenges in introducing EVs. Gupta, who manages the Vehicle Sales Forecast for India and the Asean markets and leads a team based in Bangkok, explains in detail the Indian EV scenario. He says that watching the excitement of OEMs, he is confident that India may have frugal electric technology in the next decade for indigenous cars which may provide enormous value to the consumer

Besides Mahindra & Mahindra, how many Indian companies are currently getting ready for the EV ‘revolution’ following government plans of scrapping petrol and diesel cars by 2031?

We see India as a twin nation – urban India and rural India. In an optimistic scenario we feel that urban India may go all electric in the long term. We need to understand that EV is the best alternative to cut the oil bill and reduce rising pollution. We feel the government will come up with a mandate on EV this year and every manufacturer will have to have an EV in its portfolio. We feel the government may take a softer approach and start with around 3% mandatory EV from 2020/21. Players like Mahindra & Mahindra and Tata Motors have already taken a lead and we can expect a complete portfolio of cars in EV range from a few more manufacturers. We are already hearing that Tata is working on C segment sedan and Ford is working on a collaborative programme with Mahindra for a big size SUV. Mahindra is also developing a small electric SUV. Maruti Suzuki is working on a small electric car. These are some key developments. We may hear some joint ventures with Chinese companies, which are already much ahead of India in the development of electric cars.

Do you think the government target year to phase out petrol and diesel engine is practicable?

India is not an isolated market from the world but we do feel it’s an ambitious target. We hope that we will have an electric revolution in our country. However, today it’s still early to say how the technology evolves in India. But seeing the proactive approach and vision of Prime Minister Narendra Modi, we can be confident about EV development getting on the fast track. EV penetration may grow going forward. This may be because of enforcement or interest/need of the Indian consumers. The enforcement can be due to rising traffic or rising pollution in the urban centres and the need may be due to cheaper running cost. Seeing the excitement of OEMs in India, we can be confident that we may have frugal electric technology in the next decade in Indian cars which may provide enormous value to the consumer. If the Indian consumers find the electric cars easy on their pocket in terms of fuel efficiency/cost, then we may see a complete shift of consumers to electric cars. Also in the past, we have seen that the Indian consumers were quite quick to react to the market price dynamics, for example when diesel fuel prices went down due to fuel subsidy. We have then seen sales of diesel cars going up and reaching 60% penetration. This is in spite of the fact that diesel cars were around Rs 100,000 more expensive than the petrol variants.

Do you think there will be a surge in foreign collaborations to produce, powertrains, specialty tyres and joint ventures in EVs in the light of government’s proposed electrification programmed?

Yes, collaboration will be the key. A lot of investment is needed and that too in a short span of time. This makes a win-win scenario for everybody if OEMs work together and create a technology which is more efficient and consumers can use a common charging infrastructure. It is critical for the success of EVs that we have a lot of standardization in cars, infra etc. Also markets like China have taken a big leap and we can benefit by collaborating with their local players.

What are the priorities in terms of taxes, subsidies and infrastructure to hasten the electrification programme?

I think we should not expect a lot from the Indian government in term of subsidy on electric vehicles. The priorities of the government will always be health, education, infra etc . But we strongly feel that the government has created a big gap between tax structure of Electric cars and diesel/petrol cars.

What are the bottlenecks that you see coming in the way of the smooth transition to electrification in the Indian EV sector?

The challenge to 100% EV penetration can be many. We feel that public charging infra may not be sufficient so consumers have to buy their own fast charging equipment. Please note that the Indian customer is very price sensitive so any additional cost where consumers have to invest like cost of charging/fast charging equipment can be a big deterrent to EV purchase decision. Secondly, in India the yearly running of vehicle is very less; may be around 8k in gasoline cars annually. Life of battery may be 3-4 years which would mean the consumer has to shell out more money per km which can be an expensive proposition. Also, in India a majority of consumers are happy with low performance/low speed vehicles as focus is always to get high mileage car rather than speed so even lower IC engine may continue and may be cheaper in price. Also, EVs are still not considered as a status/pride to buy in India so this may not encourage rich people to go for EV. Another challenge is that there are no proper parking places even in residential areas so charging at home is also a difficult option in metros. Also, players like Suzuki, which is a leader in India, don’t have access to good R&D in electric cars. So they may be more interested in driving gasoline cars and may always influence government policies. Lower oil prices in the long term may be a deterrent to growth of EV in India.

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