Will electric vehicles finally take off in India?


Ashish K Mishra, Forbes India
Mar 18, 2013 at 11:47am IST

Over the past five years, the clamour about electric vehicles (EVs) becoming a feasible transport option has become loud. "It has all come together", is the refrain. "It" means four things: The battery has evolved to a point where it is cheap and reliable; governments recognise the need to move away from oil and are willing to provide incentives for people to buy EVs; consumers want vehicles that are light on their pocket; and carmakers realise that the future lies in going electric and not incremental developments to the internal combustion engine.

So, it should be no surprise that in the past few months electric mobility has occupied some mind space in India. In January, the ministry of heavy industries unveiled its ambitious Draft Action Plan for Electric Mobility 2020, which targets almost six to seven million vehicles on the road by 2020. This is unlikely to happen if the government does not do anything to help the EV ecosystem develop.

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The draft focuses on the vehicle. It promises incentives to customers, vehicle manufacturers and research and development organisations. This draft was followed quickly by an announcement from Mahindra Reva that its second-generation electric car e2o is ready to be rolled out of its spanking new 35,000-capacity-per-year plant in Bangalore. "The technology is much more ready today. And government policy is changing. For the first time, all of this is coming together," said Chetan Maini, chief strategy officer, Mahindra Reva.

Will electric vehicles finally take off in India?

Over the past five years, the clamour about electric vehicles (EVs) becoming a feasible transport option has become loud.

Maini is not alone in his thinking. Carlos Ghosn, CEO of Renault-Nissan and the biggest advocate of EVs, has repeatedly said such vehicles will change the face of mobility. The company has invested almost $5 billion in its EV programme and the Nissan Leaf was launched with much fanfare in 2011. It is also widely believed that Chevrolet Volt, another EV, is the best thing to have happened at General Motors in the past decade.

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It is another matter that none of these claims have shown the desired results. Nissan sold 9,819 units of Leaf in the US in 2012, against Ghosn's expectation of 20,000 units. Volt sales in 2012 stood at 23,461 units, compared to 7,671 units in 2011. But, despite the jump in sales, it remains one of Chevrolet's lowest selling cars.

Maini says one should look at the brighter side. For instance, Nissan sold more EVs in Norway than in the US. Although the country's population is almost a sixth of the US, 5.2 per cent of all cars sold (about 10,000 units) in Norway in 2012 were EVs. Why? The Norwegian government provided support such as zero import duty on EVs, assistance for charging infrastructure and permission for EVs to use the bus lane during rush traffic.

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So, how is it going to work out in India? What is the government doing to make EVs a reality?

Ambuj Sharma, joint secretary at the ministry of heavy industries, has been involved in the EV vision 2020 document for the past two years, coordinating with almost 10 ministries and 30 vehicle manufacturers. He believes EVs are far too big a technology leap in the automotive business for the Indian government to not have a stake in it. Plus, he is worried about rising oil imports and increasing urban pollution. "We are importing nearly $180 billion worth of crude oil. This is going to increase every year depending on our GDP and number of cars," he says.

If the idea is to reduce the fuel import bill, then EVs aren't going to help much. They are at least 50 per cent more expensive and most of that is because of the battery. India doesn't make these batteries and they will have to be imported. So, instead of paying for oil, dollars will be shelled out for batteries.

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