How Well Does the electric Vehicles Hold the future for Indian Economy

future of ev in india, ev in india, ev in indian economy, future of ev

Electric vehicles or EVs are transforming the world of transportation. Over the previous five years, the global EV market has grown at a pace of 43% per year on average. EVs accounted for around 2.6% of the worldwide vehicle market in 2019.

This is likely to skyrocket during the next decade.

Many COVID-19 recovery plans in nations like China, Germany, France, and Canada and the recently announced plan in the United States place a strong emphasis on EVs. According to Deloitte, yearly new EV sales will exceed USD 30 million by 2030.

India began its EV drive in 2013 with the National Electric Mobility Mission Plan (NEMMP) 2020. 8 years later, we have a nominal 0.79% EV penetration rate. According to a FADA survey, just 500 of India’s roughly 26,500 car dealerships sell electric automobiles.

In 2015, the government established FAME India to encourage environmentally efficient automobiles. The government is encouraging public and shared transportation electrification in its second phase, FAME 2, by subsidizing electric vehicles such as buses, passenger cars, and two-wheelers. The Department of Heavy Industries (DHI) has also announced several incentives to encourage electric cars.

future of ev in india, ev in india, ev in indian economy, future of ev

India lags behind significant markets like China, Europe, and the United States. In 2019, the worldwide EV stock reached 7.2 million units, with China accounting for 47%, Europe accounting for 25%, and the United States accounting for 21%. Only 600,000 copies were sold throughout the world, with only 170,000 sold in India.

However, EVs are gaining popularity in India. The electrification of road transportation has several functions. It is a green industrial policy that promotes economic recovery following a pandemic. Its goal is to minimize oil imports while increasing energy security. It is also critical to lowering air pollution and combating climate change.

It is a critical component of global net-zero objectives and an effective carbon-emission-reduction strategy, second only to greening power sectors.

“In India, over 97.5% of all the electric vehicles sold were two-wheelers, showing a particularly robust market in the two and three wheeler category.”

These goals are prominent in India’s drive to electrify transportation.

While EVs accounted for less than 0.5% of Indian automobile sales in 2019, the volume of a stock in the country is not an accurate measure of the country’s preparedness or enthusiasm. India sold around 69,000 units in 2017–2018 and approximately 143,000 units in 2018–2019. This shows a rapid growth rate, which is expected to accelerate in the following years. Almost 97.5% of all-electric vehicles sold in India were two-wheelers, offering a particularly robust demand for two- and three-wheelers.

future of ev in india, ev in india, ev in indian economy, future of ev
ImageCredit: mahindraelectric

Since the epidemic outbreak, the federal and state governments have implemented several supportive initiatives. The government, for example, has supported the deployment of e-buses and charging stations on a national scale. Telangana has exempted the first 200,000 two-wheeler EVs from road tax and registration costs. At the same time, Gujarat will provide government discounts to students purchasing two-wheeler EVs and rickshaw drivers and self-employed persons purchasing three-wheeler EVs. Delhi will also establish a progressive EV policy in 2020, with buying incentives depending on battery range and category.

These efforts are encouraging, but they require further simplification and coordination across policies from the federal government, state governments, and municipal (city) governments.

A suitable policy framework, as well as incentives, are required.

The government cannot rely exclusively on subsidies to genuinely enhance EV adoption and India’s position as a value chain member; it must also encourage more private investment. The good news is that there are signs of increased investment interest. Tesla announced the establishment of a facility in Karnataka, southwest India, only last year, and venture capitalists are set to spend more than USD 300 million in EV enterprises around the nation. However, this pales in contrast to worldwide EV investment.

Before the epidemic, known carmaker investment plans included at least USD 300 billion for EV investment over 5 to 10 years; moreover, 45% of the budget was allocated to activities in China, with most of the remaining funds allocated to Germany, the United States, South Korea, Japan, and France. India must develop the appropriate legislative framework and incentives to become a significant EV investment destination.

The second phase of FAME was a significant improvement to USD 1.4 billion in EV subsidies, with around 85% targeted for purchase subsidies and 10% for charging infrastructure. It began in 2019 and was scheduled to finish in 2022.

Accelerating local manufacturing was a vital component of this period. However, after two years, the effects have not been as expected. By early 2021, just around 10% of the Phase 2 EV deployment objective has been met.

“The government cannot rely exclusively on subsidies to genuinely enhance EV adoption and India’s position as a value chain member; it will also need to attract more private investment to the nation.”

According to the Society of Manufacturers of Electric Vehicles, this is due to the slower evolution of the domestic component manufacturing business and governmental requirements for fiscal incentives that keep EV costs excessively high. Furthermore, an unclear medium-term regulatory environment and a shortage of accessible credit discourage private investment.

As a result, the Indian EV revolution is still in its early stages. Policy emphasis has shifted to deployment and investment above local manufacturing requirements. In addition, the government developed a production-linked incentive system to encourage firms to begin producing EV batteries in the country.

An updated examination of investor, trade, and skill gap restrictions is required to modify the regulatory environment to encourage deployment and value chain investment. This approach might also be an excellent opportunity to begin policy coordination and design for end-of-life EVs, particularly with relation to urban mining and EV battery repurposing and recycling.

India has the potential to play a significant role in EV battery recycling.

future of ev in india, ev in india, ev in indian economy, future of ev
ImageCredit: evduniya

India is likewise unprepared in terms of end-of-life EVs. Just a few prominent players are.

E-waste accounts for over 70% of hazardous trash in worldwide landfills. In 2019, only 94,000 metric tonnes of lithium-ion batteries (LIBs) were recycled globally, most of which came from portable consumer gadgets. However, EV batteries will begin to overwhelm the end-of-life battery market over the next decade. According to the World Economic Forum, to recycle half of those EV batteries by 2030, recycling capacity would need to increase by a factor of 25.

However, the EV battery recycling sector is now suffering on several levels, ranging from profitability due to relatively low primary raw material costs to changing chemical compositions of EV batteries and inefficiencies in the recycling process. While China has explicit criteria for removing, discharging, dismantling, and storing spent EV lithium-ion batteries, the other leading players—the United States, Europe, and Japan—are still struggling to develop a legislative framework that allows lucrative recycling.

“With the correct incentives and legislative framework, India may overcome some of the challenges to EV battery recycling and become a key participant within the next decade.”
Reassuringly, the number of patents in EV battery recycling has skyrocketed in the previous decade, indicating the innovation potential. The potential is enormous, with the worldwide market predicted to grow to 705,000 end-of-life LIBs by 2025 and 9 million by 2040, with EV LIBs accounting for the majority of these.

India, like China, has a significant EV growth market and might thus rely on a consistent supply of end-of-life batteries in the future. Because, unlike China, India lacks global supply networks for raw minerals such as lithium and cobalt, urban mining and recycling are also required for India to become a large-scale EV battery producer.

The initial steps of EV LIB recycling are likewise scarcely mechanized, necessitating a significant amount of physical labor. India may also have a competitive advantage over other vital competitors due to its immense population and lower labor costs than Western countries.

The Indian government has its work cut out for it.

future of ev in india, ev in india, ev in indian economy, future of ev
ImageCredit: inc42

However, the success of circular economy initiatives is not assured. China’s regulatory evolution took a decade to become the market leader in LIB recycling.

The Indian government has a lot of work to do, from improving battery collection, transport, and storage regulations to coordinating battery handling training programs; from developing labeling and traceability requirements to clarifying contractual and ownership models; and from improving extended producer responsibility to facilitating huddle and joint ventures that can drive efficiencies and reduction in cost.

Electric vehicles will alter global road transportation, and India will be a massive market for deployment. It is natural and vital for India to strive to become a manufacturing powerhouse capable of contributing to EV value chains and battery recycling.

However, to do so, the government must first identify the hurdles and then alter its legislative and institutional frameworks to accommodate those barriers and attract more private investment on a bigger scale.

Budget 2022: What Does the Future Hold for India’s EV Market?

future of ev in india, ev in india, ev in indian economy, future of ev

The electric car sector in India continues to grow. This year’s Union budget, delivered by Finance Minister Nirmala Sitharaman, has several intriguing ideas that would substantially boost the country’s electric vehicle segment.

Dinkar Agrawal, the co-founder of Oben Electric, said in a statement on Tuesday that the establishment of special mobility zones with zero fossil fuel policies will allow numerous manufacturers and OEMs (original equipment manufacturers) to grasp the chance to enhance the EV supply chain. “It’s fantastic to see the emphasis on clean and sustainable mobility, as well as activities aimed at growing the electric car category,” he added.

Similarly, Anirudh Ravi Narayanan, CEO of Coimbatore-based EV company Boom Motors, stated that the Finance Minister’s pledge to expand EV infrastructure and ecosystem initiatives was the critical announcement of interest for the EV business.

Due to space difficulties for putting up charging stations, the government has announced a battery swapping program to encourage the usage of electric vehicles in the country. “Given the limited area in urban areas for making charging stations, a battery swapping policy and interworking standards would be developed,” Sitharaman said in her Budget speech to the Lok Sabha.

She indicated that the private sector would be encouraged to develop long-term business models for battery or energy services, which will increase efficiency in the EV (electric vehicle) ecosystem.

In the next 5 years, the electric vehicle sector would see a large investment of Rs 94,000 Cr.

According to a joint analysis by Colliers India and Indospace, the electric vehicle industry is estimated to attract Rs 94,000 crore in investment over the next five years and provide business prospects in the real estate sector. According to the study ‘Electric Mobility in Full Gear,’ the electric vehicle (EV) business in India is still in its infancy. Still, it is expected to develop due to government initiatives and a shift toward acknowledging climate change.

“India is taking a step toward sustainability by pledging to reduce carbon emissions,” India vowed to achieve net-zero carbon emissions by 2070 at the recently ended CoP26 meeting.

The transportation industry in India is now the third-largest CO2 emitter. “As a result, there is a greater emphasis on EVs in India,” it stated.

Colliers estimates that over the next five years, the EV industry in India would witness investments totaling Rs 94,000 crore ($12.6 billion) across the entire chain. “There is plenty of potential for landlords throughout the range, from manufacturing to charging infrastructure,” the report stated.

A significant amount of land, around 1300 acres, would be required throughout India to establish a 110 GWh battery production capacity by 2030. According to the consultancy, India would require around 26,800 public charging stations by 2025, requiring approximately 13.5 million square feet of space.

future of ev in india, ev in india, ev in indian economy, future of ev
ImageCredit: forbes

“Landlords in congested areas might outsource dedicated charging stations to charging service providers. They can also engage in revenue-sharing agreements with charging service providers. There is also plenty of room for developers to build retail and entertainment facilities around charging stations, “According to the research.

Currently, 15 Indian states have either passed or notified EV policies, with six more in the planning stages. Demand incentives are emphasized in states like Delhi, Gujarat, Maharashtra, and Meghalaya. In contrast, manufacturer-based incentives are emphasized in southern states like Uttar Pradesh.

According to the expert, states with significant demand-side incentives, such as Maharashtra, Delhi, and Gujarat, should have provisions for setting up industrial parks/clusters for EV or production of ancillary components with plug-and-play.

Many developers have already begun incorporating charging stations for electric vehicles into their projects.

Kalpataru, situated in Mumbai, already offers EV-ready parking in its planned developments. Kalpataru is developing new technologies that enable efficient remote parental surveillance and control to provide parents peace of mind and security for their very young children who are out playing independently.

Karan Kapoor

Karan Kapoor

62 articles published

Karan Kapoor is a motorhead and a big time muscle car enthusiast. His Body functions on a 7L V8, and he trains it to become a W16. He tends to stay in the Fast Lane and sometimes is a little furious about it too. From Maruti to Ferrari, his love of cars is not hindered by price but specs. For 2 Wheels he loves choppers and cafe riders over sports bikes His love for travel is also paved by the roads, and long journeys that he finds more intriguing than the destination. His love for speed is halted by the legality of NOS in India. Give him 2 Wheels or 4. He knows how to handle 'em all.