Electric vehicle missing spark

Home to one of the largest automobile markets in the world, India represents an enormous opportunity for electric vehicle (EV). Depleting oil reserves, escalating fuel prices and threatening air pollution levels have compelled governments across the globe to look at EVs as a long-term solution for a sustainable transport system. In this issue of Kolkata on WHEELS, we will tell you about the evolution of EVs, the state of the global EV market, the need for EV adoption in India, and most importantly, the cost of running an EV.

Evolution of Electric Vehicles: From 1837 to the Present
As the nomenclature suggests, electric vehicles (EVs) operate at least partially on electricity. As oppose to running conventionally on fossil fuel-driven internal combustion engines, these vehicles are powered by electric motors for propulsion. The electric motor in turn derives energy from rechargeable batteries, solar panels or fuel cells.

It might fascinate you to know that electric cars have been around for more than a century. While flipping through the pages of historical data, it surfaced that the first known electric car dates back to 1837 and was built in Aberdeen, Scotland. The vehicle, weighing 7 tons, could carry a load of 6 tons at a speed of around 4 miles per hour over a distance of 1.5 miles and was exhibited at the Royal Scottish Society of Arts Exhibition way back in 1841.

It is interesting to note that rechargeable batteries were invented in 1859 and other innovations centering around electric vehicles slowly, but steadily, started gathering steam. Back in the end of 19th century, battery-powered electric cabs started operating on the thoroughfares of New York and London.


In London, for instance, Walter C. Bersey built a fleet of electric taxis, called ‘hummingbirds’, which became operational in 1897. Around the same time, the New York-based Samuel’s Electric Carriage and Wagon Company designed around 62 electric cabs.

Despite its early popularity, lack of proper charging infrastructure and simultaneous improvements in road infrastructure resulted in the dwindling popularity of EVs globally in the first half of the 20th century. At the same time, with the advancements of the automobile industry, car owners were increasingly looking for vehicles with greater travelling range and higher speed than electric cars could offer at that point in time.

However, by the 1960s, EVs once again began to generate interest among many leading auto manufacturers. In 1959, the American Motor Corporation entered into a joint research agreement with Sonotone Corporation to develop an electric car powered by a ‘self-charging’ battery.

In the decades that followed, a number of electric car concepts were showcased in various motor shows around the globe, including the Scottish Aviation Scamp (1965), the Electrovair (1966) and the Electron (1977). In 2004, Elon Musk – founded Tesla Motors and started working on the Tesla Roadster which was the first highway-legal all-electric car running on lithium-ion batteries. Over the next decade, several automakers  have joined the EV bandwagon with Tesla, Nissan, Renault, Chevrolet, Ford, Volvo and Toyota leading the race.

What Is An Electric Vehicle?
Positioned as the future of mobility, EVs come equipped with onboard batteries which can be charged using electricity. These batteries store and use the energy required to power a set of electric motors which propels the car forward. When fully charged, a standard electric vehicle is capable of covering a distance between 140 km to 170 km before it needs to be recharged.

An important feature of electric vehicles is that it can be plugged into off-board power sources for charging. Essentially, there are two types of EVs: all-electric vehicles (AEVs) and plug-in hybrid electric vehicles (PHEVs). AEVs can be further classified into battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs). Both BEVs and FCEVs are charged from the electrical grid and are usually capable of generating electricity through regenerative braking.

Because these types of vehicles don’t consume fossil fuels such as petroleum, they do not produce any tailpipe emissions. On the other hand, PHEVs (plug-in hybrid electric vehicles) are fuelled primarily by petrol and only supplemented with battery and motor for better efficiency. In PHEVs a battery which can be plugged into the electric grid for charging is used to power an electric motor, while petrol drives the internal combustion engine. Many a times, the PHEVs utilise electricity for shorter ranges (around 9.6 to 64.3 km). Once the battery is depleted, they switch to the internal combustion engine for greater speed and range.

There are also the conventional hybrids such as Toyota Prius, which is fitted with a petrol tank and also has a battery that gets charged every time the vehicle brakes. However, this category of vehicles cannot be plugged-in to recharge its battery.

The Current State of the Global Electric Vehicle Market
Several governments across the world are actively looking for ways to benefit from the ongoing global EV revolution. Thanks to the push from local governments and corporate, the sector is expected to grow at a CAGR of 28 per cent between 2018 and 2026.

Here are some statistics that highlight the sector’s rising potential:
(sourced from reports published by various automotive bodies)

  • New registrations of electric cars clocked a record high in 2016, with over 7.5 lakh sales worldwide, according to the International Energy Agency (IEA).
  • Norway currently boasts the most successful deployment of electric vehicles globally with a staggering 29 per cent market share; it is followed by the Netherlands at 6.4 per cent and Sweden with 3.4 per cent. Recently, Norway grabbed the headlines for setting a new world record, with electric and hybrid vehicles accounting for nearly 52 per cent of its total car sales in 2017 against 40 per cent in 2016.

 

  • Trailing Norway on that list are China, France and the United Kingdom, all of whom have electric car market shares close to 1.5 per cent each.
  • Interestingly, in the year 2016, China accounted for nearly 40 per cent of the world’s total electric car sales. In fact, if reports are anything to go by, Chinese OEMs produced 43 per cent of the 8.73 lakh EVs built worldwide in 2016 catapulting them in number one position in the electric mobility race.

In line with this growth, the market is expected to have more than 10.8 million EVs by 2026, as per a survey by BIS Research. Across the globe, some of the key players are Tesla Inc. (U.S.), Mitsubishi Motors Corporation (Japan), BYD Company Limited (China), Nissan Motor Corporation (Japan), and Volkswagen AG (Germany) among others.

Why is EV Adoption Crucial for India?
Home to one of the largest automobile markets in the world, India currently contributes a major percentage of the global car sales. In light of the growing pollution problem that plagues our country, the government has been actively promoting alternative mobility solutions over the last few years, chief among which are the adaoption of EVs. Since EVs are powered by electricity as oppose to fossil fuels, they are relatively emission-free and hold the key to India’s ever increasing air pollution issue.

Along those lines, the government unveiled the “National Electric Mobility Mission Plan (NEMMP) 2020” in 2013 under which it has rolled out a number of initiatives and programmes.

In January 2017, the government said that it would bear up to 60 per cent of the R&D expenditure for developing the indigenous low-cost electric technology.

According to a report by Bloomberg New Energy Finance (BNEF), EVs will make up only 7 per cent of annual vehicle sales in India by 2030. Sales will gather pace after this and reach 27 per cent of annual vehicle sales by 2040, by which time 13 per cent of passenger vehicles in the country will be EVs. In contrast, the BNEF ‘Outlook for EVs 2018’ sees EVs constituting 41per cent of annual vehicle sales in China by 2030.

The government has already floated two global tenders for the procurement of up to 20,000 EVs. They are now planning to extend financial support up to USD 1.3 billion (INR 8,730 crore) under the second phase of FAME India.

NITI Aayog has created a special team to come up with recommendations for the Union Government in an effort to make the transition to electric vehicles more seamless. In line with the central government’s efforts, a number of state governments have unveiled or are in the process of launching dedicated policies on EVs as well.

According to reports, in September 2017, Karnataka became the first Indian state to roll out its Electric Vehicle and Energy Storage Policy. Similarly, in October, the Telangana government prepared a draft policy on electric vehicles, with a focus on benefits for EV manufacturers.

Ranking of states according to EV sales in FY 2016-17
1. Gujarat – 4,330 units
2. West Bengal – 2,846 units
3. UP – 2,467 units
4. Rajasthan – 2,388 units
5. Maharashtra – 1,926 units
[92% of these figures are made up of two-wheeler EV sales while four-wheeler sales account for the remaining 8%]

Electric Vehicles: Cheaper to Operate than Petrol Cars?
From a consumer’s point of view, electric cars are still an elusive option to a majority of car buyers. However, one thing that electric cars have going for them is the low running cost. Here we compare the running costs of an average petrol car with that of an electric car.

As clearly seen from the calculations, high petrol price leads to a higher running cost of Rs 331 per day for travelling a distance of 50 km, which is significantly higher than the meager Rs 29 per day for an electric car. The difference in cost further amplifies when computed on a monthly basis. Our calculations show that a person running the same distance in a petrol car will have to spend Rs 7248 extra, when compared to an electric car.

Having said that, one needs to bear in mind that the total expenditure on the electric vehicle should also take into account the replacement cycle of the battery, which in this particular case is five years. The price of a new lithium-ion battery, in the current situation, is slightly less than half of the price of the car itself. Also, the base slab of per unit cost of domestic electricity has been considered while arriving at the cost of running an electric vehicle.

Running Cost: Electric Vehicle vs Petrol Vehicle
The calculations have been made with an assumption that both cars- EV and petrol – travel 50 km a day for 24 days in a month (6 days a week).
Electric car
Full range: 140 km approximately
Total consumption of electricity in a full charge: 16.5 units
Electricity usage per kilometre: 16.5 / 140 km = 0.12 unit
Minimum cost of electricity in Kolkata (domestic): Rs 4.89 per unit
Total cost of running for 1 km: Rs 4.89 x 0.12 units = Rs 0.58
Total expenditure in a day: Rs 0.58 x 50 km = Rs 29
Total expenditure in a month: Rs 29 x 24 days = Rs 696
Petrol Cars
Mileage assumed: 12 km per litre
Petrol price in Kolkata (on 16 July 2018): Rs 79.55 per litre
Average consumption (distance/mileage) 50 km/12 kmpl = 4.16 liters per day
Total expenditure in a day = Rs 79.55 x 4.16 litre = Rs 331
Total expenditure in a month: Rs 331 x 24 days = Rs 7944
Difference in running cost of both cars= Rs 7944 – Rs 696 = Rs 7248

What is Slowing Down EV Penetration in India?
Customer Demand: Creating a pull among customers by creating an economical cost proposition will be crucial in encouraging customers to invest in EVs.
Technology: As a large component of the overall EV costs, high battery prices impact manufacturing and sales. Improved technology can reduce battery costs, increase efficiency, and improve driving range, making EVs more accessible and attractive to potential customers.


Regulations and Incentives: Many countries have promoted e-mobility through a range of incentives, but these alone did not drive EV penetration. A supportive ecosystem that also establishes strict regulations on carbon emissions and regulations driven by strategic intent (for example: reduce current account deficit and geographic dependence driven by crude oil) indirectly prompts the higher adoption of EVs.
Infrastructure: Easy and affordable access to charging infrastructure—both standard AC charging as well as rapid DC charging— is key to meeting customer needs.

The Way Forward for E-Mobility in India
Besides the end-users or customers, three key stakeholders could play an integral role in India’s transition towards EVs.
The Automotive Industry: By changing the product and component mix bringing EV components and vehicles to life, improving the performance of batteries and electric vehicles and building scale, the industry can drive the EV transition in India.


The Charging Infrastructure and Power Companies: By laying down a foundation of support, innovating on business models (for example: leasing of batteries, swapping infrastructure, deploying fast chargers), making the economics of (fast) charging infrastructure work, and providing a stable power supply and grid stability, companies can enable easy and rapid charging and drive EV adoption.
The Government: By defining the regulations on emissions and fuel efficiency, clarifying aspirations, and exploring incentives and subsidies, it can support EV adoption and focus on developing a supportive ecosystem.
E-mobility has arrived. The automotive industry could benefit by viewing it not as a threat, but as an opportunity. An action-oriented perspective, acknowledging the shift, exploring expansion into uncharted territory would help industry players be a part of the success story of e-mobility in India.

Government plans new policy to promote electric vehicles
As per a published report, the government is presently preparing a fresh policy for promotion of electric vehicles, which will be rolled out initially on a smaller scale to ensure a smoother transition and better cooperation from the automobile sector.

The policy, advocating minimal subsidies, is likely to be announced at a global e-mobility summit to be inaugurated by Prime Minister Narendra Modi on September 7. According to the fresh proposal, the government will first begin creating favourable ecosystems in nine polluted cities with a population of over four million, and gradually move to cities with populations of one million-plus, the official said. Also, busy corridors such as Mumbai-Pune and Delhi-Chandigarh are being identified.

The government could also consider throwing a 100-day global challenge to automakers for setting up manufacturing facilities for e-vehicles, batteries and charging infrastructure in India, as reported by Economic Times in September last year. In February this year, Union transport minister Nitin Gadkari had announced that the government has dropped plans to prepare a separate policy for electric mobility.

“However, a new policy to create favourable ecosystems for the transition to electric vehicles is silently being worked upon. The government has already begun consultations with industry bodies, including the Confederation of Indian Industries, FICCI and automakers on five aspects,” the official said. These include challenges and support required for electric vehicles manufacturing, battery manufacturing, setting up charging infrastructure, promoting electric vehicles in the commercial fleet and the role of renewable energy in electric mobility.

SMEV moots efficiency linked subsidy for Electric Vehicles
“There is a shift in the government direction. Rather than spreading it to a pan-India basis, the government now wants to concentrate on creating pilot projects in populated and polluted cities that have a large vehicle base for an easy transition. Also, the programme needs to give time to automakers,” said a source privy to the development. The timelines and the roadmap for the policy are being identified but so far the aim remains to shift one-third of the petrol and diesel vehicles to the electric fleet by 2030.

The Union cabinet is also soon expected to take a call on the 8,730-crore second phase of Faster Adoption And Manufacturing of (Hybrid &) Electric Vehicles in India (Fame India) scheme that proposes fiscal and non-fiscal incentives to electric vehicle firms for five years. The power ministry is close to finalising a policy for electric vehicles charging infrastructure that proposes granting subsidies to PSUs for setting up a basic charging station network in big cities and highways for gaining momentum in electric vehicle sales.

Niti Ayog, which is coordinating with various ministries, state governments and stakeholders for the e-mobility policy, will also be seeking comments from the department of heavy industries, the finance ministry, the department of science and technology, the ministry of road transport and highways and the ministry of urban development for the progress.

We understand then that electronic vehicles are clearly the way for the future. However, the government’s bold initiative to make 30% of the total cars on Indian roads to be e-vehicles by 2030 would need more than good intentions to be fulfilled. This target requires policymakers to get things rolling now not only in terms of regulations but also for infrastructural support, such as sufficient number of charging points and so on. However, the spark of hope in the overall picture right now is that the automobile manufacturers themselves are vouching for electronic vehicles to take off some time in the foreseeable future so that India may keep step with the rest of the world.

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