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After its success in solar power generation, India is making giant strides in EVs - a key element which is charging up its fight against climate change.
After sputtering for the past many years, India’s electric vehicle story is finally gaining some momentum. Despite the pandemic ravaging the first half of fiscal 2021, sale of electric two-wheelers surged by over 64 percent while for four wheelers it was over 68 percent. In contrast, conventional two wheelers saw a 13.2 percent decline and passenger vehicles with combustion engines registered an over 2 percent drop in sales.
The surge in demand is on the back of comprehensive incentives being offered under the umbrella FAME 2 scheme by the central government, which is topped up with more fiscal sweeteners from states. In addition to that, there has been an increase in the number of players in the market that has enhanced awareness among the consumers.
To begin with, most of the heavy lifting in the EV story, in the first few years, were done by some local manufacturers such as Hero Electric and Electrotherm. That was followed by the entry of a rash of startups like Ather Energy, Revolt Motors, Okinawa, Ampere and Avan motors that sought to exploit the first mover advantage.
Little is known about what strategy Tesla would adopt in India but it’s flamboyant owner Elon Musk had himself confirmed its entry into the market for this year. While its scale would most likely be small to begin with, its foray itself will energise the market.
Now, the entry of the big conventional brands who had been fence sitters all this while, has given the industry added momentum. In 2019, TVS group launched their first electric scooter iQube in Bangalore and followed it up with its entry in Delhi in 2020. Around the same time, Bajaj Auto too threw its hat in the ring with the Chetak with which it re-entered the scooter segment all over again.
In the four-wheeler space, the big mover was Tata’s Nexon EV with which it lowered the price barrier for the segment. For the first time, consumers had an electric car that was practical, offered a reasonable range and was affordable.
Nexon EV quickly became the biggest selling electric car in the country. The luxury car segment also saw action with the launch of Mercedes EQC and more recently Jaguar iPace. Audi, BMW and Volvo are also set to follow suit very soon. If not for the pandemic, they would have done so already.
These are all good omens. EVs are touted as a one-stop solution to many critical problems in India. The most direct and immediate impact is on curbing air pollution and reducing import of crude oil. India accounts for 29.4 per cent of the world's oil consumption and crude accounts for more than a quarter of overall imports. It spent over $ 100 billion on imports in fiscal 2020. It is also the world's third-largest emitter of carbon dioxide (CO2) at two million kilotons behind.
"India is moving ahead towards making electric vehicles. In due course of time we will be the number one electric vehicle (EV) maker in the world. All reputed brands are present in India," Road Transport and Highways minister Nitin Gadkari said recently. "We have tremendous capability for making green power. Within six months, I am confident we will be in position to make 100% lithium-ion battery in India. E mobility will be the important tool to develop pollution free transport."
If fiscal 2021 was a year where EVs weathered the storm better than expected, fiscal 2022 promises to be another seminal year for the segment. The entry of at least three new players--Ola, Tesla and Hero MotoCorp, could push the industry to an entirely different orbit.
By any stint of imagination, Ola, which made its name as a cab aggregator to rival Uber, has very ambitious plans. It is putting in Rs 2,400 crore to build a factory in Tamil Nadu that can produce 2 million electric scooters to begin with. It can be expanded to 10 million per annum. It bought Dutch startup Etergo last year and a significant part of the investment is into R&D. Its first offering will hit the roads by the middle of this year. Around the same time, it is also setting up 5,000 charging points across 100 cities in the country, which would ultimately be ramped up to 400 cities and 1 lakh points.
"Electric is the future of mobility and we are reimagining the entire user experience of owning an electric vehicle," said Bhavish Aggarwal, Chairman and Group CEO, Ola. "Our plans to build a comprehensive charging network is a key piece of this. By creating the world's largest and densest 2-wheeler charging network, we will dramatically accelerate the customer adoption of electric vehicles and rapidly move the industry to electric."
Little is known about what strategy Tesla would adopt in India but it’s flamboyant owner Elon Musk had himself confirmed its entry into the market for this year. The firm has already set up an office in Bangalore and begun recruiting personnel to lead specific teams. While its scale would most likely be small to begin with, its foray itself will energise the market.
So will the debut of the first EV from the stable of Hero MotoCorp, country’s largest two wheeler maker. The company is all about scale and its game plan for EVs will not be any different. Last year the company said it has fixed a capex target of Rs 10,000 crore in this decade, a significant portion of which would be in EVs. It has also tied up with Taiwanese electric two-wheeler maker Gogoro to develop EVs and battery swapping stations.
"The vision and commitment of Hero and Gogoro is perfectly aligned towards the common goal of accelerating the shift to smart, sustainable electric mobility in India, and around the world," said Pawan Munjal, chairman and managing director, Hero MotoCorp.
The policies are in place, the incumbents geared up and new entrants ready to pounce, the EV story in India looks finally ready for take-off.