Goel’s first step into the EV world in 2009 was tentative and triggered out of curiosity. “I wasn’t sure. I had many questions. But I liked the idea.” Reva’s dinkiness, positive customer feedback, attractive government subsidy and cost economics pushed him to buy it for Rs 3.89 lakh, mostly to drive around in the neighbourhood. After a Maruti 800, Zen and Indica, Reva took some getting used to.
The two-door car had a cramped back seat, a “so-so” AC and an average speed of 40 km per hour that was good for city roads. The benefits far outweighed the downsides, says Goel. An automatic car with low maintenance cost (even after eight years) and a running cost of about 70 paise per km — as against over Rs 3 per km for an entry-level petrol car like Alto — made him an EV convert.
So much so that he brought home his second EV, the e2oPlus, for Rs 5.75 lakh early this year. It is a significant upgrade. With a lithiumion battery, it takes just five hours (instead of Reva’s nine) for a full recharge, has a range of 120 km (Reva’s is 80 km), averages 60 km per hour and has GPS, tubeless tyres and smartphone-controlled features.
Unlike Reva, which needed to be cooled after a drive before plugging in for a recharge, e2o has no such problems. “In driving comfort and performance, this is far better than the Spark. I use it every day to commute to my office, which is 12 km away. It costs me under 80 paise per km,” he says. EV buyers like Goel are a rarity in India even today. With limited options — just one electric car maker, Mahindra Electric, with three passenger vehicle models — this is understandable. There are just 7,000 electric car owners in the country.
Customers in India may not be ready. Electric technology is still in the works. Charging infrastructure is missing. A higher sticker price is still a hurdle. But “bulldozed” by the government — which is determined to make Indian vehicles all-electric by 2030 — Motown is bracing for an electric rush. And everyone is invited: old and new players, private and public sectors, startups and established firms.
Bengaluru-based EV pioneer Chetan Maini, who founded Reva Electric back in 1994, is dreaming big once again. His new venture called Sun Mobility has big plans to set up charging infrastructure in the country. The pilots will begin early next year. SoftBank’s Vision Fund is reportedly considering $100 million investment in it.
EV-focused startups are mushrooming. Three-year-old Lithium Urban Technologies, which offers an all-EV cab service to companies, is readying to scale up beyond NCR and Bengaluru. Ather Energy is developing India’s first homegrown e-bike; the prototype is ready. In Nagpur, Ola, Mahindra Electric and the government are experimenting with an all-electric fleet as a pilot. In Mumbai, Sajjan Jindal’s JSW Group has announced an ambitious Rs 4,000 crore EV project. JSW Energy plans to launch its first electric car by 2020. It also plans to set up energy storage and charging infrastructure.
PSUs of all hues are entering the fray. Indian Oil Corp Ltd (IOCL) and Hindustan Petroleum Corp Ltd (HPCL) along with power-focused ones like BHEL, Power Grid Corp and NTPC and even niche ones like Rajasthan Electronics & Instruments Ltd (REIL) are all looking to set up charging stations and to manufacture and retail lithium-ion batteries. “We are talking to IOC and HPCL. In the second phase, we will target government offices, smart cities and other public spaces to set up charging stations,” says REIL chairman & managing director AK Jain.
Elsewhere, Tata Motors is giving the Nano a last shot at revival by testing an electric avatar. Mahindra is stitching up an alliance with Ford Motor. Chinese carmaker Chery International may ally with Tata Motors. Suzuki Motor is partnering with Toyota Motor for technology even as it starts work on lithium-ion battery in Gujarat with Toshiba and Denso. Almost every carmaker, from Hyundai to Nissan, Renault to Tata Motors, is advancing its EV rollout plans in India.
Make no mistake, though. The Rs 4.5 lakh crore automobile industry and its over 10,000 component manufacturers — which collectively employ 30 million people (direct and indirect) and contribute over 7% to India’s GDP and half of manufacturing GDP — are a jumpy lot. And it’s not only the road transport minister, Nitin Gadkari, who is nudging the auto sector towards electrification.
Multiple ministries, along with think tank NITI Aayog, are in the electric scrum: the Department of Heavy Industries, Ministry of Renewable Energy, Ministry of Urban Development, Ministry of Petroleum and, of course, the Finance Ministry. “EVs have become this sexy topic, with virtually every minister having a point of view and announcements to make. We are thoroughly confused about what exactly is the government stand,” says a senior industry executive who did not wish to be quoted.
Industry captains reckon that in a country where manufacturing is just 17% of overall GDP and growth measly, the auto industry with exports worth Rs 1.5 lakh crore (30% of capacity) should be the pampered poster boy of the government’s Make in India campaign. Instead, it has been at the receiving end of multi-hued scrutiny and policy flip-flops.
Amid rising pollution concerns, the government and the judiciary have delivered whammies like an overnight ban on diesel vehicles and a green cess. Last year, the government pressured industry into a 2020 deadline to leapfrog India directly from BS IV to BS VI emission norms. The jump, the first of its kind in the world, poses both technological and financial challenges. Experts estimate that over Rs 60,000 crore would have to be spent to make the industry BS VI-compliant.
Barely had the industry internalised the policy challenge and chalked out their roadmap when the electric shock has them in shivers. “The government’s objectives of reducing pollution and imports deserve applause and support. But it’s the customers and market that will ultimately decide which powertrains will be successful. The (EV) vision has to be better calibrated. We have no plans to introduce EVs in India till adequate infrastructure develops,” says Shekar Viswanathan, vice-chairman, Toyota Kirloskar Motor.
“The shift towards EV will cause profound disruption in a number of industries (even) outside the auto market,” says Ashish Sethia, head of research (Asia Pacific) at Bloomberg New Energy Finance. Besides automotive, the EV thrust will impact sectors like oil & gas, power, batteries, mining and natural resources (as demand for materials like lithium and cobalt will spike) and construction (integrating charging stations is part of the plan).
Expectedly, the automotive industry will hurt the most. The technological shift from the century-old internal combustion engine (ICE) to electric motor-driven vehicles demands a very different vendor and componentry ecosystem. ICE vehicles contribute close to 60% of the industry’s revenue. ICE and EV engines have very different powertrains and little in common. While a conventional ICE car is complicated with over 3,000 moving parts, an EV has just about 30.
Manufactures of components like engine valves, pistons, crankshafts, carburettors, fuel injection systems and cooling systems will face the heat. “We cannot stop the march of technology. There is a complete acceptance of reality. What we are struggling with is so much hype and so many counterviews all round amid little policy clarity and answers to how to deal with in the next 10 years,” says Ashok K Taneja, managing director of Shriram Pistons.
Taneja’s dilemmas are real. Is investment in R&D and capacity towards BS VI compliance justified or should he just import technology or, even simpler, just import components? “There is a reluctance to take the big leap and make capacity investment wholeheartedly,” he adds. When consumer demand is growing, the thought around imports amid government’s Make in India thrust is certainly not in the interest of the industry or the nation.
“We are not against the EV shift. What we are asking for is a road map with clear milestones and extent of electrification at every stage,” explains Taneja. “Look at Europe, with a 20-year road map with every little detail around standardisation of charging, subsidies and technology clearly spelt out. We are living with more uncertainty than we deserve,” he adds, echoing what the industry strongly feels.
Adds Sethia of Bloomberg: “In India, the viability of business models to create charging infrastructure is questionable unless a minimum number of vehicles are on the roads.” Solving the chicken and egg problem — whether to create capacity or demand first — requires patient investment in the initial years. There has been limited policy-level support for EVs at the state and municipal level. The push is largely coming from the Central government.
There are other big issues. From EV technology to batteries, charging infrastructure to consumer reluctance, the EV manufacturing ecosystem is missing in India today. “India has only 500 charging points. But even at just 30% EV penetration level, Delhi alone would need 3,00,000 charging points,” says Shivanshu Gupta, partner, McKinsey.
The Global Charge
Despite the pains and challenges, India must march ahead on the EV path. For the world is moving towards EVs rapidly. Governments across the world, worried about rising pollution from fossil fuel-powered vehicles, are pushing the EV envelope. France and the UK have given automakers a 2040 deadline. China, which sold half a million EVs in 2016, has set out its own roadmap. Last year, Germany — home to Volkswagen, BMW and Mercedes — decided to ban internal combustion engines by 2030.
The push is coming from the other end, too. A coalition called EV100 of large MNCs, including Unilever, Ikea and DHL, wants to make electric transport the new normal. It wants to use its collective might and influence to build demand and cut costs for EVs and send clear directional signals to automakers.
Globally, in most progressive countries, electrified public transport and fleet operators have been the first critical step towards EVs. Concerned about pollution, Royal Mail in the UK has introduced all-electric delivery vehicles. Go Ultra Low, a joint initiative between the UK government and the auto industry, has signed up with 100 organisations, including local councils, universities and companies, to electrify at least 5% of their fleet by 2020.
London is pushing for massive investments in bicycle infrastructure and even plug-in, hybrid black cabs. Los Angeles, which phased out diesel buses in 2011, has now set a target of allowing only electric buses by 2030. China too is pushing for EVs — from just 1,672 electric buses in 2013, China sold 1,15,700 electric buses in 2016, a fifth of all buses sold.
All this pressure is finally beginning to show in automakers’ plans. Take, for example, Volkswagen, which has been reeling under a diesel emissions scandal and has decided to move away from diesel engines altogether. Early this month, it announced a massive investment of $84 billion in developing EVs and batteries. By 2030, it plans to offer EV variants for all 300 models in its portfolio. Premium carmakers like JLR and Volvo have decided to electrify all their vehicles by 2020. Over 200 new EV model launches have been announced till 2019.
The global attention has meant that EVs and battery technologies are fast getting better and cheaper. For example, cost of a battery — the main reason why EVs are pricier than ICE — has crashed from $1,000 kwh in 2010 to around $225 now; it’s likely to halve in under five years, making it comparable to an ICE vehicle. Driving range and charging time too have been plunging. A McKinsey report forecasts that charging time will come down from 6-9 hours today to 1.5-3 hours in under three years. Globally as well as in India, the direction is clear.
“What is under question is the speed. The government also needs to clarify on policy details,” says Gupta of McKinsey who has coauthored a report on “The Future of Mobility” for the Indian auto component industry. “The road to EVs will be tough but India must persist and pursue it. Else, the country will lose a significant part of the value of the automotive value chain,” says Gupta.
Plugging in India
Reducing the oil import bill, curbing pollution, meeting emission targets and betting on renewable energy are the macro reasons why an EV play is critical for India. The government has pledged to cut its carbon emissions, relative to its GDP by 33-35% from 2005 levels to 2030. It has also pledged that, by 2030, 40% of the country’s electricity needs would come from non-fossil fuel. Reading the signs on the wall, India Inc is gearing up for the EV wave. “In view of increasing environmental concerns in India and the government’s strong EV direction, Honda is now preparing its EV strategy for India,” says Yoichiro Ueno, president & CEO, Honda Cars India Ltd.
On Friday, Tata Motors pipped M&M to bag an order from Energy Efficency Services Limited (EESL) under the administration of Ministry of Power to supply 10,000 EVs. The vehicles will be supplied in two phases with 500 EVs in the first phase in November and the remaining 9,500 EVs in the second phase. EESL floated a global tender in August for 10,000 e-vehicles as part of a plan to replace the five lakh petrol and diesel cars used by the government and its agencies over a 3-4 year period. Tata Motors is readying EVs of Tiago and Bolt even as reports suggest an electric Tata Nano is being tested. The government invited tenders for up to 10,000 EVs that would hit the roads in six-eight months in the National Capital Region. A bigger initiative is afoot to have over a million e-autorickshaws and 10,000 ebuses by mid-2019.
Hyundai says it could assemble its EVs in India as early as 2019. M&M has committed Rs 600 crore for its EV business. Suzuki Motors is setting up a $600 million EV manufacturing facility. It is also setting up a Rs 1,137 crore lithium-ion battery plant in partnership with Denso and Toshiba which will be ready by 2020.
Auto component makers are exploring new opportunities. “With EVs, components will change. But I see opportunities for us. We are exploring components for motors, a new area for us. We want to be a global player with access to global market,” says Sunjay Kapur, chairman of auto component company Sona BLW. Already, 5% of his supplies are towards electrified components, which he expects to rise. He has developed axles for e-autorickshaws and will soon launch drive trains for e-rickshaws.
“Thankfully, we are not in the powertrain business. But we see enormous opportunities in EVs,” says Jayant Davar, founder, Sandhar Technologies. His company — which makes components like locks, mirrors, wheels, handles and other plastic parts — has tied up with three MNCs from Korea and Japan (two are JVs and one is a technology tie-up) to manufacture components for EVs. “We will start manufacturing as soon as we see demand,” he says. Despite the pain, the industry is hopeful. After all, the technology will solve problems of cost and ease of use. Much of the onus on getting the ecosystem right is on the government — a clear EV policy roadmap will enable a smooth transition for the industry. It’s only then that customers like Goel will fully buy into the EV play in India.
There are teething issues, but it’s nothing that can’t be solved: Sanjay Krishnan, cofounder, Lithium Urban Technologies
In 2014, Sanjay Krishnan quit a cushy job at Honeywell to chase his startup dreams and set up Lithium Urban Technologies, an electric fleet operator. This was his second fling in the public transportation business. In 2002, as the COO of Comfort India Ltd, he was trying to build a private company for urban public transport.
Today, present in Bengaluru and the National Capital Region (NCR), Lithium Urban has a fleet of 400 electric cars, has set up its own charging infrastructure (70 charging stations, each can charge two cars in one go) with which he services 10 corporate clients to ferry their employees and has logged in 20 million km already.
“We are very happy. We have had teething issues. But nothing that can’t be solved,” says Krishnan.
In 12-15 months, he plans to have a fleet of 1,000 cabs with which he will strengthen his presence in Bengaluru and NCR and expand to new cities like Pune, Chennai and Hyderabad. The all-electric fleet — from the Mahindra stable — gives 100-140 km per charge and has managed to cut down fleet costs for his corporate clients by 15-30%.
Earlier this month, the government invited tenders for 10,000 EVs and 4,000 charging stations in Delhi NCR. The pain points: limited electric product offerings in India to cater to his customers’ varied needs.
Countries need to set ambitious goals: Chetan Maini, vice-chairman, Sun Mobility
Maini can see the coming boom perhaps far better than anyone else. The EV pioneer launched India’s first EV, the Reva, in 2001. Its being ahead of its time, lackluster demand and viability issues forced Maini to sell it to M&M in 2010.
Almost 24 years after he founded the Reva Electric Company (in 1994), Maini has now zeroed in on batteries and charging solutions through Sun Mobility, a 50:50 joint venture between Maini’s Virya Mobility and Sun New Energy Systems.
Initially, Sun Mobility will be focused on buses, three-wheelers and two-wheelers. “The biggest challenge for EVs is the higher price due to costly battery, long refuelling time and range anxiety. We want to become the enabler,” he says.
Working closely with vehicle manufacturers (he has already tied up with Ashok Leyland), Maini wants to explore open architecture solutions whereby his charging stations can offer swappable batteries. Pilots will begin early next year and rollout at scale soon after.
Reportedly, talks are on with SoftBank’s Vision Fund to invest $100 million in Sun Mobility. “We want to wait and see. There should be sufficient demand to justify battery manufacturing,” says Maini.
There have also been reports that Swiss firm Leclanche SA is in talks with Maini for developing battery storage solutions. “At times, countries need to set ambitious goals to raise the bar. There is a great opportunity for India to become a large exporter of EV technology,” he says.
We are a tech product company, not an auto company: Ravneet Phokela, chief business officer, Ather Energy
Cofounded on campus by IIT-Madras graduates Tarun Mehta and Swapnil Jain in 2013, Ather Energy is developing a smart e-scooter and in-house designed lithium-ion battery packs. The startup has an impressive investor lineup — Hero MotoCorp, Tiger Global and Flipkart founders Sachin and Binny Bansal.
“We see ourselves as a technology product company and not an automobile company,” says chief business officer Ravneet Phokela. The prototype, ready in October 2016, is now undergoing testing and validation work and is likely to be ready early next year.
Unlike other vehicle manufacturers, Ather is developing its own battery solutions, which would be integrated with the vehicle. “To be successful, our product’s pickup, speed, acceleration etc should be as good. Being electric with a lower operational cost would be a plus,” he says.
Ather’s e-scooters will be smart and connected with an embedded chip on its dashboard and sensors in all critical components, and a built-in GPS system. Integrating crowdsourced and historical data and using data analytics, it plans to layer its GPS navigation system with rich information on, say, potholed roads or roads with no streetlights.
Thanks to sensors fitted in e-scooters, Phokela says they will be able to remotely offer preemptive diagnostics to drivers like, say, “Your ball bearing has a problem, get it fixed.” Ather will set up its own charging infrastructure across the country and will have mobile repair vans.
Nation is in the right direction: Mahesh Babu, CEO, Mahindra Electric
If there is one company that has the first-mover advantage by a long way, it is Mahindra Electric Mobility Ltd, the erstwhile Reva Electric. Even though the portfolio is limited — the hatchback e2oPlus, sedan eVerito, passenger and cargo van eSupro and three-wheeler eAlfa Mini currently — this is the only EV offering in passenger vehicles in India today.
Mahindra’s EV has done 50 million km so far, helping it learn important lessons in consumer behaviour and usage. Slowly, it is also building the EV vendor ecosystem in India. The company’s focus is on fleet operators and institutional buyers. “An EV becomes cost-efficient if the daily run is above 150 km,” says Babu.
Early this year, supported by the government, it partnered with Ola in Nagpur with 200 EVs for electric mass mobility in the city. It is also working with online grocer Big Basket to electrify their delivery vans. “EVs is a new concept. Consumer education through data- and experience-sharing will be critical,” says Babu.
Charging infrastructure will be among its biggest challenges. It is engaging with a range of partners, including oil PSUs and private companies, to solve the charging infrastructure issues. “Being the first mover, we are working with the government to help evolve standards. As a nation, we are in the right direction,” he says.