An anticipated announcement was made by Elon Musk that Tesla will most likely be bringing electric cars to India by 2020. With oil reserves running out the only technological transition that we can bank upon is the emergence of Electric Vehicles (EV).
There are two takes on the idea of emergence of Electric Vehicles, some say that India would adopt EV’s at a much slower rate than China or any other western country mainly because of one reason- Currently, the battery that is used in an EV is a lithium-ion battery which is expensive and the raw materials that are needed to make these batteries are short in supply as these cells use metals like lithium, cobalt, nickel and manganese. Also, these vehicles do not support long distance travel.
The other side of the story is that if we switch to an entirely electric fleet then it can help reduce 1 giga tonne of carbon dioxide emissions by 2030, and save India $330 billion by cutting oil imports, which are mainly from the Middle East. In August 2017, Piyush Goyal indicated that the NITI Aayog was working with various governmental ministries to create a plan to ensure that only electric vehicles are sold in the country by 2030, eradicating all the petrol and diesel run vehicles.
For electric vehicles to significantly replace conventional transportation in India, the industry will need proper incentives to encourage investment into the sector. Innovators, entrepreneurs, and regulators must work together to evolve new business models for successful adoption. There needs to be streamlining of equipment, a smarter distribution of fiscal incentives, and a concerted effort to develop a robust infrastructure around electric vehicles.
GST Council has decided to reduce GST rate on EV’s from 12% to 5% and on EV chargers from 18% to 5%. The new rates will be effective from 1st August 2019. The council further approved an exemption from GST on the hiring of electric buses by local authorities.
On average, an EV is twice as expensive as the petrol vehicle.
Many countries are investing in developing next-gen batteries that would replace Lithium-ion Batteries. Companies like Panasonic, Tesla, Toyota and Chinese manufacturers are at the forefront of research. They are trying to reduce the use of expensive materials like cobalt. Manufacturers such as Hyundai, Mahindra & Mahindra, Nissan, Maruti, Toyota and Tata are beginning to show an interest in the market, and a slew of electric vehicle models – 25, according to the BIS Research report – are likely to be launched by them by 2021.
An EV has 20 moving parts whereas, a regular petrol or diesel vehicle has more than 2000 parts. This means that if EV’s emerge with full throttle, it would compel most of the auto component firms to shut down. India would also need to reskill a large number of motor mechanics because of the different electronic structure.
By: Simran Gogia