Creation of ‘Virtual Cycle’ Key for EV Adoption in India

Creation of ‘Virtual Cycle’ Key for EV Adoption in India
Creation of ‘Virtual Cycle’ Key for EV Adoption in India

Electric mobility is a reality the automotive industry has taken cognisance of globally, especially in countries like China, US, and Norway (the Scandinavian nation makes up for around one-third of all vehicles sold). India, though a bit late in the game, has been talking ‘big’ about putting in place a comprehensive electric vehicle (EV) ecosystem but it does appear it will take some time before we see EV being widely prevalent.

Lack of charging infrastructure, range anxiety and inconsistent policy roadmap are posing the biggest roadblocks for adoption of EVs in the country. A stable policy framework is absolutely imperative for the Indian EV journey to take off. The dilly-dallying over the government’s FAME Scheme II hasn’t helped matters. Heavy Industries Minister Anant Geete had said during the 58th SIAM Convention that the FAME Scheme II will be announced soon but it hasn’t seen the light of the day.

It may be worth recalling that the first phase of the FAME scheme was initially proposed for two years till 31st March, 2017 and was subsequently extended for six months up to 31st March, 2018 and later to 30th September, 2018. In fact, there was a great deal of expectations about the unveiling of an EV policy by Prime Minister Narendra Modi at the MOVE Global Mobility Summit in New Delhi but the automotive industry was in for a disappointment as Prime Minister only asserted that the government will ‘soon’ frame a policy for alternate fuels like electric vehicles that will work as a win-win policy for all. Of course, it is unclear whether the government will come up with a policy for alternate fuels or design a separate policy for EVs.

Another stumbling block for adoption of EVs in India is the multiplicity of government stakeholders. Any EV-related decision-making needs to have the involvement of government stakeholders such as NITI Aayog, Department of Heavy Industries, (DHI), Ministry of Road Transport and Highways (MoRTH) and the Power Ministry (for EV charging). Abhay Firodia, Chairman, Force Motors and former SIAM President only put things in perspective at the 58th SIAM Convention. “OEMs as well as component makers really feel the need for a single ministry to deal with their day-today matters as in the current scenario they have to engage with multiple government stakeholders that has slowed down implementation of new norms and has kept the industry in a loop of confusion.”

So, how does the EV journey take off in India? Pawan Goenka, Managing Director, Mahindra & Mahindra, said the need of the hour is the creation of a virtual cycle. “What the industry needs a virtual cycle where infrastructure is there, vehicles are affordable, range is good and there are a lot of passenger vehicle options for customers unlike two-three options available now. At the moment there is no infrastructure and cost is high, once volumes starts happening and people becomes serious, EV will take off. Off course, such a virtual cycle cannot happen without the FAME Scheme.”

From the Indian perspective it is pretty clear that EVs will not be embraced by the personal mobility segment for now. EVs to start with, will be adopted by shared, fleet and corporate mobility service providers. Goenka said these mobility service providers must conduct EVs pilots. Of course, there will be hiccups and pains in the beginning, EVs can be a reality if these providers make the most of the learning curve and put their mind to it.”

Localisation will also hold the key in successfully charting out the EV journey in India. “There has to be a bigger focus on localisation – when you have battery and motor plants coming up in India, the cost of EV will come down and volumes will increase, thus sowing the seeds of rapid adoption of EVs,” Goenka said. It is unlikely that customers will like to pay anything ‘extra’ for using an EV as it will be sold as other means of transport, the Mahindra & Mahindra MD pointed out.

So what kind of EV penetration India is expected to witness going forward? Goenka offers his take. “Factoring in all the initial pitfalls, there should be 15 % EV penetration in five years and that should go up to 30 % in 12 years. If we are not reaching sales of 1,000 of EVs a month by the fourth quarter or first quarter of next year, the industry has reasons to be worried. It will be a good beginning if sales of EVs touch 25,000 in a year in 2020, and subsequently that number reaches 150,000-200,000 a month by 2023-24.”

What the country needs is a deeper synergy between the various government stakeholders who must be proactive in addressing charging infrastructure, range anxiety and stable policy framework, thus fast-forwarding the EV ecosystem in the country. Clearly, the Indian EV journey has a long way to go before it can emerge as a key customer choice.