The Modi government has aimed towards making India the hub of electric vehicles. The center has introduced a series of measures which includes a whopping 1.4 billion-dollar worth manufacturing hub. This constant push from the government is predicted to make India the fourth-largest market for electric vehicles by 2040. There’s a long way to go but the future of the electric car in India looks bright. However, there are yet many hurdles for us to overcome. As the finance minister takes on the stage put forward the 2020 budget, the manufacturers of electric vehicles are hoping for few innovative measures.
The Indian government has set a few ambitious targets:
- By 2023, India wants all the 3-wheeler-vehicles, these are mainly the autos to run on batteries.
- By 2025, India is aiming for all two-wheeler vehicles to run on batteries.
Manufacturers are hoping for a few policy changes as well as smoother finance and reduction of GST on batteries and other components. This industry is hoping that the government is going to provide easy finance for the vehicles. This would increase the demand for environmental-friendly vehicles by a whole lot.
The main hurdle for India for the EV industry is the import of the lithium-ion batteries. The lack of lithium resources has forced manufacturers to import the same from China. Hence, the industry wants the government to reduce the GST on the lithium-ion-batteries from 18percent to 5percent. We need wait and watch for the government’s reaction on this.
With the government pushing the manufacturers to produce more vehicles, they are not helping this industry in any way. This industry is currently dependent on China for most of the components. They import materials such as nickel, cobalt and battery-grade graphite as well. With the expensive import duty, the industry is looking forward t a slash on the import duty in the budget 2020. However, the government had increased custom duty on imported goods to promote the local manufacturing. With the government wanting to promote this industry but not willing to do anything about it, the manufacturers are caught in a rut.
Here are some of the challenges that this industry faces and how India is looking forward to making it better in the future.
Strong policies: India has always had a problem when it comes to policymaking. A great idea gets lost in the transition even before it reaches the right person. India needs to learn how to make a big bet on industrial policies. If this problem, isn’t fixed, India is bound to have haphazard transitions to electric vehicles. India needs to focus on the finance as well. China provides subsidies for the import of raw-materials, India too needs to take such measures to facilitate easy manufacturing of electric vehicles.
The electric vehicles industry is predicted to face a major push from the traditional automobile industry at the macroeconomic level, unless India makes it a red line that they will not switch until they make power trains and batteries in India.
- Battery supply situation: as stated previously, India is importing lithium ion batteries from China. A lot of knowledge is needed to develop a battery pack. Even after you import the cells, manufacturers need to hire professionals who know what to do with these cells. If not, they may end up with poor quality. It is best to hire professionals who have worked with companies around the globe.
- Battery swapping: the main advantage of battery swapping is the reduction of wait-time by almost 60%. However, the price rises by around 50%. Yet, this makes economical sense. How? There are few places in Delhi where this is functioning smoothly, but, in other places of Delhi, not so much. This process of battery swapping makes sense as long as a vehicle’s uptime can be improved in terms of the vehicle’s commercial utilization and usefulness.
- Charging infra: there is no other way to have charging infrastructure than to create your own infrastructure. If you completely rely on the government, you are definitely doomed. Although, building charging infrastructure is not a costly affair. According to India’s vision of having all battery-operated vehicles by 2023, this means that there have to be 2500 new electric vehicles every single day on the roads of the city. Setting up of hardware is easy but the grid might collapse.
- Skilled labor: there is a knowledge gap between understanding the product on the books and actually making it happen on the ground. You need an individual who knows the electrical and mechanical part of it. India does not have much knowledge about product development and the challenges it entails. Individuals need to have knowledge about the software development part of it as well. This is a must for the electric vehicles industry. The question is not about the job training anymore, it is about the education that India is providing. The basic mindset of students is that they trained themselves for the wrong sector, but they forget that maybe their education provided was insufficient.
- Care for climate: compared to the emissions in the US or Europe, it hasn’t been that bad in India yet. The power sector decarbonization is already in process in India. Industrial decarbonization is the next task. These sectors contribute about 20 to 35 percent of national emissions. The electric vehicles transition is a major contribution to this too. With the transition of vehicles from petrol to environmental-friendly vehicles, this will be a huge contribution to the climate change as well.
India has quite a few hurdles to cross to fully achieve its goals in the coming years. Only promoting and setting goals is not going to be beneficial. India needs to help the electric vehicle industry and do the needful to make India an environmental-friendly place. Overcoming the challenges and working on it is what they’re hoping for. With the help of the government, the electric cars future in India could be bright.