Electric Mobility Summary

RISHI AHUJA
IIM Shillong
Batch 2018-20
EV Mobility Report

Overview of EVs in India

Automobile sector is a significant contributor to the growth of Indian
economy and accounts for about 7% of the GDP. But this sector is
expected to be disrupted by coming of Electric Vehicles. EV sales
reached around 0.759 million in FY19.

payback period, and hence, would be late in adoption. On the other

The above graph shows the projected number of electric vehicles in
India by 2026. It shows that EV opportunity not just lies in passenger
cars, but also in e-buses, e-cycles and e-bikes. But there are hurdles as
well. The graph on the right, from HSBC Global Research report,
clearly shows that PV would still remain unaffordable due to longer
hand, Buses, 3-Wheelers and Taxis would be the early adopters for
electrification, as their utilization is high and fixed charging
infrastructure can be provided.
There have been several attempts to promote or check the feasibility
of EVs. Some of them include Nagpur Multimodal e-mobility project,
EESL’s procurement order of 10,000 electric vehicles and installation
of charging stations across Delhi. Even HPCL recently announced a
pilot for battery swapping stations.

Major Challenges for Faster Adoption

Indian EV story is interesting and revolutionizing, but at the same time, it is challenging and ambitious. Here are some of the major challenges
faced by the Indian market in the process of transformation to electric mobility:

Lack of Charging Infrastructure Battery Manufacturing and Procurement

This is a classic chicken or egg problem in the Indian context.
A robust infrastructure cannot be built until there are
enough EVs on road and vice-versa. The land acquisition
cost is very high and the rules for power distribution are also
ambiguous.
Range Anxiety
According to Deloitte Global Automotive Consumer Survey,
Range anxiety is the 2nd biggest concern for people buying
EVs. Currently, the driving range of an electric car is around
80 kms on a single charge. Very few models offer a range of
150 kms. The same applies to 2 wheelers as well.
Currently, almost the entire need for EV battery is met by
imports. India does not have a specialized battery
manufacturing facilities. Also, it was only after FAME 2, that
R&D in the field of battery manufacturing is promoted.
India - A Small Car Market
Unlike other countries, Indian auto market is predominantly
a small car market. The average price of a car in India is USD
10,000. Hence, with the battery contributing significant cost
to a smaller car, EV becomes unaffordable compared to an
ICE car.

Current Slowdown Supply Chain Inefficiencies

The slowdown in the auto sector as well in the economy has Although the prices of battery are falling in the global
led to production cuts and delay of the plans to introduce market, India is not able to procure the same at better
EVs. EESL cut-short the order of 10,000 EVs on account of prices due to less bargaining power. Also, supply-chain for
this slowdown. EV component and aftermarket is still at a nascent stage.

Policy Framework
The Indian Government has shown good intentions to fast-track the adoption of EVs by
launching National Electric Mobility Mission Plan 2020. The FAME policy, which was launched in
2015 focuses on 4 pillars – technology development, demand creation, pilot projects and
charging infrastructure. FAME 2 was launched recently with a budget ₹10,000 cr. including
₹1000 cr. for investment in charging infrastructure. GST rate on EVs was reduced to 5% this year.
The Govt. also plans to make all its 5.5 Lakh vehicles electric.

The Govt. was also considering to make all new 3-wheelers and 2-wheelers below 150cc to be
electric by 2023 and 2025 respectively. It also aims to make at least 30% of the vehicles electric
by 2030. The government is also thinking about mandating 40% of fleet of cab aggregators like
Uber and Ola to be electric.
Rishi Ahuja – IIM Shillong
EV Mobility Report

The reason for such a push by Govt. is to cut down on the crude oil
import bill. But if the domestic battery manufacturing ecosystem is
not improved, the shift to EVs may create more trade imbalances as
the crude oil savings may take years to offset battery import costs. The
shift may also result in giving up taxes on new cars (which is about
13% of total indirect taxes) for subsidies on EVs.
Many state governments have taken steps to make their own EV
policy.
Karnataka is the first state to frame a policy for EVs. Delhi plans 50%
of buses to be electric. Kerala and AP aim to have 1 million EVs by
2022 and 2024 respectively. Telangana is looking into investments
into vehicle retro-fitment. Tamil Nadu, on the other hand, will be
providing subsidy on land purchases as well as one-time re-skilling
allowance for workers in EV manufacturing units. Maharashtra and
UP plan to become EV and EV component manufacturing hubs.

What are Current Players Doing?

The current wave of EVs has shaken even the strongest player in the
auto space. Below are some examples of what current giants in auto
sector are up to:
Mahindra and Tata Motors are players leading the EV revolution
currently with their mix of offerings. Mahindra has partnered with
Ford and both of them aim to produce and sell EVs in Indian market.
Mahindra is currently producing electric three and four wheelers, and
has also started its electric car-hailing service Glyd for corporate
customers in Mumbai. Bajaj Auto recently launched its classic scooter
‘Chetak’ as an electric version this year. Hero Electric invested in
Electric 2-wheeler manufacturer Ather Energy. It has also established
HeroHatch incubation centre within the organization to promote
innovative thinking to revolutionize mobility.
Ashok Leyland is in talks with various multinationals to build an
electric ecosystem around e-buses in the country. Since both the
players have agreed too form a partnership, Toyota would be sharing
its hybrid EV technologies with Maruti Suzuki. Hyundai and Kia
Motors also joined the club by investing around $300 million in Ola
and Ola Electric. Tata Motors, along with its group company Tata
Power, is set to establish 500 charging stations in multiple cities.
We can clearly see more and more players entering into partnerships
and joint ventures. Many firms are also looking at investing into start-
ups which may eventually lead to acquisitions. We may also see many
new product launches in the coming time. OEMs are investing in
every opportunity arising in the EV space and are moving towards
becoming ‘mobility solutions provider’ rather than just selling
vehicles.

Who are the New Challengers?

The electrification of auto sector has reduced the barriers for many
traditional players as well as start-ups to enter into this segment.
These players are the new challengers in the industry and questioning
the status-quo of the established giants. Many of them have entered
into co-opetition with those giants. These challengers are mainly
working in 4 areas – 1. Charging Infrastructure, 2. Developing and
Manufacturing EVs, 3. Retro-fitment, and 4. Mobility Services. As the
market for EV matures, we may see more players entering EV
component and after-market segment.

Charging Infrastructure
Petroleum giants like IOCL and HPCL are moving towards establishing charging stations. IOCL has partnered with Hyundai and NTPC for this case.
Sun Mobility is a start-up by Chetan Maini, the man who brought EVs to India, which looks into battery swapping technology and has worked
with Ashok Leyland for this purpose. Ola Electric too has worked with BYPL and BRPL to bring charging stations in Delhi. Panasonic has also
entered the EV industry with its charging service called Nymbus.

Developing and Manufacturing EVs

For new players, electric two and three wheeler segments have been very attractive. There are dozens of companies working on manufacturing e-rickshaws
in the country. Ather Energy, backed by Hero Electric and Sachin Bansal, is one prominent start-up for electric 2 wheelers, and has received around $91
million in funding till now.

Retro-fitment of Old Vehicles

The Government gave a nod for conversion of old vehicles into hybrid and electric some time ago. E-Trio, headquartered at Hyderabad, is the first company
in India to receive an ARAI certification for retro-fitment of 4 wheelers. Meladath Auto Components is a player providing 2-wheeler retro-fitting kits. They are
making the current vehicles eco-friendlier and economical.

Mobility Services
Electric Mobility is gaining a lot of traction in the first and last-mile connectivity. Many start-ups like SmartE, qQuick, Oye! Rickshaw have already started their
services through electric 2 and 3 wheelers.

Rishi Ahuja – IIM Shillong