Electric Vehicles-Should OUR CARS BE REPLACED WITH EVs?

The government launched the National Electric Mobility Mission Plan (NEMMP) 2020 in 2013 to achieve national fuel security by promoting hybrid and electric vehicles in the country, a target to achieve 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards. Under union budget for 2015-16, the central government initiated a scheme namely (FAME) Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, to promote clean fuel technology cars. It is expected to save 9500 Million Liters of crude oil equivalent to Rs. 62000 Cr. Savings.

Electric Vehicles

EV is the new buzz in the auto industry and there are many reasons behind it, but important of all is the soaring pollution and ascending crude oil import bills in India.

The largest contribution to pollution is from Transport in India; about 51% consists of pollution coming only from vehicles.

The world is becoming a clean haven but as India, almost as a whole is diving towards the pots of dirt, a new report by Greenpeace India shows. With all the worry about global warming, electric vehicles could play a significant role in combating CO2 emissions and hence help blow the triumph over global warming which is plaguing the planet.

IS INDIA REFUSING TO ‘GO EVEN FURTHER BEYOND’

IMPACT ON IMPORT BILLS

India is importing 100 million tons of crude oil and spending a huge amount of foreign exchange, this will have a huge impact on the Indian economy and when the prices of crude oil will rise up this will lead to the impact on demand and supply of petroleum commodities.

India’s crude oil import bill jumped over 20% to $56.25 billion in the first seven months (April-October 2017) of the current financial year and is likely to rise up to $90 billion by March 2018. India is one of the largest importers of oil in the world and imports nearly 80% of its total oil needs. This holds a great impact on the current account balances.

Electric Vehicles

AIR LEVEL CONCERNS
Transport is one of the main causes of air pollution, bugging the people of India. Air pollution is the 5th largest killer in India. Across the globe, India’s air quality index is around 301-400 which comes in the very poor category and can cause respiratory illness on prolonged exposure to many other health problems.

Recommended Read:- Energy, Technology & Policy.

A SHIFT TO ELECTRIC VEHICLE IS NEED OF THE HOUR.

With the FAME scheme government wants to focus on these two problems but the implementation has many hurdles. Let’s look at the principal factors that will influence the EV ecosystem in India.

                                             GOING FROM GAS TO GRID!!!!!!

Critical points to make EV a reality in India:

  • A substantial amount of electricity will be required to make EV run on the Indian roads. Power generation capacity is the biggest question.
  • The infrastructure requirements for putting electric power in EV (charging stations).
  • Another crucial element is the battery, which needs to be replaced every 4 years (Cost 3 Lakh) which increases the overall purchase price of an electric vehicle.
  • Low range and speed.

The fast-charging unit costs about Rs 3-4 lakh to set up, this means that the government needs to spend ~1.80 lakh crore for setting up charging stations in India. This is a huge amount that the government wants to spend for achieving EV target by 2030.

 Fortum (electricity co) and NBCC plan to set up more than 150 charging stations across the country over the next 12–18 months. The expansion of charging stations is necessary, as the government has placed an order of 10,000 EVs from TATA through a public tender. 

Should we let the Sleeping Dogs lie!?

Currently, the vehicle population in India is about 210 million and for EV to enter and gain its strength as per the FAME India scheme, it is expected that there can be about 34 million cars on roads by 2030.But the running of these cars is only possible if we are able to generate the amount of electricity needed to charge the vehicles so that they can be operational. For example, the current market leader, E2o Mahindra takes about 7hrs to charge, so the onetime power consumption to fully charge the EV would be around 15KW that is one EV will require 2KWH of dedicated installed capacity.

This scenario is possible as the total installed capacity of power stations in India for the Nov 2017 was 330860.58MW. The power generation growth rate to meet this extra demand is ~6.5% p.a.

The cost of charging the EV will be different and will depend on the type of car as well as electricity rates. For example, the Mahindra Verito gives a mileage of 15kmpl.  At Rs 75 per liter of Petrol, the car would need 7 liters to cover 100kms for a total cost of Rs 525 for the trip. The Mahindra e2o would need 23 units of power for a full charge of 100 km. At Rs6 a unit that would be Rs141. This will result in a net saving of ~Rs384 per 100km for the average consumer.

CRITICS FOR COST OF ELECTRIC VEHICLES

The running cost of EV is low but the manufacturing and maintenance cost is huge. Prominent expenditure is that of the battery which is expensive as well as it has to be replaced in the period of 4-5yrs which isn’t feasible for a common man.

Additionally, anxiety about the range and the speed of the EV prevails in the market too, as the average range for EV is ~90km; and the top speed is limited to 80km/h. This adds to the concern of the people for choosing an electric vehicle over the conventional vehicles.

THE SILVER LINING

In 2016 the cost of the battery was approx $275 per KWH, according to the Mckinsey report and predictions are that these prices will be slashed to $100 per KWH by 2030.

Companies like Tesla are working on potential solutions for doubling the lifetime of the battery cells; Sun Mobility is developing solutions for smart batteries and battery swapping by partnering with leading players in the industry. Automobile giant Mahindra & Mahindra has already joined hands with Enerrsto (lithium battery manufacturers) for testing, analysis, and validation of the batteries. These efforts can go a long way in improving the range and speed of the EVs. Effects are being made to bring in low-cost batteries, plans for remodeling the lithium-ion battery are under process by Indian Space Research Organisation (ISRO) and the memorandum has been finalized with BHEL to cut down the cost of lithium battery and bring buy-back commitments for old batteries. This will take care and will also manage the waste which will be generated at the end of the battery life.

 THE BOTTOM LINE

All in all, as for the Indian people who believe they should extract value out of money, before imposing necessity for electric vehicles, the usability concerns should be addressed. People will be willing to pay high prices only if the value can be drawn out.

Replacement of existing vehicle base will be a major hurdle, for the creation of new EV market base. In FY16 out of the 22,000 electric vehicles sold only 2,000 were four-wheelers. This replacement of petrol/diesel vehicles can be done slowly by letting them expire after their useful life.

We at Mudraksh think that the EV has a potential of developing its market in India.

  • The power generation capacity is achievable and development in infrastructure (charging stations) will lead to the expansion of EVs.
  • Along with the government bringing buyback agreements of used batteries and providing incentives to people as well as automakers can push the EV sales in India.
  • With battery technology the range of the car can be doubled, without the cost being compromised.

In a nutshell, the government’s target of electric vehicles in India by 2030 is achievable. With the willpower to eliminate the hurdles; both from the government side as well as private players, incorporating EV will be a successful campaign. This will ensure that we give a healthier and cleaner planet to our future generations.

Recommended Read:- EFFICIENT MARKET HYPOTHESIS – DOES IT MATTER

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