Aatmanirbhar – Will the PLI incentive help the India Electric Vehicle manufacturers

While people might be willing to switch to EVs, the lack of infrastructures like electrical charging stations and high prices are a concern

Very few of us are aware that on the 3rd February 2022, India completed 97 years of its first electric train, which ran between Bombay VT and Kurla Harbour in 1925. The inventions started way back in 1828 when Anyos Jedlik, a Hungarian Inventor and Engineer, developed an electric motor that he used to make the small electric car. Then between 1832 and 1839, Scottish inventor Robert Anderson developed a crude electric carriage.

The first electric three-wheeler, the Vikram Safa was invented by Scooters India Pvt Ltd in 1996, and approximately 400 vehicles were made and sold at that time. In 2000, BHEL developed an eighteen-seater electric bus, which became popular too, after which approximately 200 electric vans were made and run in Delhi.

Electric vehicles came into existence in the 19th century but did not succeed due to high manufacturing costs, lack of technology for power backup, and a lack of charging infrastructure. India saw its first electric car in 2001 but failed to create excitement in the market, as no one imagined a future with electric mobility. Society has been more than comfortable with the conventional ways of transport.

Supply of domestic cells and batteries is going to be important to achieve battery standardization. India lacks a domestic supply of key raw materials.

However, we have arrived at a juncture where no further delay or wait for electric mobility to penetrate the country is logical anymore. One of the biggest reasons is, of course, the imminent danger of adverse environmental impact on health.

Atmanirbhar Electric Vehicle (EV) supply chain Self-reliance is critical.

In India, two-wheelers and passenger vehicles dominate the market. India is expected to be the world’s third-largest automotive market in terms of volume by 2026. There has been an apparent shift in the priorities and working of the automobile sector and this shift is leading us towards EVs.

All things considered, one of our biggest challenges is to drive higher adoption of EVs through the supply chain and infrastructure. The sector needs a focused approach toward R&D and localization. A strong, local supply chain, accessible battery prices, and widespread charging infrastructure are the components for the EV market to become more attractive.

EVs need to become accessible to everyone for a sustainable future. For this, it is important to lower cost barriers. The existing practice of making EV assembly here in India can only sustain if the service set up is backed by the seller. As we reach volumes, market forces will come into play and we will see most of the manufacturing done right here, in India and that would also bring down the costs.

There are so many Lithium battery manufacturers in India who are making them here on Chinese machines by importing the cells and BMS from China. China, of course, has already taken the lead in the EV sector and their manufacturing ecosystem is in place therefore, their products are accessible and have led to strong dominance in the 2 and 3-wheeler segments.

EVS in India

The present EV ecosystem in our country is a complex one with sales at a bare minimum. While people might be willing to switch to EVs, the lack of infrastructures like electrical charging stations and high prices are a concern. To create a robust ecosystem for the EV agenda, we need to set up funds (overall the union budget has been favorable for the EV space like reduction in customs duty from 10% to 7.5 % in motor parts, which will also help reduce the cost of EVs) and R&D facilities. According to reports TATA and Mahindra are top R&D spenders in the electric mobility industry. Also, for a strong manufacturing base, simultaneously we must ensure designing vehicles that are close to conventional vehicles – many start-ups like OLA Electric, Ather Energy, Yulu, Tork motors, etc are playing an important role in evolving this space.

I think that the automobile sector in India is a robust one and the moment all the players begin focussing on EVs, things will change faster – we are definitely poised to be a major exporter in the EV segment. Leading players in India like Tata, Mahindra, OLA, and Ather have already initiated the change and once they sort out the service setup and maintenance issues, the domestic sector will rule the roost.

Still a Strong Electric Vehicle policy is required

EV transition is a critical area and is a high priority for both national and state governments in India. Through the national FAME (Faster Adoption and Manufacturing of Hybrid and Electric vehicle) policy, and state-level equivalents, the Indian government has signaled a strong commitment to growing the sector and reducing the carbon footprint of transport, in line with its targets under the Paris Climate Agreement Act.

At this point, the policy for EVs is encouraging however, I believe, we need to implement incentives to boost the production of Lithium cells.

Small businesses cannot benefit from the Production Link Incentive (PLI) scheme.  There has also been a reduction in export incentives, which is affecting exporters as well.

Small businesses cannot benefit from the Production Link Incentive (PLI) scheme since it is only available to big investments. Currently, the government does not promote exports or offer incentives to existing industries to attract dollars into the country, only foreign investment is a priority. There has also been a reduction in export incentives, which is affecting exporters as well.

The PLI policy will not attract people in this space as this industry needs a complete setup of manufacturing, sales, marketing, and service set up. Which will not attract foreign players unless the market is already there.

The unorganized sector which is growing initially will automatically convert into the organized sector over a period of time which I saw in the Inverter segment and other sectors over a period of time.

We also need improved monitoring and execution of the policies. EVs need electricity, therefore, simultaneously we must start looking to strengthen our solar charging capabilities because we will need an alternative source of energy sooner.

The Union Budget for 2022-23 aims to strengthen the EV ecosystem to speed up the demand for green vehicles. The introduction of the battery swapping policy and interoperability standards announced in the Budget will go a long way in building the use cases and will be a boost for the start-ups in the space. The battery swapping policy will create new avenues for companies to venture into the business. The budget promises to encourage the private sector to develop sustainable and innovative business models for battery and energy as a service and we are in for better times!

Electric Vehicles and localization and domestic battery technology

In the last few years, Electric Vehicles have become a part of our daily conversation.

EVs have come in as a ray of hope for the future of mobility. It is certainly a revolution in the making that is poised to bring remarkable changes, especially in an environmental aspect.

With the gradual emergence of EVs in India, the domestic EV industry is keenly shifting its gears towards localization of key components like batteries and helps to gather and enhance the local assembly of EVs.

The automobile sector has gone through a paradigm shift and efforts are being made to switch to less energy-intensive options.

Supply of domestic cells and batteries is going to be important to achieve battery standardization. India lacks a domestic supply of key raw materials – like lithium, cobalt, and nickel. This makes cell manufacturing a costly affair.

The Indian manufacturers need to focus on indigenous battery packs. India is a distinct market and we need batteries that are favorable for Indian conditions – like extreme temperatures and humidity.

The battery swapping policy, once in play, will help our EV segment to grow. Charging through the solar with storage need to be encouraged otherwise India will need additional power generation and that would bring us back to where we started i.e. dependence on coal, gas, and oil.

Kunwer Sachdev1

By Kunwer Sachdev

Kunwer Sachdev, Entrepreneur and Innovator, Founder - Su Kam Power Systems

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