The Indian automobile industry is fourth largest in the world. Indian auto sales are increasing with a CAGR of 7.01% annually and have reached a level of 4.02 million units (excluding 2 wheelers) in 2017. Indian automobile industry is expected to reach US$ 250-280 billion by 2026.
India automobile industry shows a very high potential of growth as it is still in very early stage of development; non-motorized transportation and public transportation still largely represents major percentage of trips taken in India (Approx. 66% in 2007). Even though Indian automobile sector has shown a consistent growth for a long time, number of automobile owner per capita has remained very low in India with only 50 vehicles per 1000 people in comparison to 231 vehicles per 1000 people in China and 910 in United States of America.
It brings great opportunity and at the same time, great challenge for India. India is already dealing with existing automobile burden in terms of carbon emissions and energy security.
As per WHO report 2018, 14 of world’s 15 most polluted cities in the world are Indian. In 2014, India’s capital Delhi, became the most polluted city of the world. As per the Global Burden of Disease comparative risk assessment for 2015, air pollution exposure contributes to approximately 1.8 million premature deaths and 49 million disabilities adjusted life-years (DALYs) lost, ranking it among the top risk factors for ill health in India.
Transport sector is one of the biggest contributors of air pollution in India. Vehicles in India predominantly runs on fossil fuel and as a result, Indian cities suffer from extremely high level of urban air pollution particularly in the form of CO, SO2, NO2, PM (Particulate Matter) and RSPM (Respirable Suspended Particulate Matter).
Moreover, crude oil imposes a big burden on India’s import bill. India imported 83% of its crude oil in 2015-16, which costed around INR 4160 billion.
These figures show that India has very high incentive for a mobility transformation. Niti Aayog report 2017 shows that India can save 64% of anticipated passenger road-based mobility-related energy demand and 37% of carbon emissions in 2030 by pursuing a shared, electric and connected mobility future.
This would result in a reduction of 156 Mtoe in diesel and petrol consumption for that year. At USD 52/bbl of crude, this would imply a net savings of roughly 60 billion USD in 2030.
India has been a laggard in the global race toward electrification of automobiles with no clear guiding policy unlike China, which has offered hefty subsidies and incentives to promote battery-powered cars in its efforts to reduce dependence on oil imports.
In the absence of clear government support, the nascent push towards electric mobility is largely being driven by personal choice and is a simultaneous bet on oil prices. Indian consumers currently have roughly 10 electric/hybrid car variants to choose from, compared to 54 in the US and over 100 in China.
Although government has taken some steps in recent years (some of the government steps are being summarized in figure 1), but the short-term visionary steps and inconsistency in decision making have been the primary roadblocks in EV adoption in India.
Indian think tank revised its electric vehicle penetration target from 100% of vehicle sales to 30 % of vehicle sales within one year of announcement. As of now, India has no formal policy announcement / notification on Electric vehicles.
Some of the government incentive schemes have certainly shown some positive outcomes in country’s electric vehicle sales. National Electric Mobility Mission Plan (NEMMP) 2020 aims to promote hybrid and electric vehicles (Government of India, 2012), resulting in the development of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME), which incentivized the purchase of electrical vehicles. Under FAME scheme, the government is expected to spend around INR 140 billion, which includes incentives to the customers for purchasing electric vehicles and incentives to the manufacturers for research and development besides developing the charging infrastructure.
In early 2018, an interim arrangement was set up to enable charging stations to operate without a license, potentially improving the conditions of EV charging stations (First Post, 2018).
India’s Infrastructure requirement to support electric vehicles –
Other than government policies and incentives, shared infrastructure development is one of the major requirements for facilitating the EV adoption in India. Shared infrastructure demand consists of two major elements – first is electricity demand and second is public charging demand.
Electricity sector of India –
Installed power generation capacity of India is large enough (344.7 GW as on 31.08.2018, as per Ministry of power report, Government of India) to cater to the demand generated by electrical vehicles. In fact, the average plant load factor of the country was only 60.67% in year 2017-18, which means about 40.3% of the capacity was unutilized. A demand generation through EV will be a boost for the power generation industry. As per Lawrence Berkeley National Laboratory (LBNL) report, 100% BEV sales would add 6% to the peak electricity demand of the country.
The only concern is the present energy mix of the country. India’s power mix is primarily driven by coal based power plants, which generated 75.9% of the total country’s electricity in 2017-18. With given low average efficiency of Indian coal power plants, electric vehicles would not provide the much-needed environmental benefits but would just end up shifting the pollution from cities to hinterlands. Therefore, Indian power sector will have to increase efficiency of its power plant or bring more greener options such as solar, wind, large hydro etc in its energy portfolio.
Indian government has set up a target of 175 GW of renewal energy capacity by 2022. If India achieves this target and supplies the power to EV through renewal sources, then it would result in a sustainable solution.
Indian power distribution sector brings a major setback in the electrical vehicle infrastructure development. The present financial situation of state electricity boards is not sound. This is mainly due to uneconomic tariffs for agriculture, high T&D losses (which often disguise large-scale theft), and low billing and collection efficiency. Electric vehicle charging infrastructure would require a strong distribution grid network that can support the high voltage supply demand, which would be a great challenge with existing distribution infrastructure. It would require a major overhaul of distribution system and hence, large investment.
Public charging infrastructure in India –
As shown in Table 1, publicly accessible chargers in India were only 222 in 2017 in comparison to 1,30,508 in China, 32,976 in Netherland and 22,213 in Germany in the same year (EV outlook, 2018).
In recent years, government of India has taken some serious steps to increase the pace of public charging facility installation. These steps include treating EV charging as a ‘service' under the Electricity Act, 2003, opening of EV charging market for all, introduction of dynamic pricing with Time of Day tariff (differential electricity tariffs for different times of the day keeping in mind peak and non-peak hours) etc.
India recently released a draft notification for socket outlets or vehicle connectors to be used in electrical vehicle chargers. Draft “Bharat EV charger” standards specify the charging standard for India.
Electric Vehicle charging policy –
Apart from national target and EV policy, some Indian states have come up with their own target and policies to support electric vehicle growth. The Kerala government has set a target of putting 10 million electric vehicles (EVs) on road by 2022. The state has rolled out an electric vehicle policy (EVP) studded with tax holidays and creation of common charging infrastructure.
Andhra Pradesh, Karnataka, Maharashtra, Telangana & Uttar Pradesh have already announced official policies regarding EVs and other states are in the process of drafting similar policies.
The state of Karnataka is also aggressively incentivizing the production of electric vehicles, establishing a target of $4.83 billion in investments that will help generate 55,000 jobs.
State Governments are also setting electricity tariff policies for charging electric vehicles in the state. The Delhi state electricity regulatory commission has set the electricity tariff (TARIFF ORDER 2017/18) at INR 5.50/kWh (supply at LT) and INR 5/kWh (supply at HT). Andhra Pradesh state DISCOM (Distribution company) has also filed a petition for tariff order for EV category tariff: INR 6.95/kWh (Bloomberg New Energy Finance Report). Maharashtra state has also planned for set up a special electricity tariff for EV charging. These initiatives will certainly reduce the total cost of ownership of electric vehicle and speed up the adoption process.
Conclusion –
High vehicular pollution and burden of import oil bill put a huge pressure on India to shift from conventional vehicles to electric vehicles and brings a great opportunity to the continuously rising automobile sector of the country. Growth of electric vehicles in India has been long held back in comparison to other countries due to poor government policies and infrastructure support. Recent changes in the center government and state government policies seem to be good future steps but India requires faster, consistent and stronger policy framework to cater to this humungous opportunity.