Is India Getting Ahead of Itself in the Race to Electrify Its Transportation?

can be reached at marcusamick@aol.com
can be reached at marcusamick@aol.com
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India will eventually play a major role in the future of electric vehicles, given some of the significant strides being made in the development of the technology. But the growing question seems to be: Is there an actual market for EVs in India to support all the investments being made in the technology there?

  • India’s electric vehicle market is still struggling to find its footing, despite all the country’s efforts to create a robust ecosystem for EVs.
  • The cost of EVs continues to affect the appeal of the vehicles in India, especially when compared to other modes of transportation like electric scooters.
  • Carmakers like Renault and Tata Motors have vowed to offer more affordable electric cars in India.

The Hyundai Kona was the first electric SUV to be sold in India. (Photo: Hyundai Motors)

With some of the groundbreaking innovations that India is driving in the world of electric vehicles, we never bothered to consider one small detail in all our raving over companies like SUN Mobility. Namely, are the people living in the country even showing an interest in EVs?

Well, apparently some, but the number doesn’t come anywhere close to registering a blimp on the scale of India’s 150 million drivers. In fact, according to a data report compiled by Bloomberg, a little more than 8,000 people in India actually want electric cars.

Why? Yep, you guessed it — cost.

Take, for example, the Hyundai Kona, the first electric SUV to be sold in India, which went on sale this summer. The Hyundai Motors SUV sells for about $35,000, but the average Indian earns about $2,000 per year, which puts the Kona out of reach for most, even if they do find the EVs appealing.

“The affordability of electric cars in India is just not there,” says R.C. Bhargava, chairman of Maruti Suzuki India Ltd., maker of the sales leader Alto, as quoted in the Bloomberg report. “I don’t think the government or the car companies expect that in the next two to three years there will be any real buying of electric vehicles.”

According to Bloomberg’s research group, BNEF, more than half of the passenger vehicles sold in India last year cost $8,000 or less. BNEF doesn’t expect the price of electric cars to fall in line with the price of gasoline-powered vehicles until the early 2030s, notes the Bloomberg report.

The other challenge that India faces with electric cars is the country’s inability to produce lithium batteries at a scale that is both economically viable and readily available, as detailed in an India Daily report. Unlike China, India currently imports 100 percent of all its lithium-ion cells used in e-car battery packs.

India already has a robust tradition of two-wheeled transportation, as evidenced in this view of a parking lot at the recent England/India cricket test match. (Photo: Getty Images)

Electric scooters vs. electric cars

The cost to-annual income ratio creates an interesting problem for India, which is desperately counting on EV to help solve the country’s alarming concerns with pollution. In 2015, India launched its FAME-India policy, an initiative aimed at fast tracking the manufacturing and adaptation of hybrid and electric vehicles, as detailed in Fair Observer report.

But more than 90 percent of the vehicles manufactured under FAME-India from April 1, 2015 to March 31, 2019 were electric scooters, which are much more affordable.

Still, it hasn’t stopped carmakers from seeking to capitalize on the potential market for EVs in India, even amid growing concern about the country’s true viability of electric vehicles. According to Live Mint, the French manufacturer Renault plans to launch its first EV in India in 2022.

Touting a different approach, Renault says it’s EV strategy will focus on offering more affordable electric vehicles in India, through unique partnerships with government officials and private companies.

Tata Motors (parent company of Jaguar Land Rover) is also planning to tap into the India market with its Nexon compact SUV, as highlighted in another Live Mint story. The SUV will be equipped with Tata’s Ziptron modular electric powertrain, developed in the India-based company’s own facilities, and priced a lot cheaper than the Hyundai Kona.

The hope seems to be that the demand for electric vehicles will one day meet the investments being made in the technology, as Rajeev Chaba, managing director of MG Motor India, explained.

“Somebody has to take the leadership, and it will trickle down,” Chaba told Bloomberg.

“We have to start somewhere,”  said the managing director of MG Motor India, which plans to launch an electric SUV by the end of the year. 

WHY THIS MATTERS

Policy can drive development, but only affordable pricing and desirability can drive actual sales. Similar lessons are being learned in the U.S., and will hopefully lead to a smarter selection of EVs in the future.


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can be reached at marcusamick@aol.com
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