Mains Marathon

Approach

• Introduce by defining electric vehicle and Indian Programmes to promote electric vehicle production.
• Discuss the challenges of India in EV manufacturing.
• Suggest measures to increase EV production.
• Conclude by stating that if India overcame the challenges, then India is ready for EVs.

Answer

An electric vehicle operates on an electric motor instead of an internal combustion engine and has a battery instead of a fuel tank. In general, EVs have low running costs and are also environmentally friendly. In India, the fuel cost for an EV is approximately 80 paisa per kilometers which is cheaper than a petrol-based vehicle.

In 2013, the Government of India formulated the National Electric Mobility Mission Plan that committed to ensuring that by 2030, at least 30 per cent of vehicles on our streets would be electric. This deadline is unlikely to be met. The more recent Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme in 2019, commits to providing incentives in terms of subsidies and supporting technology to encourage the manufacturing and purchase of electric vehicles. The EV market in India is projected to reach $700 million in 2025, a dramatic jump from $71 million in 2017 — a 10-fold increase in under a decade.

Challenges to EV Manufacturing

• Supply Chain Disruption: The last two years of supply chain disruptions due to the Covid-19 pandemic and the US-China trade war which led high-tech industries continue to face logistical headwinds, including shortages of critical components like silicon chips and batteries. India’s big automobile companies also had to stop production owing to shortages of chips, like those that power new multimedia features in the vehicles.
• Expensive Materials: The consequence of supply chain disruptions and the race to shorten supply chains is that critical components are becoming prohibitively expensive. In the case of EVs, Indian manufacturers are also struggling to source lithium-ion batteries, which are largely imported from China, South Korea and Taiwan. Prices for battery-grade lithium carbonate, a key input, went up 400% year-on-year in November 2021.
• Import Dependence for Raw Materials: India does not possess critical raw materials such as lithium, cobalt and nickel, which are used to make lithium-ion (Li-ion) battery cells. Consequently, Indian manufacturers rely heavily on imports of battery cells from China, Japan, Korea, and Taiwan. Although India has received an encouraging response from investors under the PLI scheme to manufacture ACC batteries domestically, most bidders are expected to start manufacturing only from 2025.
• Charging infrastructure: EVs are typically powered by lithium-based batteries. These batteries usually need to be charged every 200-250 kilometres or so for a car. So, India needs a dense proliferation of charging points. It takes up to 12 hours for a full charge of a vehicle at the owner’s home using a private light-duty slow charger. To compound this technological problem of slow charging at home, there are only 427 charging stations around the country. This is woefully inadequate.

Solutions to increase the production of EVs

• Increase Competitiveness: Automobile industry majors must act fast to ensure the future competitiveness of the Indian EV ecosystem, which relies heavily on imports. Indian automobile majors would do well to shore up supply chains and upgrade capacities within and between different manufacturing clusters.
• Two-Wheelers for EV Head start: The two-wheelers offer a good opportunity to localize EV component manufacturing. This segment already accounts for nearly half of all new passenger EV registrations. India is already the largest two-wheeler manufacturer in the world, and the bids to set up battery gigafactories indicate a healthy appetite for new-age technologies that can help shorten supply chains. It’s time the bigger companies wake up and jump-start their EV ambitions.
• Battery Manufacturing: India needs to focus on building a supply chain, primarily by manufacturing batteries domestically and bringing down the cost of EVs in India. Recently Tesla Inc. has incorporated an Indian subsidiary - Tesla India motors and Energy Private Limited with an aim to eventually set up a manufacturing unit in India wherein Tesla cars will be locally produced. Similarly, India needs to attract foreign battery manufacturers as well as domestic players to set up local production facilities. Such measures would lower the cost of batteries and EVs, improving cost competitiveness.
• Mining Urban Waste: Manufacturers need to think about the life cycle of batteries and formulate plans to mine urban waste to ensure that precious materials can be extracted from batteries. This strategy has the potential to save up to 50% of materials required to produce new batteries.

India must prepare itself with better charging infrastructure, battery-making factories and smart incentives for car companies and consumers to go electric. Then, India is ready for a world where electric vehicles will dominate transportation.