India's unique path towards electric mobility revolution

India's unique path towards electric mobility revolution… E-MOBILITY REVOLUTION 

Abhishek Saxena Public Policy Professional NITI Aayog, Govt. of India

India economy is growing at a rapid pace with a GDP growth rate of more than 7% in the last 5 years. This coupled with the increase in per-capita income has led to the massive mobility needs in the country. This is evident from the Census 2011 data which shows that nearly 40% of Indians travel more than 6 Km for work. The addition of non-work related travel to, will point to immense travel needs for 1.3 billion people in India. Undoubtedly, People in India, and across the world, are travelling more than at any point in history.

The increased mobility needs ofthe country would have to be met in a unique and innovative way by transforming the traditional means of mobility. This, coupled with the issues of pollution & global warming prevalent in India and across the world requires a mobility revolution, which would be led by Electric Vehicles, among other forms of shared, connected and transformative mobility solutions.

India is perfectly poised to be a leader of the global electric mobility revolution. According to a recent Morgan Stanley Blue paper titled ‘ India's Transport Evolution' (May 2018), India would have 30% EV penetration and 35% of total miles would be shared, by 2030. Moreover, the blue predicts that from now till 2030, every second car sold across the world would be in India. This has presented a huge opportunity for India to move towards clean shared and connected mobility solutions. More than 2.5 crore vehicles were sold in India in 2017, out of which nearly 78% were 2 Wheelers, 15% were 4 wheelers and the rest were 3 wheelers, buses & trucks. The vehicular mix is unlike any other western country where the majority of automobile sales are driven by 4 wheelers. It is evident from the lower car penetration of 18 per 1000 population in India compared to more than 800 cars per 1000 population in some cities of the US & Europe. This presents a unique landscape in India to usher towards electrification.

The cost dynamics of an electric vehicle is different from the conventional Internal combustion engine vehicles. The upfront cost of Electric vehicles is higher than its electric counterpart, but its operating cost (including fuel, maintenance, etc.) is much lower than electric. Thus, the Total Cost of Ownership (TCO) parity between electric and ICE vehicles would be achieved earlier for vehicles having usage (in KMs) every day. This is true for commercial vehicles, public transport and shared mobility.

The yearly combined sales of 3 wheelers & commercial vehicles( buses & trucks) are nearly 1.5 million( nearly 7% of total vehicle sales). But, the majority of travel needs of the citizens are met by public (& shared) transport. It directly correlates with the higher usage of public transport vehicles (KMs per day) compared to lesser usage ofprivate vehicles in India. electrification story of 2 wheelers, which are largely used for private transport, would be very different from cars. Electric 2 wheelers have a smaller battery size( 1-3 KWH), smaller motor and lesser number of electronic components compared to electric 4 wheeler. With the rapidly falling battery prices slated to go below $100/KWH by 2030, the electric 2 wheelers would achieve the upfront price parity compared to ICE 2W. This combined with the lower operating cost and minimum need for public charging would make a good case for faster electrification.

The government of India, in its commitment to clean mobility, has recently approved a US $ 1.3 billion scheme called FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India Phase-II). The scheme aspires to incentivize 10 Lakhs E2W, 5 lakhs E-3W, 55,000 e-4W and 7,000 buses (on OPEX basis) over the next 3 years period up to March 2022. The scheme rightly captures the essence of the Indian mobility landscape by providing more than 90% of demand incentives for electric 2W, 3W & buses. Along with the fiscal incentives of Rs. 10,000 for every KWH of battery (for 2W, 3W & 4W), other incentives announced by various ministries and state governments would pave the way for rapid electrification of the automobiles in the country. The future of India would surely be driven by clean, connected & shared mobility.

This presents a direct opportunity for the electrification of public transport, where the higher upfront capital cost can be offset by the lower operating cost, thus making a viable business proposition.

*** The views and analysis expressed in the paper/document are personally those of the author. They do not reflect the views of NITI Aayog. NITI Aayog does not guarantee the accuracy of data included in the publication nor does it accept any responsibility for consequences of its use.