Week 43 (Oct 18 - 24)
This week's recap - EV penetration in India could be delayed due to COVID-19, EESL invests in Thailand based SWAG, Private sector is yet to buy into NHEV plan, and Maharashtra tries to woo Tesla
EV penetration in India could be delayed due to COVID-19 As per India Ratings & Research (Ind-Ra), the coronavirus pandemic is expected to delay the penetration of electric vehicles in India, as low affordability and the government's priority on reviving the existing conventional automobile industry shift the focus away from EVs. Underlying challenges in the adoption of EVs such as higher battery cost and reliance on imports would prevail in the medium term, and robust government policies would remain key for the development of EVs in the country.
Key highlights of the report
EV penetration is likely to be faster in scooters, buses, and three-wheelers, as they are used for intra-city transportation, where the distance covered is shorter. This makes charging infrastructure easier to develop and viable.
e2W, especially scooters, could also see an upside due to a lower pricing delta between an EV & ICE and several models being available for buying.
The passenger vehicles (PVs) segment will face a double whammy, as consumers would be wary to buy a costlier EV than an ICE vehicle, while Auto-OEMs would refrain from incurring high Capex amid the pandemic.
Battery prices have dropped by 85% over FY10-FY20 globally and are likely to decline further with better economies of scale. However, prices for Indian markets are higher than the global average due to lower volumes.
Robust government support is imperative, as could be seen globally, for achieving the target of 30% electrification by 2030. For example, China (over 50% of the global electric fleet) witnessed a subsidy program of over USD60 billion during 2009-2019. The Indian subsidy program of INR100 billion (equivalent to USD1.4 billion) is much smaller than China’s.
India will continue to import EV components and that we would be limited to the assembling of battery packs in the near to medium term as the manufacturing of batteries may take longer. While the government has laid out a Phased Manufacturing Program to promote localization of EV components, we lack meaningful resources of lithium and cobalt, which are the key raw materials for a lithium-ion battery. Moreover, significant capital expenditure is required to establish battery manufacturing facilities, undertake research and development, and develop required expertise, which is difficult in the current scenario and can only be justified with a larger scale.
Growth drivers for electrification
Earlier electrification of commercial fleets of home-based delivery apps (such as Swiggy / Zomato) in 2W and Ola / Uber for PVs, than vehicles for personal use, due to the longer distance traveled daily making it economically feasible.
Increased e-commerce should also help electrification in 3W goods carriers and light commercial vehicles (CVs).
Electrification is likely to be highest in buses, due to the highest incentives (41%) being allocated under FAME -II scheme as well as the initiatives taken by state governments to electrify bus fleet amid increasing pollution.
The Indian government has laid out an INR100 billion outlay over FY20-FY22 for faster EV adoption under the FAME - II policy. This includes direct subsidies (86% of the total amount) as well as the development of charging infrastructure. Additionally, Goods and Services Tax on an EV is 5% compared to 28% for an ICE.
Energy Efficiency Services Ltd to invest in Thailand's e-mobility player SWAG State-owned EESL looks to invest in Thailand-based SWAG EV, an emerging e-mobility player, which uses clean energy to provide swappable batteries for electric motorbikes. With over 21 million motorbikes in the country, SWAG will use Solar energy to charge the swappable batteries that will increase the capacity of the power grid to incorporate a higher share of renewable energy in its energy mix and trigger decarbonization in Thailand. The concept is replicable in various locations and the investment will be used to implement several pilot projects to test the use and acceptance of shared batteries as a service model. [Source: ET]
The private sector yet to charge up on electric vehicle infrastructure. The Union government’s decision to invite proposals for setting up and operating electric charging infrastructure across some 18 major highways may be a concerted move to promote such installations but whether such a business is independently viable is yet to be established. A senior executive in one of the auto fuel retailing companies said setting up e-charging stations independently was not viable at this juncture and battery swapping with standardization was a better option. [Source: BusinessStandard]
BMTC begins trial runs of electric buses on 10 key routes After a gap of six years, the Bangalore Metropolitan Transport Corporation (BMTC) Wednesday has restarted trial runs for an electric bus in the city. The 12-meter long 35-seater AC e-bus has been provided by Olectra Greentech and is capable of running 200-250 km on a single charge in traffic conditions. During the trial run across multiple routes, the performance of the bus will be assessed in terms of battery charging, carrying capacity, and its response in heavy-traffic roads, among other indicators. The outcomes of this will help BMTC finalize and optimize the operation of electric buses in the city. [Source: IndianExpress]
Maharashtra invites Tesla for investment. After announcing a possible entry into the country, Elon has found himself being courted by Telangana, Karnataka, and now Maharashtra. All 3 states have favorable EV policies from an investment point of view. Maharashtra is already home to a host of domestic and foreign automobile manufacturers with Chakan Industrial belt near Pune a major automobile hub in the state. [Source: TheScroll]
Other interesting global news
Why are electric cars expensive? The cost of making and buying an EV explained
IHS: Overwhelming number of new car sales will be EVs in the coming decades
Electric cars 'as cheap to manufacture' as regular models by 2024
Tesla beats street estimates on profit and reaffirms goal of 500,000 deliveries
Tesla is making plug-and-play microgrids with a wide range of applications
GMC Hummer EV: 5 things to know about GM’s first electric ‘super-truck’
Biden campaign tells miners it supports domestic production of EV metals