Just last year, the conversation around electrification in India just got louder by a few decibels. The reason – the introduction of a piece of legislation that had, for the first time piqued everyone’s interest, end customers included. But, right from the moment it was launched, FAME II divided opinion.
While prominent names in the industry claimed that much more was needed if the country was to remain on track to achieve its electrification goals, many others hailed it as the much-needed boost for the electrification in India, claiming that this piece of legislation would see the country through the finish line and help achieve complete electrification.
One year on, the world is a totally different place. With the outbreak of the Covid-19 pandemic, vehicle sales are lower than they used to be. People aren’t buying regular cars, let alone electric ones. So where does that leave India in its journey to total electrification?
To answer this and understand more about the Indian e-mobility space, we caught up with Sohinder Gill, Director General of the Society of Manufacturers of Electric Vehicles (SMEV) and CEO, Hero Electric Vehicles India. I started by asking him what impact Covid-19 has had on India’s mobility space.
“The on-ground reality is that it has particularly taken a backseat, particularly due to the Covid-19,” he says. “Some categories like two-wheelers, three-wheelers, low-speed three-wheelers are better placed. Cars not doing anything at all and the same applies to buses, because of lack of resources. That said, a lot has been happening on the policy front. One after the other, many state governments are announcing lots of measures to attract manufacturing into their states, or simply trying to promote electric vehicles directly or through infrastructure.”
Pre-Covid, things were looking up and the industry witnessed a lot of positive market trends related to e-mobility. For instance, the attractive prices of electric two-wheelers had the price-sensitive Indian customer, for whom affordability and value for money are key decision-making factors, completely hooked.
According to Gill, as things begin to settle down, this trend will be on the rise for the next 2-3 years.
India can Become 30% Electric by 2030
Since it’s been a year since FAME II was launched, I was curious to know what the industry sentiments were.
Gill explains: “FAME II was sort of a good thought into localisation, self-dependence and trying to move the market to new higher performance levels, bigger batteries, higher range levels, etc. That said, it was too premature as the market was in its very nascent stage. Instead of nursing the market at that point, there were obstacles being put in. For example, if you are not 100% localised within the next couple of months, you would not get subsidised.
“Similarly, if your vehicle performance is below a particular speed or a range, you won’t get a subsidy. The maximum subsidy would be capped at 20%, which means affordable vehicles would never get 20% as they would fall short of that MRP tier. Those were the things that were good to implement, but maybe after a few years. That’s where they went wrong.
“We all know that e-mobility will surely happen, because there are so many distinct advantages of EVs like low maintenance, smooth ride, home-to-home, low running cost, long life and so many things. The question is how quickly you want to make it happen? Government intervention is supposed to quicken the pace because there are also two national objectives of the country from FAME II point of view – air and exhaust pollution and crude oil self-reliance. The government’s steps to quicken the pace was faltered by the policy intervention which were unkind to us; it has not accelerated the pace, rather deaccelerated it.
“There is a common view that if you at least accelerate the electric mobility and adoption of electric mobility the way we want to in these low hanging fruits like two-wheelers, three-wheelers and buses, India can become 30% electric by 2030. It means we need to really front-load the subsidies to the first few million customers, so that the vehicles can be seen and experienced. Once you have done this, only then can you sharply taper off the subsidies.”
Gill isn’t too worried about the charging infrastructure in the country, as he believes that the government has been quite active about it.
Range anxiety hasn’t been a deterrent for Indian customers. But infrastructure-wise, one of things that he said really caught my interest. This happened when we were speaking about inter-OEM co-operation, and while Gill said that there hasn’t been much of that, mobility technology companies like Ola are exploring battery swapping technology with the hopes of introducing it to the Indian market.
While battery swapping hasn’t been a huge success in international markets, for the price-sensitive Indian market, it might just be a game changer. “Another collaboration that has recently happened is rapid charging models for two-wheeler batteries between Hero and another company, which has developed a rapid charging solution,” adds Gill.
World over, start-ups have introduced some major disruptions in traditional industries and the Indian automotive industry is no exception. That said, Gill believes that automotive is not an easy game. His advice to start-ups looking to venture into e-mobility – breaking electric mobility into bits and pieces and concentrating on the part which they feel they can create a differentiator, and the greater part of this would be technology.
People are looking at India as a fertile ground for any new technologies, especially from a business or manufacturing point of view.
As our conversation moved forward, I asked Gill about challenges that he foresees. He was quick to respond by saying: “The rapidness of adoption; otherwise there is no challenge. Only thing is whether we can reach that curve where the exponential growth starts. When we have crossed that threshold and we have gone into a major mass mobility, that’s the challenge here. It seems to shift time and again by a few months or a few years.
When asked where the government fits into this, Gill says that even if subsidies were to be left aside, one big ask would be to realign the budget from Rs. 10,000 crores (INR 100 billion). He also firmly believes that the government has been very successful in transforming habits, case in point – the overnight shift from petrol and diesel vehicles to CNG in commercial vehicles.
Gill expects steady growth in the Indian over the next couple of years, especially seeing demand for city-speed two-wheelers, three-wheelers and micro-logistics pick up over the next two-three years, closely followed by taxis and mini-buses in the next level. While this might not be the ‘exponential growth’ that some predicted on FAME II’s announcement, it definitely is something to be optimistic about. But Gill adds that this might be the perfect opportunity for people considering to enter the Indian e-mobility space to take the plunge.
He concludes: “People are looking at India as a fertile ground for any new technologies, especially from a business or manufacturing point of view. I believe there’s a message for business houses out there who are serious about entering India or taking advantage of the Indian market – if they are interested to jump in, this is the time. Otherwise, if they wait to time the market, it might just be too late.”