The road ahead is however lined with obstacles, including a lack of infrastructure to support such vehicles and high purchase costs, experts say
India's electric car ambitions slowed by infrastructure challenges
Sanjay Khiani from Mumbai is contemplating buying a new car. Although the idea of an electric car holds certain appeal and he is concerned about the high levels of pollution in the country, he says that he has ruled out buying such a vehicle because “they have not come of age”.
“They need to do more kilometres on one charge and you need to have charging stations all over the place, plus the charging has to be quick,” he says.
The uptake of electric vehicles has been slow to take off in the country. But India has an ambitious target to sell only electric cars by 2030 in an effort to reduce pollution and the country’s carbon footprint.
Companies are eyeing the opportunity with interest. The road ahead is however lined with obstacles, including a lack of infrastructure to support such vehicles and high purchase costs, experts say.
Lack of charging points in the country means that potential buyers are put off by the uncertainty about whether they will even be able to recharge their car on a long journey, often referred to as “range anxiety”.
“The key challenges to adoption of electric vehicles in India is primarily due to low penetration of charging infrastructure and perceived higher initial cost of acquisition,” confirms Mahesh Babu, the chief executive of Mahindra Electric.
Mahindra Group, an Indian conglomerate, is the first Indian company to manufacture and sell electric vehicles in India. Other Indian companies are also starting to move into the market – Tata Motors is developing its electric car strategy and planning to launch soon. Foreign brands are showing cautious interest in the market. There have been rumours that billionaire Elon Musk’s Tesla is interested in entering India, although such plans are yet to be confirmed.
“Many more electric vehicle manufacturers are set to enter into the fray, translating huge gains for the end users,” says Sohinder Gill, the director of corporate affairs at the Society of Manufacturers of Electric Vehicles (SMEV).
The targets fit in with New Delhi’s aims to address some of the major challenges that the country faces.
High levels of pollution, which affect the population’s health, is also a major concern. New Delhi has been rated as the world’s most polluted city and 13 of the world’s dirtiest 20 cities are in India, according to the World Health Organization.
Rising incomes fuelling demand for cars in India is further adding to the congestion.
“There are almost 140 million vehicles in India and vehicular pollution alone contributes to the 30 to 35 per cent of the total pollution,” says Mr Gill.
He says that meeting the Paris goals “can only be made possible by pursuing an electrically connected mobility mission”.
After US president Donald Trump last month announced a withdrawal from the Paris climate change agreement, India has insisted that it will push ahead with its commitment to the accord. Prime minster Narendra Modi has described a failure to act on climate change as “morally criminal”.
Another factor at play in the government’s desire to move away from petrol and diesel vehicles is that India is eager to reduce its heavy dependence on oil imports – something which weighs heavily on the country’s current account deficits.
The electric vehicle industry in India, excluding e-rickshaws, managed to sell 25,000 units during the financial year to the end of March 2017, according to SMEV. Out of these, motorbikes and scooters accounted for 23,000 vehicles, while the remaining 2,000 units were electric cars.
Mr Gill says that “the important thing is the trend and perception is changing fast”.
Mahindra is investing to scale up its electric vehicle production, despite mass demand not being there now, to be ready for a shift towards electric vehicles. It plans to double its production of electric vehicles to 1,000 units later this year.
However, the company acknowledges the challenges in India that are putting off the average consumer from going electric.
Mahindra’s electric vehicles include the e2oPlus, a hatchback aimed at urban commuters in India and the eVerito, a sedan, priced at about 750,000 rupees ( Dh42,720) and 900,000 rupees respectively for ex-showroom models. The eVerito can run for 110 kilometres on one charge.
“As far as affordability is concerned, when compared to fossil fuel vehicles, electric vehicles still seem to have a higher cost of acquisition, even though the total cost of ownership is substantially lower,” says Mr Babu.
Mahindra says its typical electric car buyers currently are those who are particularly concerned about the environment.
Beyond personal vehicles, Mahindra sees huge opportunities in the commercial vehicle space for transportation of people and goods. For example, BigBasket, an online grocery in in India, has bought electric vans from Mahindra.
“Going forward, Mahindra Electric has announced the future road map for electric vehicles in the country and this involves products being launched in the mass mobility eBus and electric three wheeler as well as high performance luxury segments,” says Mr Babu.
Ayush Lohia, the director of Lohia Auto Industries, which manufactures two and three-wheel electric vehicles in India, says that “the future of electric vehicles looks quite promising” but that “long-term government policy on electric vehicles” is very much required and the lowest possible taxation is needed to boost the industry.
The biggest expense that goes into producing electric cars in India are the batteries.
These are largely being imported from countries such as China at the moment because there is not a critical mass of electric vehicle production, industry insiders say.
But if more players enter the electric vehicle sector in India, it could help reduce manufacturing costs.
Tom von Bonsdorff, the managing director of Volvo Auto India, told the Times of the India newspaper that the country’s electric car ambitions were commendable, but he pointed out that “13 years is a very short time” to go all electric and achieving this requires “drastic change”.
“The question is more that we need to kickstart the activities to make sure that we get here.”
Mr Babu says that the government’s ambition “sets the stage for an even more favourable policy push towards electric vehicles, and he expects this to start to improve.
“Charging infrastructure is going to be very important aspect of that,” he says. “Discussions around this have already begun.”
If such developments materialise, it could be an easier ride for both manufacturers and customers when it comes to electric cars in India.