Electric vehicles: opportunities and threats

A couple of months before Piyush Goyal, Union Minister of State with Independent Charge for Power, Coal, New & Renewable Energy and Mines, announced that only electric vehicles (EVs) will be sold in India from 2030. This is the basic reason why whole automotive industries have been heading toward only Electric Vehicle. Placements in engineering colleges have been going on, where central of attraction is electronics and related to it. Various institutions have been engaged in this process. NITI Ayog was preparing the road map for the same. Different ministries had given their inputs and ideas, which are being worked out by experts, as part of a national mission to promote solar energy power plants and electric vehicles. Plans like (NEMMP) National Electric Mobility Mission Plan has been sketched.

NEMMP plan target has been set of only 5-7 million Electric Vehicle annually by 2020. On the other hand, our automobile market including two, three and four wheelers are expected to sale 23 million by 2030. There are three main benefits of this plan. First to mitigate adverse environmental impact from road transport. India has been one of those countries which always stands on their commitments at international platform. India has promised in Peris agreement to control emission. To meet those commitments Indian steps to move for electric vehicle. Second objective is to reduce noise and air pollution. It is true that at NVH (Noise Vibration and Harshness) point of view electric vehicle gives better response than those vehicles which use I.C. Engine. Third is to focus on growth of domestic manufacturing capabilities.

Transition between vehicle compatible with IC Engine and Electric vehicle would require increasing the current global EV battery production by a factor of five, just to cater to the Indian EV market. This huge demand for batteries is an ideal opportunity for the domestic manufacturing industries and job creation. Due to lack of suitable policy support as of now we have missed such opportunities. Consequently, it leads to increasing import bill for electronics products currently highest after oil and gold. We are heading for electric vehicle so we must keep this important thing into mind. Accordingly, ground needs to be prepared for further playing. I am saying so because annually Electric Vehicle market is expected to be around more than $50 billion as per expert’s anticipation. It could also lead to current account deficit since India cannot afford to fulfil such a high demand solely through imports.

These things are good that we are heading toward emission less technology and transforming generation of technology. But still many questions have been hanging before us which needs to be answered. Challenge starts from battery technology. Variants of lithium ion batteries such as lithium-titanate, lithium-cobalt, and lithium-sulphurare predominantly used in electric vehicles. For manufacturing of Automotive batteries lithium is of particular importance. Do we have that kind of facilitation to develop self-sustained production? As of now reality is, No, a big No. It is so because the resource is limited to only nine countries and 95% of global lithium production comes from Argentina, Australia, Chile and China. We have not yet prepared for it. Without doing such basic things if we try to shift and talking for sudden changes will be like beating the bush.

If we don’t have production facilitation, then will supply chain of Lithium be feasible for us? No, because If we see lithium price in 2013 and 2017, we will find that price is more than double. In upcoming years there are chances of more hike in price of lithium. Basic law of economics is there, high demand of limited resource will definitely lead to hike in prices. These things will lead to deficit in our budget. It could be possible that Electronics jump and take position of increasing import bill of crude oil. Second reason is that according to one research 40000 tonnes of lithium is required to manufacture Electric Vehicle batteries in 2030 which is higher than the current annual global lithium production of 32000 tonnes. How our demand will be met? Even if global production is injected unilaterally in India, we are not going fulfil our demand.

One thing must be cleared that just copying stuffs from the rest of the world and pasting and forcefully inserting in our country is not always good idea. I would like to give some examples to support my statement and is to be learnt from the historical experiences. U.S. and China are two main players who will be going to play from centre. It is so because they have ambitious electric mobility targets, are way ahead in the race to secure lithium supplies. China has been second largest reserves of lithium and is making strategic moves to control most of international lithium mining assets. For example, China’s Tianqi Lithium holds a majority share in the expansion of the Talison Lithium plant in Australia and equity investors are planning to buy stakes in Chile’s lithium mining companies.

Similarly, USA has tried its level best and has been successful in securing mines in Chile and Australia where potential of lithium exists. Apart from that Tesla has been planning to manufacture half a million Electric Vehicle by 2020 and investing in Research and Development to reduce supply risks. These two countries played the same game in past to disturb the economy of the world. How can we forget the scenario like the one that played during the oil crises of the 1970s and the price shocks of 1980s and 2000s?  I believe these kinds of things are the new mapping of uplifting their economy on the name on emission. Economy of US and China have never ever been static and fixed like other countries. They have been shifting it from time to time.

Today these both countries are self-dependent for fuel needs for their consumption.  America has been using shale gas and on the other hand China have also found alternatives. Due to it burden from middle east decreases and price fell. This is the basic reason why America has no more political interests in middle east. Now they have been appealing for emission less environment. All the first world country pleading not to use coal for energy generation, but fact is that they have used the same coal blindly to become developed country from a developing country.

One more major concern of this concept of electric vehicle is that well to wheel efficiency might decrease. After insertion of electric vehicle great amount of electricity will be needed. From where those electricity will come? In India’s present energy mix consists of 55% coal, 30% oil, 9% natural gas and only 2% is renewable energy sources. Majority of energy comes from coal and only 2% of energy is extracted from renewable energy. It could be more dangerous if we don’t plan for it properly since we know coal gives more emission than conventional fuels. If coal is needed, then additional coal must be imported from Australia or somewhere else which will impart additional burden on our economy also followed by deficit in budget.

Apart from it one more challenge is that how charging system will be assisted? Whether will it be done at home or common charging point will be made? If it is done at home, then how men engaged in three-wheeler will do it? I believe here one thing can be done. For passenger vehicle people should make charging point at home. For three-wheeler common charging station can be developed where batteries will be replaced like existing LPG gas cyllinder. For long range travelling common charging point should be made where halting station exist like Dhabas on Highway. This could be solution. Other than that high-speed charging technologies are needed to be developed. In mobile phone one plus five have shown such innovations where phone is charged with in half hour unlike other mobile phones. Such kind of technologies should be developed so that with in 15 minutes one can charged the vehicle.

Even government is trying its best to promote electric vehicle. Under the new goods and services tax (GST) regime starting 1 July, EVs are being taxed at 12%, compared with 28% that petrol and diesel vehicles are subject to. Hybrid vehicles are taxed at 43%. The government is also offering benefits that include zero import duties on electric vehicles as well as lower electricity costs. So, to achieve the given goal work needs to be done with good pace. From charging infrastructure to availability of electricity, everything needs to be revamped and build up. I am saying so because consumers will not shift to EVs unless the very basic requirement of charging stations at regular intervals is met.

At the end one more thing I would like to say that the government must also consider commercial vehicle because the majority of emission generated from there since they still have been using very old engines. So, some scraping policies need to be put forward along with the promotion of electric vehicle. That would be the optimum way of reducing emission.