Air pollution is an insidious killer. And India is currently holding the embarrassing title of 7 most polluted cities out of the 10 most polluted cities across the world. The world’s most polluted city on the earth is Gurugram. The severity of the situation can be estimated from the fact that life expectancy is reduced by almost 10 years in Delhi NCR. Though it’s an alarming time, but the good news is that people are now aware (out of fear) about the adverse effects of air pollution and willing to contribute to make a change and also expect concrete solutions and stringent actions from the government. This has forced the political parties to cover the issue in their election manifestos as well. One of the fascinating and aspiring solutions by political pandits is the growth of electric vehicles in India.
The Indian automobile industry became the fourth largest automotive industry in the world. Alone, the electric vehicle market was valued at $71.1 million in 2017 and estimated to reach $707.4 million by 2025 which is an increase of 34.5% CAGR during the stipulated time. The Indian government is playing a major role in increasing the growth of the industry by providing subsidies and schemes for supporting the industry. Recently, the government has come up with a three-year subsidy plan of $1.4 billion. This will help the market to grow and attract more investors as well as create curiosity among the consumers.
However, the path to create a strong EV market in India is not as easy as it sounds. There are numerous challenges that are still not addressed by the Indian government. The inadequate infrastructure for charging vehicles is one of the major challenges in India. Presently, there are only 150 charging stations across the country. This fact acts as a strong restraint for the adoption of electric vehicles by the customers as well as for investors to continue with the investment. For instance, Mahindra & Mahindra recently stopped its electric car production owing to the poor infrastructure in India. Also, due to the same reason, Volkswagen has explicitly mentioned after numerous rumors that they do not have any plans to shift their whole automobile production to electric vehicles by 2025.
The lack of infrastructure brings many other challenges as well. One of them is the theft of electricity by consumers. There are about 2 million electric two-wheelers and e-rickshaws in India. Due to the absence of charging stations and expensive power, many consumers use unethical means such as theft for charging their vehicles. In Delhi alone, the theft due to the charging of EV vehicle is estimated to be more than 20 million dollars per year. Most of the Indian Discom companies are already struggling to keep their losses minimum and achieve the targets set under the UDAY scheme. If this trend continues to grow, this may give an extra financial burden and create an imbalance for the Discoms which will eventually be the liability of the state and central government as we have seen before UDAY.
The new subsidy program by the government of $1.4 billion may sound very promising but there may exist a flaw. Out of the total subsidy amount, only 10% is allocated for building the infrastructure to set up charging stations. This amount may not be sufficient considering the scale of the market and the consumer size in India.
On an average, EV vehicles run about 80-100 KMs in one full charge which may resist consumers from investing money. Also, Battery life and charging time may also act as a perspective challenge for the consumers. Therefore, the government, as well as the car manufacturers, need to substantially invest in research and development in order to improve the battery life as well as reduce charging time for the vehicles.
The future of the automobile industry is supported by numerous factors such as the availability of skilled labor at low cost and low-cost steel production. The industry has great potential for investment and creates direct and indirect employment to skilled and unskilled labor as well. Though the idea of the electric vehicle market appears very fascinating in the Indian context, but it is definitely not a smooth road to achieve!