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High Commissioner Shri Vikram K Doraiswami's address at the London EV Show - 29 November 2022

Posted on: November 29, 2022 | Back | Print

High Commissioner’s address at the London EV show

I am delighted to be part of this effort of the vehicle industry to lead the transformation into the modern age - hopefully, this is part of the process of being a post-carbon transportation future.

Change in the transport sector is driven by pollution hazards, increasing energy costs, climate change and the need to sustain the mobility that powers the global economy.

Transport is central to the modern age – mobility, especially individual mobility has been a defining element of the 20th century. Transport has been as much a part of democracy as is of the modern age: Individual mobility powers individual choice while public mobility promotes social equality. 

India’s capital New Delhi has a population of more than 18.3 million with a density of around 30,000 people per sq. mile. This is the scale of transportation we are looking at and that is why India is important in the global transport scenario. 

For India, EVs are important for the following reasons:

(i) Climate commitments made in COP 26 (November 2021)

(ii) Air pollution particularly in urban areas.

(iii) Energy security – India’s energy import bill rose from US $ 96 million in 2001 to US $ 8.78 billion in 2015.

(iv) India’s aspirational middle class creates demand. India’s EV market is slated to be 3rd largest by 2030. 

Considering these, India has developed a mobility policy which is ‘shared, connected and electric’.

According to an independent study by CEEW Centre for Energy Finance (CEEW-CEF), the EV market in India will be a US$206 billion opportunity by 2030 if India maintains steady progress to meet its ambitious 2030 target of electric vehicles to account for 30 per cent of private cars and 70 per cent of commercial vehicles. This would require a cumulative investment of over US$180 billion in vehicle production and charging infrastructure.

India has distinctive advantages in making the shift towards electric vehicles (EVs), it has a relative abundance of renewable energy resources such as solar and wind and availability of skilled manpower in the technology and manufacturing sectors. India offers the world’s largest market potential, especially in the two/three-wheeler and buses segment. 

What has been done so far in India in this context?

In the last year (2021), India attracted US $ 6 billion in investment in EV sector alone. The government is also prioritizing the shift towards clean mobility, and recent moves to amend the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) II scheme to make electric two-wheelers more affordable, is a case in point. Under the phase two of the FAME scheme, as on July 11, 2022, about 469,315 electric vehicles were supported through demand incentives amounting to about INR 18.69 billion. Approvals have been granted to 6,315 electrical buses and 2,877 EV charging stations sanctioned in 68 cities across 25 states/Union Territories. 50 original equipment manufacturers (OEMs), both start-ups and established manufacturers, have registered and revalidated their 106 EV models. There are 1,576 charging stations sanctioned for set-up across 9 expressways and 16 highways.

In addition, multiple production-linked incentive schemes announced by Government of India intend to create a local manufacturing ecosystem to support goals around greater adoption of electric mobility transport. 100 percent foreign direct investment is allowed in this sector under the automatic route.

Supply chain management is key for effective transformation to EV vehicles vis-à-vis production of components, batteries and charging infrastructure. The Government of India has already started collaborating in the right direction, including committing to invest $6 million jointly with the Australian Government to explore lithium and cobalt mines in Australia, the incentives under the PLI scheme for setting up giga-factories, and so on.

In April 2022, one of the world’s most energy dense batteries at 54MWh was developed by a Bengaluru-based battery startup. Having a high density implies that the battery gives more power per atom, proving to be cost-effective when compared with alternatives such as sodium-ion or aluminium air. It takes just 30 minutes to fully charge a battery. This will make pave way for making EVs more economical, considering batteries usually account for 35-40 % of the total cost. Besides technology, financing is key for the future of EV transition.

Public mobility:

In India, car is today the shining star of transport sector. Car registrations in India rose by 2500% from 1981 to 2001 while the population grew only 77% in the same time. Share of public buses in the Transport Ministry of India fell from 11% in 1981 to just over 1% in 2001. 14% of Indian emissions is transport alone which is why public mobility is important. Future mobility of a large Indian cities will be public mobility. 370,000 more e-buses are needed in India; currently there are only 2200 e-buses on ground.

The question is who will buy / procure these buses.

The answer is State Transport Corporations (STCs) which are financially stressed and less effective. They reported total losses of US $1.8 bn in 2016-17 (only 7 of 62 STCs recorded profit). This is exacerbated by the high cost of e-buses, 2/3 times of diesel buses – high capital cost (CapEx) even if operating cost (OpEx) is low.

The solution is to move from bus to mobility, to consider mobility as a service. The STCs should be buying services, not buses, which is similar how TfL (Transport for London) works. The STCs pay per km fee, while the operator pays for the vehicle and let STCs collect the fee. The contracts work like ‘infrastructure contracts’ with fixed income periods. This is being tried in 5 Indian cities with standardized contract terms which in unprecedented in a federal system. This leads to assured kms, payment security, level-playing field and bankable contracts. Payment guarantee is also under development. The last tender issued was for 5450 e-buses. This model results in record per km low prices, 27% less than diesel buses and 33% lower than CNG buses, which implies a saving of US $ 22,000 per bus and US $ 264,000 over life of bus contract. It can have a positive impact on profitability of the STCs. This will be inflection point for transformation.

Implications:

Helps reduce the oil import bill. 

Increase financial incentive to decarbonize transport, especially public transport.

Revitalize STCs.

Reduce air pollution.

Reduced cost, possibly look at even monetizing air pollution savings through aggregation of carbon credit etc.

The way ahead:

NITI Aayog has set a target of 50,000 e-buses in India in the next few years in a phased manner. It is proposed to explore replacement of all 10 + year old buses with e-buses – over 40,000 in stock against less than 3000 at present. Shared solutions should be explored for 2/3 wheelers. The battery after completion of their last charging usage for EVs may be used for power grid solutions. 

Challenges:

Grand challenge ahead would be for the STCs to increase capacity and ensure progress. There are costs associated with depots and electrical infrastructures. Huge supply constraints are there as the current annual production is 1350 e-buses. There is need for massive financing close to US $ 10 billion in the next few years to achieve the target of 50,000 e-buses. International agencies like World Bank have to be engaged for risk mitigation. 

Still there are other questions such as what happens to commercial vehicles – especially trucks? We need to think of new solutions. As the Minister of Economy of Slovakia suggested, Hydrogen could be a key to ramp up green freight solutions.

Next comes the question of what happens to financing and how do we achieve quick changes – given the scale and diversity of the world and its population.

I hope that some of these could be debated and discussed at the London EV show.

November 29, 2022