In the light of India’s pollution problem, and the need to move towards cleaner alternative fuels, it is important to examine the country’s readiness to move towards electric vehicles and whether the government’s ambition of an all-electric fleet by 2030 is feasible. While debates have focused on the government’s role, the automotive industry’s preparedness, the technology and cost, there has hardly been any debate on what customers want. Several global studies have shown that the biggest concern customers have when considering the purchase of an electric vehicle is “range anxiety”. The user worries about whether the battery will run out of power before the destination or a suitable charging point is reached.
A petrol or diesel car can run for a minimum of 300-350 km before it needs to be refuelled. Electric vehicles in the Indian context can at best travel 80 km before they are required to be recharged and recharging takes a minimum of six to eight hours before the vehicle is available again. Consumers are understandably concerned about how long the vehicle can run, particularly given unpredictable traffic conditions that can leave the customer stranded. There are additional challenges the industry has to overcome to make electric vehicles the preferred choice for customers: availability of vehicles, choice for customers in terms of models and makes, cost of vehicles, charging infrastructure (public and individual) and the availability and quality of electricity supply.
Currently, electric vehicles account for less than 0.5 per cent of vehicle sales globally; in India less than 25,000 electric vehicles — cars and scooters — are sold annually. Only one model of car is available in India. For customers to have a choice of vehicles and brands will require vehicle manufacturers to bring their international model line up into India. Most of the global models are priced above $40,000, with subsidies, and these models are expensive for the India market. For large numbers of Indian customers to buy electric vehicles, the purchase price has to come down significantly. The cost of the battery accounts for a large part of the vehicle’s overall cost. But with global developments, including advanced research in battery technology, ongoing, battery costs are expected to go down significantly by 2018. In the next 5-10 years, electric vehicles could potentially be available on par with existing petrol and diesel vehicles, making them affordable to customers.
The final frontier with respect to electric vehicles is the availability of the fuel, which is electricity. There are two approaches being followed: setting up electric vehicle charging centres, and second, battery-swapping infrastructure. Both are important if customers are to have an uninterrupted journey. Electric vehicles are disruptive in nature and oil companies that are dependent for their survival on existing technologies will be greatly impacted due to the shift. These companies with their readymade infrastructure will transform themselves to providers of energy for the transportation sector when the need arises.
For electricity companies such as state electricity boards and private companies such as TATA Power, this is an opportunity to get new commercial customers, and they will quickly move in to grab the opportunities. In the short-term, however, the charging infrastructure will be a challenge. As more electric cars are sold, many companies will develop business models around electric vehicle charging. With momentum behind electric vehicles globally, it’s probably time for customers to make their choice.
(The author is an auto industry expert and managing director of Avanteum Advisors LLP, Chennai)
