Electric Vehicles in India – An idea whose time is now?

Will 2017 be the year in which electric vehicles embed themselves firmly into the public imagination? We are still in January, and we already have a lot of interesting and interconnected news coming from the Indian electric vehicles sector.
Earlier this week, Okinawa Scooters announced the launch of its electric scooter “e-Ridge”, priced at Rs. 43,702(ex-showroom Delhi). According to the manufacturer, Ridge has a range of 90 km and comes with two charging setups(fast charging unit charges the battery fully in 1-2 hours while the normal one takes 4-6 hours). A week earlier, JSW Group in Davos announced its intentions to venture in electric car manufacturing by 2020. The group also said that it will launch electric 2 wheelers before 2020. And today, Moneycontrol.com reported that Tata Motors is betting big on hybrid and electric vehicles. Tata Motors had earlier received orders for 25 Hybrid buses from Mumbai Metropolitan Region Development Authority (MMRDA) and will supply more than 50 fully electric buses to the Himachal Pradesh government. This follows the launch of Ashok Leyland’s first Made-in-India electric bus in October 2016.
Are these just isolated events, or these parts of an increasing trend of electrification of mobility, particularly road transport? To answer this question, we need to look at a few major drivers across the globe – technology & cost, increased visibility and government policy support intended at cutting down green house gas emissions.
Technology & Cost changes 
Disruptive Technology
In this “must-watch” video, Tony Seba explains why Electric vehicle is a disruptive technology

  • Electric motor is 5X more efficient than an Internal Combustion Engine(ICE)(90-95% for electric vs 17-21% for ICE)
  • EVs are 10X cheaper to charge/Fuel
  • Maintenance – EVs have 100X fewer moving parts – Gasoline(Petrol) car has 2,000 moving parts vs 18 moving parts for EVs.
  • EVs are more powerful than ICE

Tony Seba calls EVs as Computer-on-Wheels. An interesting interview with Tony can be read here.
Decreasing battery prices
In its very aptly titled report Electrifying insights: How automakers can drive electrified vehicle sales and profitability(January 2017), McKinsey highlights the fact that the average battery pack price has reduced by a whopping 77%(yes, that is right) in just 6 years – from 2010 to 2016. During this period, the global electric vehicles sales increased by 160% per annum(from 4,000 units in 2010 to 530,000 in 2016).

The report suggests that based on the current projects, the battery pack price will drop below $190/kWh by 2020 and to $100/kWh by 2030.
Increased vehicle range
According to the report “Since 2013, the estimated range for many EVs has increased significantly. For example, base models of the Nissan Leaf and Tesla Model S grew from 75 and 208 miles per charge in 2013 to about 107 and up to 249 miles in 2017, respectively”. While the examples are for passenger cars, the increase in vehicle range can be extrapolated to 2 wheelers and 3 wheelers as well.
Widespread charging infrastructure
The number of charging stations globally is estimated to increase from around 2 million in 2016 to more than 12 million in 2020. According to a survey conducted last year by Nissan, Japan has more electric charging stations than petrol stations.

  1. Increased visibility and capturing of public imagination

If there is one company that has redefined the electric vehicle industry(or potentially the entire automobile industry), it would be Tesla. In 2013, when it’s “Model S” won the Motor Trend Car of the Year, the entire industry and potential customers took notice. It became the first car without an Internal Combustion Engine(ICE) to win the award. And in 2015, Tesla simply blew away the automobile industry when it’s P85D Sedan was adjudged as the “Best car ever” by ConsumerReports.org. Jaws dropped when it was announced that the P85D Sedan score 103 points out of the possible 100 points for conventional cars, and ConsumerReports had to change the scoring methodology to account for the points scored by the Tesla vehicle. While the  early models of Tesla targeted the wealthy Silicon Valley professionals, the yet to be launched Model 3 has already become one of the most sought after cars, with more than 400,000 advance bookings across the world ever since its launch announcement in March 2016. With the success of Tesla(along with Space X), its founder Elon Musk inherited the most admired CEO from Steve Jobs, and became part of the popular culture when Robert Downey Jr. modeled his portrayal of Tony Stark(Iron Man movies) after Elon Musk. Given his popularity today, it is hard to believe that Tesla almost died in the winter of 2008, and how Obama’s election brought Tesla back from its near-death experience. If you are interested in the Tesla story(and the SpaceX story), Elon Musk’s biography by Ashlee Vance is highly recommended.
While Tesla eventually succeeded, there were also some high profile failures. Better Place, founded by Shai Agassi and which raised almost $1 Billion in capital, is one such failure. The firm established an innovative battery swap model, and had all the ingredients for success, but somehow lost the way and went bankrupt around 2013. A post-mortem of what went wrong is available here, but the point here is that even in its failure, the firm helped the electric vehicles industry get the attention of investors and the automotive industry.
Today, thanks to the effort of Tesla and others, the EV segment is buzzing with activity, with companies like General Motors jumping onto the EV bandwagon with models like Chevy Bolt EV, which is giving a tough competition to Tesla Model 3. Startups like Faraday Future and NextEV(headed by former CTO of CISCO, Padmashree Warrior) are also aiming at garnering market share in this nascent sector.

  1. Policy Support

Many countries across the globe have been promoting EV technology through rebates. For example, in the USA, all-electric and plug-in Hybrid cards purchased after 2010 could be eligible for a federal tax credit of upto $7500. Thanks to the liberal subsidies and incentives for buying EVs and for manufacturing EVs, China overtook both the USA and Europe in annual sales of Electric Vehicles and Plug-in Hybrids.
Now, where does this leave India?
Indian Scenario

  1. Policy Support

The National Electric Mobility Mission Plan 2020, launched in 2013, targets a vehicle population of 6-7 million electric/hybrid vehicles in India by the year 2020. In 2015, the Department of Heavy Industry launched the FAME(Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) India scheme, and allocated Rs.795 Crores for the Phase I of the programme to be implemented in 2015-16 and 2016-17. The focus areas include Technology Development, Demand Creation, Pilot Projects and Charging Infrastructure.  The FAME India is linked to the “Make in India” programme and the “Smart Cities” Initiative. The Gazette Notification of the FAME India Scheme can be downloaded here. The incentives for buyers of the EV are available in the Annexure 13 of the Gazette Notification.

  1. Start-ups and Industry initiatives

Some of the key figures in the Venture Capital and Angel investing community have realised the potential of EVs and have made strategic bets in some of the EV start-ups. The notable example is Ather Energy. Founded by IIT Madras graduates Tarun Mehta and Swapnil Jain, the e-scooter manufacturer got the financial backing of angel investors like Flipkart founders(Sachin and Binny Bansal), and later on, from the global hedge fund, Tiger Global. Ather Energy got perhaps its biggest validation when Hero Motocorp decided to invest Rs. 205 crores in Ather.
Ratan Tata is one of India’s most well known angel investors who is convinced about the future of EVs. In July 2015,  he invested an undisclosed amount in Ampere Vehicle, a manufacturer of 2 wheeler EVs. The firm had also received investments from Private Equity firms like Forum Synergies and IMI Investments.
Most recently, one of India’s prominent venture capital firms, Kalaari Capital, made a seed investment in an electric bike company, Volta Motors. Go GreenBOV is another promising startup in this space. Some of the other firms active in this space include Electrotherm, Lohia Auto Industries, among others.
Among the giant Indian automakers, Mahindra is a leader EV manufacturer with its e2o Plus cars, and Hero Electric is a leader in the 2 wheeler(electric scooters/electric bikes) space.
According to Society of Manufacturers of Electric Vehicles(SMEV), a total of 22,000 EVs were sold in India during the FY 2015-16(end of March 31, 2016). In comparison, the total automobile sales in India during the FY 2015-16 stood at 20,469, 385 as per Society of Indian Manufacturers Association. From the numbers it is obvious that India is at best a fringe player when it comes to EVs, and that at the current rate, India is nowhere near achieving the target of 6-7 Million EVs by 2020.
However, technology improvements coupled with cost reduction and government support, can accelerate the growth of the EV segment, and if the interest in EVs get converted to actual purchase, then achieving 6-7 Million EV sales by 2020 should not be as big a task as it appears currently.
(This blog originally appeared in Aspiration Cleantech Ventures)