Automakers are bullish about India’s EV revolution

Electric vehicles may just be the silver lining for India’s auto industry, which is going through one of its darkest patches ever. EV manufacturers have embarked like never before on top-level talent hiring, investments in new products and charging infrastructure and building an ecosystems. “The world is on the cusp of a mobility revolution that will be EV-driven,” says Amitabh Kant, CEO, NITI Aayog. “And the domestic manufacturers of EVs are leading this disruptive change to secure a strategic position in the global value chain.” This optimism is shared by manufacturers like Tata Motors which has managed to top the sales chart to sell over 3,800 of its EV SUV, Nexon, in FY2021. The arrival of Elon Musk’s Tesla this year is expected to be a turning point for the personal EV segment in India. Meanwhile, Mahindra, which has lost its first mover advantage, is working on its ambitious Born Electric Platform, which will form the basis of a fleet of EV vehicles and is expecting a higher penetration in personal segment by 2025. It has announced a fresh investment outlay of Rs 3,000 crore for EVs in the next three years. India’s EV revolution could first roll out on two wheels and three wheels. About 82 EV models (32 two-wheelers and 50 threewheelers) have been registered under Phase 2 of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-2) scheme. The e-2W and e-3W have opened windows of opportunities for OEMs, fleet operators and individual consumers and account for 31% and 66% respectively of total EV sales in FY2021. Four-wheelers are still a minuscule 3.4%.MISSION 2 WHEELERS Homegrown two-wheeler majors are fast-tracking their EV plans. Hero MotoCorp has tied up with Taiwan’s Gogoro for the development of electric twowheelers in 2022 and bring in the latter’s battery-swapping platform to India. Hero MotoCorp has already invested in Bengaluru-based EV startup Ather Energy and some of the models are being retailed. TVS Motor will set aside a substantial portion of its Rs 600 crore capital expenditure for EVs and related technologies. It also plans to widen the sales of its electric two-wheeler, iQube, to over 20 cities. Bajaj Auto plans to extend the sales of the Chetak electric scooter to more markets while Ola Electric is expected to start selling its indigenously developed electric scooter from July. The EV game is capital-intensive and most players are looking at a longer horizon of three years. It is not a game of the next quarter, says Kavan Mukhtyar, partner and leader-automotive, PwC India. Although it is a bit of a chicken-and-egg situation, as you need volumes to make huge investments, adds Mukhtyar. “While EV sales is still a miniscule 0.87% of total vehicle sales, it is imperative for the nation to indigenise the manufacturing of EV and its components in alignment with Make in India and emerge as a global hub for EV manufacturing in the long term,” says Kant. NOT AN EASY DRIVE The obstacle is the huge upfront cost of electric vehicles compared with ICE vehicles. Battery costs, which constitute 30-50% of EV, have fallen by more than 90%, to almost $135/kWh. This is slated to fall below $100 in the next three-four years. But India’s dependence on China and South Korea for cells continues. To cut the dependence on China, India has announced a productionlinked incentive scheme for advanced chemistry cell (ACC) battery storage. The government hopes this scheme can help achieve manufacturing capacity of 50 GWh of ACC and 5 GWh of “niche” ACC. The scheme is expected to attract an investment of Rs 45,000 crore. Kant says collaborative efforts by the government and the private sector provide an opportunity for India to strategically position itself as the “the cheapest manufacturing destination” in the global supply chain of lithium-ion or Li-ion cell industry. Panasonic and other global players are exploring opportunities to establish an assembly facility for Li-ion battery modules in India even as home-grown players are stepping on the gas. Ather Energy is working with the Tamil Nadu government to set up a Li-ion battery-manufacturing plant in Hosur. A joint venture between Suzuki, Toshiba and Denso aims to manufacture 30 million Li-ion cells in their facility in Gujarat. Tata Chemicals is setting up a Li-ion batterymanufacturing unit in Dholera, Gujarat, with an investment of ` 4,000 crore while Tata’s automotive component arm Tata AutoComp Systems has entered into a joint venture with the Chinese company Guoxuan High-tech to manufacture battery packs for electric cars. Mahindra Electric in collaboration with LG Chem of South Korea too will manufacture Li-ion battery packs. As the penetration of EVs increase, competitively priced battery packs will see a huge opportunity. Sohinder Gill, director-general, Society of Manufacturers of Electric Vehicles (SMEV), says while recent policies favour growth in EVs, some of the non-integrated approach (on battery swapping, sudden increase in import duty) acts as a deterrent . The trouble is the government’s push through subsidies and incentives has not seen a major increase in EV sales. At 1.33 lakh EVs, FY2021 saw a 20% decline in sales y-o-y. However, the contribution of EVs to total sales saw a marginal increase from 0.77% to 0.87%. As per a report by Indian Energy Storage Alliance (IESA) in December 2020, the EV market is expected to grow at a CAGR of 44% between 2020 and 2027 to hit 63 lakh unit annual sales, and the annual battery demand to grow at 32% to 50GWh.E-Wheels are Turning 82864024HIGHER HIRE High-level hiring is in full swing. The last few months have seen companies such as Tesla, Ola Electric, Mahindra and TVS Motor make some strategic top-level recruitments in keeping with their business plans. Tesla has hired Prashanth R Menon as director of India operation, Chithra Thomas as HR head, Manuj Khurana as policy and business development head and Nishant Prasad as the head of its supercharging business. Ola Electric has appointed Wayne Burgess, a Jaguar veteran, as head of vehicle design; N Balachandar as chief human resources officer and YS Kim as global head of sales. Mahindra has appointed Uli Stuhec as VP & head of Global Born Electric Platform. The road ahead may be long, but EV makers are revving up. 82864127 82864852AMITABH KANT, CEO of NITI-AayogON INVESTMENT TO MANUFACTURE LITHIUM-ION CELLS IN INDIA:Advanced chemistry cell (ACC) battery storage is the future. The Li-ion cell manufacturing industry has realised that its overwhelming dependence on China comes with associated supply chain risks. This provides India with an opportunity to strategically position itself in the global supply chain of Li-ion cell industryON GOVT MEASURES TO BUILD AN EV ECOSYSTEM: We have tried to bridge the differential between ICE and EV through scal measure like reduction of GST to 5% (compared with 28% for ICE), direct subsidy through FAME II, removal of registration fee and permit requirements. Nearly, 18 states/ UTs have come up with EV policies. The Department of Heavy Industries has sanctioned 2,878 charging stations in 62 cities. MoRTH has allowed registration of EVs without pre- tted batteries, providing a level-playing eld to battery-swapping model. These steps along with focus on R&D would prove to be a game-changer in the mobility landscapeON TRACTION IN ELECTRIC TWO- AND THREE-WHEELERS India is predominantly a 2W and 3W market. E-2Ws and e-3Ws dominate the EV space, given their economic viability, upfront cost and fuel economy. Apart from conventional ICE 2W and 3W manufacturers introducing EV models, startups like Ather Energy, Okinawa and Revolt are spearheading the e-2W market. Fleet operators such as, Amazon, Bigbasket and Flipkart are making efforts to increase the share of EVs in their fleet.

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