Auto companies likely to go slow on electric vehicles
INDIA, THE WORLD’S FIFTH LARGEST AUTO MARKET, IS SET TO BECOME THE THIRD LARGEST BY 2020. THE GOVT HAS A VISION TO MAKE THE COUNTRY AN ALLEV MARKET BY 2031
MUMBAI: Automobile makers are unlikely to formulate a strategy for electric vehicles (EVs) in a hurry although they realise that its adoption is inevitable amid a government push to switch to zero-emission technology by the beginning of the next decade.
While some are waiting for the government’s intent to be backed by a policy document others are unlikely to introduce EV models till the ecosystem matures. Utility vehicle maker Mahindra and Mahindra Ltd is still the only auto company that is going ahead with the launch of EVs to capitalise on its first-mover advantage. Most of the launches in the initial phase will be focused on the public transport segment, Pawan Goenka, MD, at the firm said during the launch of company’s first passenger e-rickshaw on September 8 in New Delhi.
High cost of battery, which accounts for three-fourth of the cost of an electric vehicle, makes EVs twice more expensive as compared to gasoline-run vehicles, and creation of an adequate infrastructure, among other factors, are some of the challenges that the EV market faces.
India has close to 500 charging points and a city like Delhi alone will need 350,000 points to meet demand, Shivanshu Gupta, partner at McKinsey & Co said during the annual conference of auto component manufacturers’ association on September 8. “There has to be an economic case so that whoever makes an investment is able to recover it fast.”
“Forecasts are predicting that the price per unit of electric car will be equivalent to that of gasoline by 2025. That will be the tipping point,” said Amitabh Kant, chief executive at NITI Aayog.
While top officials at local arms of global firms conceded that “it’s an idea whose time has come,” they are unlikely to get to the drawing board unless the vision is backed by a policy framework.
“It’s a direction that is correct but the steps need to be clearly enunciated and worked along with the industry,” said CV Raman, executive director, R&D at Maruti Suzuki India Ltd.
Others are more sceptical. “They are saying that the price of the battery can be reduced by localising it. Even in countries such as China and Japan where lithium ion batteries are produced for many years, they haven’t been able to meet the reasonable price target so far,” said Yoichiro Ueno, president and CEO at Honda Cars India Ltd.
“Honda Japan has the EV technology know-how for 20 years,” said Minoru Kato, president and CEO at Honda Motorcycle and Scooter India Pvt Ltd. But it hasn’t been able to come up with a model that can meet the parametres, he added.