India has opportunity to take a short cut on the road to electric vehicle adoption

Tesla helped electric vehicles gain a mainstream foothold in the US by starting with luxury cars and then moving downmarket. India’s nascent transition to EVs is heading in the opposite direction.

Many consumers will get their first taste of EVs from public transit systems and corporate fleets in India, where car ownership per 1,000 citizens is just 20, compared with 800 in the US. Companies such as Bangalore’s Lithium Urban Technologies, which provides EV fleets to corporations, are expanding as India aims to end sales of internal combustion engines by 2030.

“In the next five years we’ll have 10,000 electric cars and buses,” Sanjay Krishnan, the firm’s co-founder, said, adding that the company hopes to have its first electric bus as early as this year.

India’s relatively low rate of car ownership means consumers have an opportunity to make the electrification leap without some of the challenges and costs other nations will face.

“We started with mass mobility and will go to an aspirational model – just the opposite of Tesla,” said Mahesh Babu, the chief executive of Mahindra Electric Mobility.

Mahindra partnered with Uber Technologies in November to supply hundreds of EVs for Delhi and Hyderabad. Along with Tata Motors, it is also supplying battery-powered vehicles for India’s first 10,000-car tender, aimed at government employees.

Predictions about India’s path to wider EV acceptance mirror some of the ways in which China’s market developed. Consumers there were introduced to EVs after heavy public investment in infrastructure including buses, taxi fleets and electric railways, according to Sophie Lu, an analyst at Bloomberg New Energy Finance in Beijing. The Chinese also became acclimated to the technology through a long legacy of electric bikes and low-speed EVs. And about 75 per cent of vehicles in car-sharing fleets are electric, according to BNEF.

Lithium Urban, whose clients include Accenture and Tesco, is looking to raise US$20 million from institutional and strategic investors. It plans to double its current fleet of 400 electric cars over the next six months, expanding in New Delhi and entering cities including Chennai, Pune, Mumbai and Hyderabad according to Joy Nandi, the head of the national capital region at the company.

Lithium Urban uses Mahindra & Mahindra’s electric-car model e2o to ferry corporate employees. The fleet’s use by corporations assures vehicles travel the minimum 175 to 200 kilometres a day required to break even, Mr Nandi said.

“It costs under 1 rupee per kilometre on an electric car compared with 4 to 5 rupees on a diesel or petrol vehicle,” he added.

However, the nation’s goal of ending sales of vehicles powered by fossil fuels will be a stretch, says Rahul Mishra, a principal at AT Kearney.

“The vision of electric mobility shows good intention to address

emission concerns and leverage our strength in the power sector,” he said. “However, a target without a clear road map is still an aspiration.”

Energy Efficiency Services, which conducted a tender offer to replace the government’s fossil-fuel driven fleet with electric cars, expects potential demand of 500,000 vehicles.

“Indian EVs will claim a good share of the mass-transportation market, unlike in the West,” said Pawan Goenka, the managing director at Mahindra & Mahindra.