Commercial EVs
Commercial EVs are set to get a shot in the arm with the tweaked FAME II.
Commercial EVs are set to get a shot in the arm with the tweaked FAME II.
The In view of the commitment to the Paris pledge to reduce carbon footprint by 33 to 35 per cent from its 2005 levels by 2030, commercial EVs are set to get a shot in the arm by the revised FAME II notification. With stress on proliferation of EVs in shared mobility space (read EVs for commercial use) to curb pollution in cities unlike advanced markets where the pull is towards fourwheel EVs, the tweaked FAME II scheme is set to benefit electric two-wheelers and three-wheelers the most. In these segments – electric twowheelers especially, it is the vehicles used for commercial activities that are going to experience higher traction. Expressed an industry expert that there is an acute business angle to it in view of the purchasing power of the audience. As of current, electric vehicles, small and big, are considerably costlier than conventional ones even if the gap is narrowing, and the business for which they will be used is likely to charge higher freight or fare, he added. As efforts to reduce pollution in urban centres like Delhi, Mumbai and Bangalore continue, the revised FAME II scheme is set to encourage a electric growth story that could be much different from that of the other countries. A clue of that is had with the
proliferation of electric threewheelers in Delhi NCR as a last mile transportation medium. There’s not much of electric four-wheel taxis or even electric buses.
Of the estimated 1.5 million battery-powered threewheelers in India in 2018, an estimated 70 to 80 per cent of them are in the Delhi NCR region. Given Delhi’s chronic air pollution problems, they are a logical extension of the pedal powered threewheelers born out of bicycles. As shared mobility mediums in last mile transportation segment, the electric threewheelers are yet a North Indian phenomenon. Though found in some South Indian cities, their proliferation has not bee as fast as in North Indian urban centres. With 11,000 new electric threewheelers estimated to hit the streets every month, the electric story of India is beginning to look unique. It is beginning to look far different from that Europe, US or China. If the pace of proliferation of electric vehicles will improve under the tweaked FAME II scheme, the participation of corporates and e-commerce players like Amazon and Flipkart is encouraging. Also, the announcement by Tesla that it is entering the Indian market and will locally make vehicles. Global players like BYD are already present in India. The home grown CV players have also invested extensively to build a prowess in electrical and other alternate fuel technology mediums. As the government pushes for electrification of shared mobility mediums to reduce pollution, it is clear that EVs – commercial EVs especially, will be the inflection point for a slew of alternate technologies like LNG, hydrogen fuel-cell among others.
TWEAKED FAME II
Rolled out in 2019 with a total outlay of Rs 10,000 crore rupees for three years, the FAME II scheme has been tweaked to eliminate the stringent riders that have limited its scope. Considering the unique way in which the Indian EV market is evolving, the tweaked FAME II scheme is also an indication that an out-of-the-box thinking is the need of the hour. The country’s electrification story highlighting some very unique socio-economic trends with the stop light on two- and three-wheelers, a technology agnostic approach could be the next best solution to solving the pollution challenge in urban region, mentioned a source. A part of the Indian electric vehicle industry and engaged in the development of motors, he said that the tweaking of FAME II scheme to benefit electric two- and three-wheelers was the need of the time. The scheme has introduced a demand incentive of Rs.15,000 per KWh for electric twowheelers with an upper ceiling at 40 per cent of the vehicle cost, which translates into nearly doubling of the current subsidy. With an eye of electric two-wheelers especially (India sold 21 million units in 2019), the modified scheme hints at easing strict criteria and several challenges that were difficult to adapt to for industry players. As per the specifics, the incentives for electric two-wheelers would amount to roughly Rs.45,000.
‘COMMERCIAL’ ELECTRIC TWO-WHEELERS
Typically not acknowledged as commercial vehicles and yet used for commercial purposes by e-commerce logistics companies and food delivery aggregators like Zomato, ‘commercial’ electric two wheelers have been growing in the country. They are diverse in nature. From a Hero e-bicycle to a self-propelled electric scooter from Omega Seiki or some other player, ‘commercial’ electric two-wheelers are gaining ground due to their ability to help navigate past the congested roads of many urban centres like Delhi, Mumbai and Bangalore. With established players as well as startups like Hero Electric and Komaki launching electric two-wheelers specifically for commercial use with particular attention to higher payload, range and TCO, a near unnoticed change in last mile transportation structure is underway. Providing a strong fillip are commitments from new age companies like Zomato whose current fleet may not comprise of many electric two-wheelers, but are being operated with a commitment that the entire delivery fleet will be zero tailpipe emission electric by 2030. Swiggy too has chalked out a similar commitment to go green. The two are in fact in talks with in talks with electric scooter and bike aggregators like Zypp, Spinny and eBikeGo. With two-wheelers accounting for 70 per cent of the 253 million vehicles on Indian roads, according to JMK Research, it is not surprising to see that the tweaking of FAME II scheme will favour electric twowheelers the most.
ELECTRIC THREE-WHEELERS
After electric two-wheelers, it is the turn of electric threewheelers to most benefit from the tweaked FAME II scheme. With the transition to electric mobility particularly appealing because of the several issues it promises to address, including energy security, the falling cost of technology and the ‘Atmanirbhar Bharat’ policy are said to tilt the equation firmly in favour of electric three-wheelers, mentions an expert. Emerging as a source of employment for many poor urban households, electric three-wheelers have been supporting the rise of a unique infrastructure model, he adds. SmartE is offering connectivity to tens and thousands of people everyday. It loans e-rickshaws for around Rs.350 per day to a driver who takes home whatever he earns beyond that. With the battery charged using SmartE infrastructure, the vehicles run for four-to-five hours before empty. As the charge goes down they get into the queue at the SmartE charging station for another round of charging.
One charging point is claimed to cater to about 140 vehicles. The business overall is said to be proving profitable for both, the driver who hires the e-rickshaw and SmartE.
Attracting those who cannot afford the upfront cost of a conventional three-wheeler or an electric one, the SmartE model could soon go out of fashion as the nature of electric CVs changes; their technology and perception changes. Providing loans to drivers to purchase their own vehicles, Bangalore-based Three Wheels United is taking help of technology such as AI and IoT to understand and map behavioural data, client reliability and the risks involved. Seen as the relevant players almost in the electrification of transport in India and some other markets, electric threewheelers are gaining fast in technology. Exploring techs such as battery swapping are helping corporates and individuals alike to look at electric three-wheelers as a commercial medium to earn money. With a socioeconomic angle attached to three-wheelers, and electricrickshaws forming a bigger chunk than cargo threewheelers, it does not come as a surprise that the tweaked FAME II notification explains the launch of an aggregate demand for 300,000 vehicles across a variety of user segments by state-owned Energy Efficiency Services (EESL). On the electric three-wheeler front, the Heavy Industry is said to believe aggregation will be the key method to bring the upfront cost of such vehicles at an affordable level and at par with conventional three-wheelers.
A number of electric threewheeler manufacturers, albeit at the organised end, will benefit not only from the tweaked FAME II scheme, but also from the EV policy formulated by the states.
In a bid to attract local manufacture, many states are going all out to formulate an EV policy. One such Telangana has been quite successful at that. It has attracted a number of EV manufacturers, conversion specialists and EV aggregators. ERide, for example, is headquartered in
Hyderabad has been chosen to custom make 200 electric loaders as part of a prestigious initiative called ‘The Livelihood India Project’ put forth by the Government of Telangana and Vijaya Dairy. Piaggio is known to submit a representation to the Telangana state to issue fresh permits for electric threewheelers. Mahindra Electric Mobility recently introduced its Treo electric three-wheelers in the state at Rs.2.7 lakhs. The University of Hyderabad launched an electric rickshaw facility (run by Transvahan Technologies) for students and visitors in December 2019 to improve (zero-emission) transportation on its vast campus. Hyderabad-based Gayam Motor Works has been providing electric autos to Ikea for its delivery fleet since 2018. Hyderabad-based ETO Motors has decided to set up a new manufacturing facility for electric three-wheelers in the state.
ELECTRIC BUSES
With companies like Tesla zeroing on the Indian EV market, global players like BYD have already secured a firm footing. Manufacturers like Tata Motors, Ashok Leyland, Daimler India Commercial Vehicles, SML Isuzu, Force Motors and VE Commercial Vehicles are not behind. Neither are bus and coach builders like JBM and BYD-Olectra. They are not only building, or have built, the capability to respond to the market needs for electric buses, they are also ready to respond to the need of electric trucks and vans (both passenger and cargo versions). The revised FAME II scheme notification calling for targeting cities with over four million population, there is an amount of buzz. The clear expectation is that private players will also take to e-buses. Against the sanction of a total of 5,595 e-buses in Phase I of FAME II to urban and inter-city agencies as per a UITP-India report, the procurement process of about 2450 e-buses with subsidy has been completed. The Department of Heavy Industries (DHI), which administers the scheme, is clearly looking at an even higher uptake. It is therefore targeting cities such as Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Mumbai, etc., which are capable of accommodating e-buses, which have significantly higher initial acquisition as well as lifecycle costs as of now. The revised notification stating that EESL will drive aggregate demand for remaining e-buses on an OPEX basis as per the revised scheme norms, there is a need to systematically remove the hurdles concerning e-buses like range, manoeuvrability of longer buses due to infrastructure constraints, operating capital, depot development, related infrastructure development like ITS, and more.