View from India: EVs encourage last-mile delivery

Lithium batteries that are used in electric vehicles (EVs) are imported, hence EVs cost more than conventional vehicles. The transport sector contributes to carbon dioxide emissions. Putting both aspects together, it seems a viable opportunity to widen the community of EV users.

India imports lithium batteries, which has scaled up the cost of electric vehicles (EVs). Battery is the key energy supplier of EVs but it’s a challenge to ensure their long-term performance. “Two issues need to be addressed. First is the energy capacity of the batteries; the second hurdle to consider is the rate at which the energy can be discharged. We need a trade-off between energy control, and the cost and size of the batteries,” said Babu KSV, business head, e-mobility, Automotive motors, Cooling Solutions and Export, Lucas TVS, at the recent CII Karnataka Electric Mobility Conclave.

The internal combustion engine is the core of mobility business, while battery is core to EV business. The price difference between the EV and internal combustion vehicle is steep and needs to be lowered.

Perhaps supportive schemes and scalable measures, innovative technology and infrastructure will help soften the EV price to some extent. Better pricing may create a healthy equation between the demand and supply of EVs. In September, the Government of India approved of a production-linked incentive scheme for the automotive sector to encourage the production of EVs as well as hydrogen fuel cell vehicles. It is expected to ramp up opportunities for local manufacturing, besides encouraging EV component makers.

On their part, the state governments have come forward with a slew of incentives to fast track the deployment of EVs. For instance, Gujarat will offer government subsidies for students purchasing two-wheeler EVs and for rickshaw drivers and self-employed people buying three-wheeler EVs. Telangana has exempted the first 200,000 two-wheeler EVs from road tax and registration fees.

The Government of Karnataka (GoK) has set aside around 400 acres of land for an EV park near Bidadi, which is in close proximity to its capital city Bangalore. If other states take the cue, then EV charging stations can be positioned as a private-public partnership.

In 2017, when GoK was formulating the EV policy, what seemed important was to attract investments into the supply chain. “Investments continue to remain a priority for EVs. With that, it’s also crucial to chalk out incentives to woo customers. For instance, Karnataka’s entrepreneurial culture has encouraged startups to create electric two-wheelers. Hopefully we could have many more such startups,” said RK Misra, co-founder of YULU Bike.

Two-wheelers (2W) facilitate last-mile connectivity, and EVs don’t pollute the environment. Putting both aspects together, it’s no surprise that around 90 per cent of EVs in India are 2W, and 90 per cent of these are fleet operators for e-commerce firms. There are, however, some on-ground challenges. The logistics of e-commerce companies is represented by a gig worker, who comes with his or her own vehicle or asset. It could also be possible that the vehicle may be rented out. So it may not be appropriate to impose rules for the gig worker to wheel around an EV. A public bike-sharing policy may help popularise e2W mobility in urban and rural areas. On the one hand, this will evolve as a shared, connected and clean mobility; on the other, it could help expand the circle of ecommerce consumers in urban-rural India. “By 2025, we aim to cover 800,000km per day. EVs are expected to lower driving cost per vehicle. Then the rising petrol or fuel price may make EV an attractive choice,” reasoned Ganesh Kollegal, assistant vice president of Government Affairs, Swiggy.  

As the price of petrol is escalating, it makes economic sense to create EV-ready infrastructure that could lead to its large-scale adoption. Auto companies are gearing up for EV production in a big way. A recent media report about Tata Motors indicates that the company is planning to raise funds to the tune of $1bn. It is intended to generate cash flow through a stock sale of its electric vehicle unit as it is making a transition to plug-in cars. Several private equity (PE) funds in many parts of the world have shown interest. 

As reported, Ashok Leyland has made its EV division into a separate one. Conceptualised as Switch Mobility, it focuses on EVs for the domestic and international market.

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