#ETAUTOEVC - MY TAKE-AWAYS || ELECTRIC MOBILITY: PRESENT & FUTURE

Being a big-time EV enthusiast & after having attended some EV conferences before, I had very low hopes from the ET Auto EV Conclave even when the industry top-shots were listed to address. Thanks to my never altering activism towards sustainability, I strived ahead and attended it. To my amazement, the conference hall at the Lalit was jam-packed with more than 300 people with no place even to stand. I was flabbergasted with such huge focus the auto industry has been showering on e-mobility compared to the last year. I came out with more hope and positivity than ever that the EV industry was really serious about National Electric Mobility Mission 2030.

Let me divide the whole conference into 3 major discussions/sessions or else it might sound like a government policy document that has all the information but reading it is challenging task laden with, difficult to avoid, an afternoon slumber.

1. Session:1 - Do we need Subsidy and Why?
2. Session:2 - Is EV the only hope or can other solutions co-exist?
3. Session:3 - Where is the Battery Research progressing?

Session:1 - Do we need Subsidy and Why?

Subsidy!! Till now how FAME-I has turned up to be a semi-failure (or semi-success, depends on how you see it), everyone has been waiting for FAME-II which is supposed to be out by March-2019 after a hiatus of 2 years since 2017.

Imagine the big shots from big OEMs sitting with the head of the policy makers with room full of people curiously biting their nails for an answer to - #SubsidyKabAayega?” (When will the Subsidy be out?). And guess what, the same was the scene in this session when Mr. Shailesh Chandra, President-Electric Mobility, Tata Motors, Mrs. Sulajja Firodia Motwani, Vice Chairperson, Kinetic Group, Mr. Naveen Munjal, MD, Hero Eco Group and Mr. Rahil Ansari, MD & Country Brand Head, Audi India raised their concerns in front of Mr. Anil Srivastava, Director General - DMEO & Principal Advisor, NITI Aayog.

Concerns of OEMs:

Everyone agreed that there is a need of a long-term policy roadmap as far as subsidy distribution is concerned - the one with proper timelines and sensible subsidy strategy.

• As ~90% of the total vehicles in india consist of 2-wheelers (2W) hence 2W should be relatively subsidised more.
• There are 3 categories of 2Ws if we pocket them on the basis of the range(KMs) they provide:

1. 2W with range upto 30 KMs.
2. 2W with range up to 60-70 KMs.
3. 2W with range more than 70 KMs (high-end premium 2W).

Hence, these 3 types of vehicles serve 3 different use-cases and hence the subsidy can further be divided depending upon a use-case’s penetration in the market in order to benefit the right user.

• The current subsidy doesn’t take into account the battery replacement cost that the user is going to incur after 3 years. There is a suggestion of providing an additional stipulated incentive in FAME-II of Rs.20,000/KWH in case of e-buses to recover the cost of the vehicle in the 1st 6 years only. A similar standard can be offered for 2W, 3W & others.
• It is also proposed that the subsidy on e-2W is suggested to be reduced by Rs.11,000/- from a current max of Rs.22,000/- hence increasing the price by Rs.11K-15K. How are OEMs supposed to ensure the demand adoption, in this case?
• In case of 4-Wheelers (4W), there is still a gap of ~3 lacs in case of compact sedans even after applying the subsidy. (To exemplify, Price of Verito D2 is Rs.7.62 lacs while that of e-Verito D2 is Rs.10.39 lacs. The applicable subsidy is Rs.1.38 lacs. Hence the difference after applying the subsidy is Rs.1.30 lacs. But if you consider the battery replacement cost then the difference will reach to 3 lacs.)

Response from NITI Aayog:

Mr. Anil Srivastava remained non-commital on the whereabouts of the FAME-II subsidy both on the timelines of its launch & on the specific policy inclusions it’ll have. Having said that he encouraged all to look beyond the subsidies given the enormous scale in India. He expressed that even if the subsidy becomes available it’ll still be applicable only to initial few thousands or few lacs of vehicles and not to the crores of vehicles in India. As such, China is phasing out its subsidy by 2020 as it failed to achieve the desired adoption. The govt. might take some time to wait and watch how the international scenario unfolds.

In government defence, he said that the govt. has done tremendous work in last 8-10 months in choking out 14 policies to progress towards a sustainable EV adoption -

1. No permits required for commercial EVs.
2. No RTO and vehicle registration taxes.
3. Subsidising charging of EVs at home and commercial buildings.

My Take:

My final take is that India needs some focus if we want to achieve some results. India needs subsidy for initial adoption from supply as well as demand sides. The OEMs won’t produce if there is no demand. And the Indian customer, being price-conscious, can’t be sold expensive electric vehicles even if we have 14 most-polluted cities out of top 20 in the world. Hence the govt. Should -

1. Either provide subsidy for demand generation and faster adoption.
2. Cluster approach given the paucity of funds. Put all the funds in a single city to prove the business sense and then let the private players take it from there.
3. Focus the subsidies more on 2W (to get the quantity effect) and buses (to reduce the most polluting vehicles).
4. Work with OEMs to understand their high pricing. For eg. in case of buses, the price of a 9m, 34-seater electric bus is 4-5 times more than that of a regular diesel one. If we remove the battery (considering 150 KWH battery priced at $400/KWH would cost Rs.42 lacs), would the bus body cost 80 lacs to 1Cr?

Session:2 - Is EV the only hope or can other solutions co-exist?

India spent 5.65 lac crores on Crude Oil import in 2017-2018 while the overall spend had increased by 25% compared to 2016-17. At this rate, we practically need any and all technologies to reduce the oil import load as soon as possible.

To put things in perspective Mr. Jan-Oliver Roehri, CTO, Bosch, explained the logistics spend is 14% of the total annual crude oil import spend. If we convert the fuel in all 2W in India from the conventional Gasoline to a mixture of Gasoline and Synthetic Oil then we’ll start saving Rs.18 thousand Cr. annually on fuel import, pollution mitigation is separate.

China and Japan

In the words of Mr. Rakesh Batra, National Leader - Automotive Sector, EY India, the world is moving towards a balanced approach as far as different technologies are concerned. To substantiate the same, he took the case of China. In 2017, China sold a total of 777,000 EVs (passenger vehicles) out of which 652,000 (83%) were pure BEVs (Battery EVs) and the remaining 125,000 (17%) were HEVs (Hybrid EVs). As per announcements, China is going to continue in the same direction to achieve the target of 7.5m EVs/annum with 1m HEVs out of them.

On a similar note, Mr. Sandeep Balooja, Former Executive Chairman, Mando Automotive India spread some light on the proliferation of HEVs in Japan stating that the 1st hybrid was started in Japan in 1997 and since then they have come a long way that today HEVs command a total of 19% share in the total vehicle demand in Japan.

Indian Scenario

In the words of Mr. Chetan Maini, Co-Founder & Vice Chairman, Sun Mobility, India, being home to 14 out of 20 most polluted cities in the world, needs to come up with dramatic solutions to improve its situation. Having said that, given the complexity of operations and variability in demand, Indian approach might be different from what has been working in case of China and Japan.

In 2018, China, other than passenger vehicles, sold 13m electric 2Ws and ~1 lac electric buses whereas India sold a total of 25m vehicles with a total of 21m 2Ws out of the same. Hence, the market for 2W is certainly there.

But the most important factor that would tilt the adoption of EVs towards hybrids and FCEVs in India along with BEVs is the supply side constraints due to the limited battery raw materials reserves in India, as explained by Mr. Rohan Rao, Partner - Advisory, KPMG India, during the report launch on ‘Automotive Fuel: Racing Towards a Multipolar World’.

Figure-1: Reserves of Li-ion battery raw materials in selected countries || Courtesy: KPMG report titled - "Automotive Fuel: Racing towards a multipolar world"

As we can see that the important raw materials such as Lithium, Cobalt & Nickel which are required for battery manufacturing, do not exist in India. Hence, in order to reduce our import of Oil and later on, to reduce our import bill of battery raw materials, FCEVs do make logical sense.

Having said that, with China’s renewed focus on developing the infrastructure for FCEVs and a serious commitment on bringing 1m FCEVs and 1000 Hydrogen refuelling stations by 2030, India will also get a technology ripple effect due to the same in a similar way as that of BEVs development.

My Take:

In my view, India should not let 1 technology monopolise the market as is the current case with gasoline based vehicles. If India will keep banking on BEVs, there will come a time where India would import batteries the same way it is importing oil today. India govt. as well as the private companies need to spend on R&D of technologies in order to have a free technology market in the future. This is what China has been doing efficiently. Having said that there was one startup in the conference Log 9 Materials that presented a new technology about which I have described below in the 3rd session.

Session:3 - Where is the Battery Research progressing?

Indian crude oil import increased by 25% in 2017 compared to a year earlier. The government is certainly trying to reduce this huge import bill and one of the proof of the same is huge GST of 28% on cars. Along with this huge GST, the government also charges a road cess in the range of 15% which was recently increased by 2-7% on luxury cars, SUVs and mid sized cars.

Probably in future the government will come up with a standardised Carbon Tax and perhaps policies like these would push for some real growth in other technologies away from ICE (Internal Combustion Engine) especially towards batteries as batteries are going to be the backbone of all types of renewable technologies.

The below picture has become the favourite of all battery manufacturers and the same was true with this session where the battery giant Panasonic representative Mr. Atul Arya, Head - Energy System Division, Panasonic India as well as Mr. AA Deshpande, Deputy Director, ARAI talked about the importance of research and lack of preference for one particular chemistry at this point of time.

Figure-2: Types of battery chemistries available in the market

Useability/Acceptance of battery chemistries:

As far as electric buses are concerned, LFP seems to be the main choice as depicted in the figure below because of its higher safety levels which matters more at large battery sizes. But with due time, NMC will become an equally relevant a choice given the technological advancement in the battery management system (BMS).

Figure-3: The battery market of Li-ion variants by %sales volume for electric buses

Log 9 Materials

In my view, the highlight of the event was when I came across this start-up from IIT Roorkee. They have been developing Graphene based Metal-Air batteries replacing the need to depend on Li-ion batteries. As explained in one of the above figures, India doesn’t have the reserves to sustainably produce Li-ion batteries indigenously. Hence, as explained by Log 9 Materials CEO Akshay Singhal, either we should import the Li-ion reserves and still face the range anxieties that BEVs and the current charging solutions offer or produce these Metal-Air batteries that provide completely clean electricity to run the EVs with no range anxiety. And one of the biggest benefit of this technology is that India has abundant resources of Aluminium hence we won’t have to depend on other countries. To get a feel of what the company and technology looks like, have a look at the below video:

My Take:

One thing that’s certain is that the future is fixed and that is the proliferation of Electric Vehicles. How we reach there, depends on time and technological advancement. Having said that, from today’s standpoint, Li-ion batteries seem to rule as the prime source of EV charging given the kind of scale and support this technology has been garnering from all around the world.

Recently, @ElonMusk commented that Tesla is working toward reducing Cobalt content in its batteries from current 3% to 0% in coming future.

Figure-4: Cost Break-up Economics for a generic Li-ion battery || Courtesy: Mr. Atul Arya, Energy System Division, Panasonic India

Cobalt, which is typically mixed with Nickel and Manganese in making EV batteries, is scarce and is expected to nearly extinct by 2020. Due to Cobalt's constrained supply (world's 80% only in DRC), it's prices are surging and hence companies like Samsung and Tesla are endorsing the technologies that are trying to build cobalt-free batteries. The new compositions for NMC batteries have already been developed; NMC(6:2:2) and NMC(8:1:1).

In another news, Japan's behemoth Panasonic Corp - World's leading batteries manufacturer is investing $1.8B in Tesla’s $5B Nevada plant in order to hedge risks of surging prices of the materials, hence increasing the production of battery cells to 5000 a week.

Concluding Remarks

We are trying to find the answer to 1 single question - how to bring electric vehicles on road? But the truth is that the OEMs, Battery Manufacturers, Banks & other Financial institutions and the Government have all been working in silos.

Who is going to test which kind of vehicles to be built? Who is going to take the pain of operating the available EVs and analyse the customers’ expectations to decide the future of EV adoption? Who is going to build the charging solutions - swappable or regular in order to check the viability for each use-case? Who is going to do research on the new technologies to become the Indian Tesla or Panasonic in future?

The answer to all of these questions is - the swift and agile start-up community. What I really feel is that this transition in the transportation industry is going to bring Engineering Technology Revolution in India the way E-commerce brought the Internet Revolution or Facebook brought the Social Revolution. 

And the ripples in the still water have started to show. Start-ups such as SmartE, Twenty Two Motors, Euclion Energy, Avan Motors, EV Motors India, Ather Energy and Log 9 Materials, present the silver-linings in the cloud.