Electric vehicle industry by 2030
India is the second-most populous country in the world with a population of 1.36 billion people. Experts estimate that its population will exceed that of China by 2030. However, India faces a major environmental problem. According to the World Health Organization, six of its cities are on the list of most polluted cities in the world. This is mainly due to industrial emissions, exhaust fumes as well as smoke from agricultural burns. This creates a very toxic cocktail that caused 1.2 million deaths in 2017. The capital city New Delhi has one of the worst air pollution on the planet.
It is also important to point out that India produces almost two-thirds of its electricity from coal and gas, which is constantly making the situation worse. It ranks the country as the world's third-largest emitter of greenhouse gases. That is why the government has launched new fuel standards and is in the process of promoting electric cars instead of gasoline and diesel ones.
An independent study published by the CEEW Energy Financing Center (CEEW-CEF) found that if India met its targets for electric vehicles by 2030, it would create an opportunity for India about $206 billion (Rs 14,42,000 crore) over the past decade. By 2030, a study predicts that the cumulative investment demand for vehicle production and cost infrastructure to meet India's electric vehicle intentions will exceed $180 billion (Rs 12,50,000 crore). India has yet to officially announce the 2030 e-mobility target, but the government think tank includes NITI Ayog's 70% commercial vehicles, 30% passenger cars, and 40% buses. Finally, in the new decade, 80% of motorcycle (2W) and bicycle (3W) sales will be electric vehicles. Thus, according to the CEEW-CEF study, total sales of electric vehicles in all automotive segments in fiscal 2030 exceeded 100 million units, which is 200 times the market value of 500,000 units as of March 2020.
New fuel standard
Being one of the biggest polluters in the world, India implemented a new fuel standard in 2020 which means that from April 2021, all vehicles sold in the country will have to comply with the BS6 emission standard. This standard corresponds to that called Euro 6 in Europe. It makes it possible to divide by five the quantity of sulfur emitted by vehicles on the roads. The government recently announced that it is possible to sell and register electric vehicles without batteries by installing electric stations at 69,000 gas stations nationwide. This can accelerate the development of the industry.
The entry into force of this standard has a cost for India. The prices of cars will increase between 5% for those with gasoline and 10% for those with diesel. Converting these is difficult and, Indian car brands like Maruti Suzuki have decided to stop producing diesel vehicles. The reason was that updating the engines would not be profitable in the end. The implementation of this standard could improve air quality in several cities, including New Delhi, which has more than 10 million cars on its roads. However, the standard is only applicable to new cars. The old ones will therefore continue to circulate, even if they are very polluting.
Going green with electric cars
The government of Indian launched a very ambitious plan in 2017. Its goal is for the country to become 100% electric by 2030 in addition to promoting the electric car industry. Energy Minister Piyush Goyal said India could become the first country to have a fully electric vehicle fleet. In addition, he was trying to set up a program that would make it possible to self-finance the project. He would therefore not need to seek support from the government or the Indian people.
The energy minister formed a group for the project along with the participation of several ministers, including the Transport Minister, Nitin Gadkari, the Minister of Oil and Natural Gas, Dharmendra Pradhan, and the Environment Minister, Prakash Javadekar which will serve as a board of directors. The latter met to assess the project feasibility and quantify the savings that could be made on fossil fuels. According to Piyush Goyal, the country will have to set an example for the rest of the world, rather than follow it. India will be the first country to do so largely.
The minister reassured the population about energy tariffs, saying that an increase was not necessary. According to him, all you need to do is work smart and use available technology. In his view, India would be able to provide affordable energy to the whole country. The government wants to stimulate the automotive sector, he said that he intends to tax electric cars less than others to help them. He also helped the EV sector by issuing a tender to renew the government's car fleet and convert it to electricity. By 2017, only 10,000 cars were converted into EVs. As of 2017, Indians can use a fully electric four-wheel vehicle sold by Hyundai. It is one of the first automobiles in the country. However, electric cars only represent 0.06% of the market in India, while they occupy 30% of the market in Norway which is a smaller country.
Is it really turned into a realistic project?
It is a beautiful project for India, but some experts doubt that it is feasible. In 2017, when Transport Minister Nitin Gadkari announced that he wanted India to go 100% electric in the automotive sector by 2030, he surprised the world. Many thought it was a very ambitious goal since many countries did not have such a demanding plan. Their only goal is to phase out motor cars by 2040.
Even India realized that its plan was perhaps too ambitious for the facilities it already had, as its leaders lowered the targets, going from 100% to 30%. This is a marked decrease, but it may be more achievable for the country. In addition, the government has decided to focus on two-wheelers, since sales of these are significantly higher, instead of conventional automobiles four-wheeled vehicles. In one year, auto sales were around 3 million, while those of two-wheelers were over 21 million. Experts consider this choice to be more feasible in the short term.
However, India has several problems that could significantly affect the project. Even to this day, it faces frequent power cuts. It cannot, therefore, ensure a constant power supply for electric vehicles. In addition, India is lagging in recharging points. There are only 386 recharging points counted in the country, while China has over 215,000. Some experts, including TERI chief Ajay Mathur, have raised the question regarding the popularity of electric vehicles in India. He also states that a majority of the Indian population is not familiar with the idea.
Unlike its neighbor China, a leader in the production of electric vehicles, India does not have large-scale electric vehicles or battery facilities. It does not have a hold on raw natural resources, such as cobalt or lithium, which are crucial for the production of batteries. This problem could force the country to import the vehicles, but this is another problem that would emerge. As part of its Made in India domestic manufacturing program, India imposes a duty of 50% on imported two-wheelers and a 125% duty on four-wheelers, which would make automobiles too expensive. Even Tesla CEO Elon Musk said, “I'm told import duties are extremely high… even for electric cars and, it would make our cars unaffordable." 2030 goal remains to be in existence when India will sacrifice for domestic enterprises to achieve its goal.
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