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Will 2018 be the year of EVs?

India
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Though still a long way to go, the year may see electrics dominate the mind space of consumers, companies and governments, writes S Muralidhar

The P1 was the first car designed by Ferdinand Porsche, the founder of German luxury and sports car brand Porsche. It was an electric coupe that hit...


Though still a long way to go, the year may see electrics dominate the mind space of consumers, companies and governments, writes S Muralidhar

The P1 was the first car designed by Ferdinand Porsche, the founder of German luxury and sports car brand Porsche. It was an electric coupe that hit the streets of Vienna in June 1898. Ludwig Lohner, the owner of the firm that commissioned Porsche to design the octagonal electric motor and battery set up for the P1, felt strongly that the age of the horse-drawn carriage was over and that the electric car was the future.

One hundred and nineteen years after the P1 made its debut, the electric car is back with a bang, for a completely different set of reasons. Though the mode of transport it portends to replace looked and drove similarly, the electric car has returned to put us again at the cusp of what seems like a revolution in the automotive industry.

Are we there yet?

The concept of electric mobility has gained momentum, and has moved into the mind space of the urban population. EVs have already leapfrogged from being technology demonstrators to potentially becoming the inevitable choice of transport for the 21st century. So, will 2018 be the year of the electric vehicle? Has the automotive industry worldwide gained critical mass in its transition from fossil fuel to battery power?

It is highly unlikely that half the world’s population will be driving or commuting in an electric vehicle sometime within the next two decades. But, what is undeniable is the way the concept that electrics are the future has taken hold in the minds of the masses. The VW diesel engine scandal, the rising incidence of smog in cities across the world, the spectre of climate change and to a lesser extent, a self-motivated urge to go green amongst consumers have led to a growth in awareness about the advantages of electric vehicles both private and public. But, the future mass adoption of electric vehicles will still depend on multiple factors including legislation and incentives.

A recent study done by Roland Berger and Lazard outlines the factors that will influence ‘powertrain electrification adoption’ in the three major emerging markets for EVs currently (US, Europe and China). The Global Automotive Supplier Study 2018 mentions that the Total Cost of Ownership (TCO) advantage over ICE (internal combustion engine) vehicles, evolution of fuel and battery prices, and taxes and incentives will be the big factors that will drive EV sales in the next decade.

Indian buyers can be prodded and influenced to adopt EVs only if all these factors are at play here too, in addition of course to the alluring promise of lower pollution levels, which could become a significant influence going by the recent furore over smog in the National Capital Region (NCR).

It is an oft repeated quote that historically the cars came first and the roads came later. With EVs, the same observation could be turned around and applied to the charging infrastructure (the current lack of it). But the pace at which new EVs are being developed or have been planned, makes it seem like they would even arrive ahead of demand kicking in. More than 100 new EVs have already been planned for roll-out within the next five years. And optimistic projections for total EV sales globally by the year 2020 put it at eight million, which will still be less than 10 per cent of total car sales. Some of these confusing signals are the reasons why there has been a lot of uncertainty about the immediate future of EVs. But traditional car manufacturers who are under pressure to perform from their boards and shareholders, and over-enthusiastic governments who are under pressure to convince their vote banks that they are proactive and responsive to the needs of its citizens are making sales projections for EVs that represent a gallop when the reality shows that it would only be a trot.

Reality bites

Though we are way behind in the emerging EV game, in the Indian context too overzealous projections about going electric have already left many of us baffled about what could possibly be the road map that the Government has in mind to achieve the goal. Various studies have predicted that the cost of batteries (the single most crucial component in an EV) will have reduced enough by the year 2030 to ensure price parity for EVs with conventional fossil fuel cars. That is good news because the combination of value-conscious Indian buyers, a potentially underdeveloped charging infrastructure and inadequate incentives will significantly affect the prospects for EVs.

A dose of reality was delivered late last month when the Society of Indian Automobile Manufacturers (SIAM) laid out a more realistic, albeit still optimistic, target for going all electric. The SIAM white paper on EVs has set 2047, India’s 100th year of independence, as the target year for a 100 per cent replacement of conventional fuel vehicles by electrics. The timeline for electrification, according to the SIAM paper, includes intra-city public transport fleets to be fully electric by 2030 and 40 per cent of all new vehicle registrations by 2030 being EVs, in the run up to all new vehicles being EVs by 2047.

What Watt!

2018 could be the year from which EVs moved away from the realm of the hyperbole into reality. The stock market, though often prone to irrational exuberance, is already willing to buy into the future of EV makers over conventional carmakers. Not surprising then that Tesla is more valued than Ford, though the latter’s revenues and profits are much higher. That sense of optimism about EVs is spreading, though not all of it is coming from a perceived need to go electric amongst buyers.

The coming year could mark the beginning of a mass movement in electric mobility, even in markets like India, where buyer preferences are rooted in affordability and practicality. Small pockets of adoption and experimentation are already sprouting with cab companies such as Lithium Urban Technologies in Bengaluru, which runs an entire fleet of EVs. With homegrown brands such as Maruti Suzuki, Mahindra and Tata laying the foundations for going electric and if the Government walks the talk, we just might leapfrog into an electric future along with the rest of the world.

(This article was published on January 2, 2018)

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