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Minhaz Merchant

Minhaz Merchant is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa, 2014). He is founder of Sterling Newspapers Pvt. Ltd. which was acquired by the Indian Express group

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Electric Car Revolution

Till prices fall and production rises, India will lag behind China, the US and Europe in switching to electric cars

By 2030, many of us will be driving electric vehicles – cars powered by lithium-ion batteries rather than the century-old internal combustion engine that uses petrol and diesel. The Indian government plans to phase out fuel-engine vehicles over the next 15 years. In the West and China, the pace is even quicker.

So far the hurdle for electric cars and trucks has been the short distance that can be travelled between charges. That’s changing fast. Tesla’s CEO Elon Musk says his latest electric car can go over 600 miles between charges. He plans to get an electric-powered truck on the road within months. All of this has huge implications on the future of the oil industry and the battle over global warming.

Cars and trucks spew carbon dioxide into the atmosphere. Electric vehicles will reduce pollution as the world gradually shifts from petrol and diesel vehicles to battery-powered cars and trucks. While the aviation and shipping industries will continue to rely on petroleum products for longer than the automotive sector, scientists are already working on short-haul electric-powered passenger aircraft.

In India, the speed breaker for fast-tracking electric cars is the lack of charging station infrastructure. In the United States, charging stations are becoming almost as ubiquitous as petrol pumps. New technology is allowing charging facilities to be set up even outside individual homes. China has treated the move towards electric vehicles as a means to reduce both pollution and reliance on fossil fuels.

The challenge to convert a century-old technology of petroleum-fuelled vehicles to an electric battery-powered transport universe is enormous. Only one per cent of vehicles worldwide today run on electric charge. China is leading the way. Over two per cent of its annual production of cars is now electric-powered. In 2016, China made more than 3,00,000 electric cars, the highest in the world. By 2025, China plans to increase the ratio of electric cars to 20 per cent of total production.

An internal combustion engine that runs on petrol or diesel has over 2,000 moving parts. An electric battery-powered car engine has only around 20 moving parts. As a result electric cars need much less maintenance and have longer “shelf lives” than petrol/diesel cars. In India, hybrid cars that can switch between petrol/diesel and electric batteries sell for less than Rs10 lakh. However, cars powered only by electric batteries cost upward of Rs 35 lakh. Till prices fall and production rises, India will lag behind China, the US and Europe in switching to electric cars. China’s ambitious target is to completely end the production of petrol and diesel cars by 2030. The Chinese government has imposed penalties on automobile manufacturers who don’t meet phased electric car volume targets incrementally by 2020 and then by 2025.

In India, Energy Efficiency Services Ltd. has catalysed the move towards electric cars. Its tender was won by Tatas with Mahindra, the second lowest bidder, getting a 30 per cent share of producing 10,000 electric cars in an initial order.

The numbers remain small and the Indian government must encourage the establishment of an infrastructure of charging stations across the country as the US and China have done. The National Electric Mobility Mission Plan (NEMMP) was endorsed by the Indian government in 2015. The target is to, like China, end petrol and diesel vehicle manufacturing by 2030 and switch entirely to electric vehicles (EVs).

The ISRO’s Vikram Sarabhai Space Centre is doing excellent work in battery cell technologies. Chetan Maini’s Reva was India’s first electric car. Maini was a pioneer, ahead even of Tesla’s Elon Musk. The Reva was launched in 2001 but due to the lack of an ecosystem for electric cars in India, volumes didn’t pick up. Mahindra acquired the company in 2010 and is leading the charge to mainstream electric cars. Hyundai makes electric cars in South Korea under the Ioniq brand. It has pledged to begin EV manufacturing in India once the infrastructure for charging stations is in place. ABB India recently bid for a government tender to set up 4,500 charging stations for EVs.

As Union Transport Minister Nitin Gadkari said in a recent interview: “Already, electric taxis are fully operational in (Nagpur). We have 20 charging stations and we are installing 20 more. Additionally, there are 55 buses running on 100 per cent bioethanol. We are scaling it up to 1,000 electric taxis. So it’s a public transport revolution. Let’s say petrol is Rs 80 (per litre) and diesel is Rs 60 (per litre). In electric, the equivalent cost will be Rs 10. On top of that, it is pollution-free, cost-effective and an import substitute. The problem in making all this (electric vehicles) was that the lithium-ion battery was expensive, but now look how costs are coming down. Even as we speak, I know they have just come down by at least Rs 40-50 further.”

Once EVs take off globally, crude oil prices are expected to fall below $20 a barrel. That would be a windfall for India which imports 82 per cent of its crude oil, spending nearly $100 billion annually. India will benefit in two ways with EVs: one, lower pollution in cities; two, a lower trade deficit due to reduced crude prices.

According to a UBS Global Auto Survey citied by Bloomberg: “Almost every sixth car sold in the world will be electric by 2025. By the middle of the next decade, global sales of electric vehicles should hit 16.5 million, analysts led by Patrick Hummel said in the report, a 16 per cent increase from the previous estimate. They predict electric vehicles will make up 16 per cent of all car sales by then, up from a previous estimate of 14 per cent.” Hummel added: “The shift to electric cars will come faster in a more pronounced way fuelled by the diesel demise in Europe, battery technology advancements and regulation in China and Europe.”

In the 1920s, Henry Ford set off the automobile revolution by establishing the world’s first assembly line production that transformed individual public transportation. A century later, the automotive industry is gearing up for another revolution.

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