Roadblocks ahead for India's electric car ambitions

An employee walks past a Mahindra e2o electric car on display at Mahindra’s showroom in Mumbai, India.
An employee walks past a Mahindra e2o electric car on display at Mahindra’s showroom in Mumbai, India. PHOTO: REUTERS

Carmakers in India are gearing up to meet an ambitious government deadline to sell only electric cars in the country by 2030, but analysts say the path ahead is filled with obstacles.

The Indian government has pledged to reduce greenhouse gas emissions by an estimated 37 per cent by 2030 and reduce oil demand by 64 per cent.

Carmakers are planning to ramp up the production of electric vehicles. One of them is Mahindra & Mahindra, which has electric cars in the market and is now looking into electric trains.

The company - which offers the e2oPlus electric car starting at 746,225 rupees (S$15,600) and the eVerito, a sedan, starting at 925,317 rupees - has sold 3,000 electric vehicles. They can cost more than twice as much as diesel or petrol cars, which can be bought for under 300,000 rupees.

Major Indian car manufacturer Tata Motors said it was looking into developing electric versions of its existing car models.

Tata Motors and Mahindra have also won tenders to supply Energy Efficiency Services Limited, a government agency, with 10,000 electric cars in total.

Other firms have also announced plans to go electric, including India's biggest carmaker Maruti, which said it would offer electric cars within two years.

"Electric vehicles are the next huge technological challenge for the automobile industry," said Mr Ram Kidambi, a partner at consultancy firm A.T. Kearney.

India has 210 million vehicles, with as many as two million added every year on the back of a growing middle class. Sales of passenger vehicles are expected to grow by as much as 9 per cent in the 2017-18 fiscal year, according to the Society of Indian Automobile Manufacturers (Siam). Yet this growth has been accompanied by worsening pollution.

Currently, electric vehicles are not popular in India due to cost and a lack of infrastructure such as charging stations.

India's target is more ambitious than that of countries like Britain and France, which have announced that they would ban sales of petrol and diesel cars by 2040.

Siam said India could go all electric only by 2047 at the earliest and has asked for concessions from the government, including exemption of road tax for electric vehicles.

Experts said the only way to convince people to buy electric vehicles is if costs are kept low.

Mr Kidambi said conversion will happen slowly, adding that only environmentalists will bite initially. "But if you have the right value proposition, people will buy."

Overall, though, he believes that India's drive to go electric will be chaotic. "I don't see India transitioning smoothly. It is a large country at the end of the day,'' he said of the country of 1.25 billion people.

 

A Tata Motors spokesman said the Indian electric vehicle industry is still at a nascent stage compared with the global industry.

Whether the 2030 deadline can be met depends on factors such as a charging infrastructure to support electric vehicles and an ecosystem to supply parts like batteries, the spokesman added.

Not everyone is convinced that India should go all electric.

Mercedes-Benz's India managing director Roland Folger told the Press Trust of India that the move would "foreclose better technological options", like vehicles that run on hydrogen. "To me, the whole plan to go electric nationwide looks like a rushed idea," he said.

A version of this article appeared in the print edition of The Straits Times on January 03, 2018, with the headline 'Roadblocks ahead for India's electric car ambitions'. Print Edition | Subscribe