Heavy commercial vehicles are the biggest barrier to electrification in India

18 June 2018 Consultancy.in 4 min. read
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As the electrification drive gradually gains momentum across the world, a new report from global professional services firm EY elucidates how the new segment could solve India’s issues of urban mobility, pollution, and heavy reliance on oil imports. For public transport, however, conditions for electrification remain “unfavourable.” 

In principle, electric vehicles (EVs) represent a solution to a number of contemporary problems – an opportunity that many countries in the developed world have jumped at. France and the UK, for instance, have announced that internal combustion engines (ICEs) will be entirely abolished by as early as 2040.

For India, the EV revolution is a blessing in disguise, albeit one that will require patience and substantial investment to realise. Given its sizeable population and the upward trends in prosperity, India has emerged as a vital part of the global automotive market, attracting investments from the biggest automobile firms and OEMs (original equipment manufacturers) across the world.

However, the spike in vehicle sales has combined with rapid urbanisation in the country to create highly congested cities, which are characterised by spatial constraints, hindered mobility, and severe air pollution. The volume of pollutants in Delhi, for instance, remains at ‘hazardous’ levels by World Health Organisation standards the whole year round.

Conditions for electrification across segments of the vehicle market

Moreover, to fuel the mass of vehicles, the country has had to rely on oil imports, which place a significant burden on the economy. Each of these issues could potentially be eliminated through the introduction of EVs, which explains the highly ambitious government target of manufacturing as many as 7 million new EVs by 2025.

An even more ambitious target has been set regarding the penetration levels of EVs in the domestic market, which the government hopes to push to 100% by 2030, despite the fact that the current level of penetration stands at 1%. According to a new report from Big Four accounting and advisory firm EY, some segments of the automotive sector will help push this plan along, while others will pose a substantial barrier.

Two-wheelers and three-wheelers, for instance, fit the profile for electrification perfectly, given that they require a relatively low amount of investment to electrify and are much easier to charge. However, under India’s current legislation for the segment, there is low scope for policy intervention.

The path to electrification is a little more challenging in the four-wheeler segment, particularly for private vehicles, wherein there is little scope to predict periodic usage, a high voltage requirement, and, again, little room for policy intervention. Outside of the private domain, sub-segments such as corporate cabs and aggregators are relatively more conducive to electrification in light of better route predictability and more leeway for government intervention.

Components of the EV landscape

The most challenging segment, however, is that of commercial vehicles employed for public transport, including buses and heavy motor vehicles for transportation of goods. Naturally, the size of the batteries required to run such vehicles entails substantial investment, as does the infrastructure to facilitate charging of these vehicles.

As per the report, the varying degrees of difficulty among segments can be attributed to the range of supplementary factors that need to be considered with electrification. Alongside the charging infrastructure mentioned above, there is also the preparedness of the EV components manufacturers to consider, as well as the capacity for the technology and data management.

Other factors to consider include the administrative facilities such as the service network management, control systems, and the management of smart grids.”The success of India’s EV mission depends on the development and proliferation of the domestic manufacturing ecosystem. However, the absence of an EV supply chain in the country demands an urgent investment in domestic R&D and local manufacturing capabilities,” said the report.