The way forward for the electric vehicle push: 

The way forward for the electric vehicle push: 

Context

• India’s announcement and intention to move from fossil fuel-driven vehicles to electric vehicles is considered positive.

India building vehicles based on Internal Combustion Engines (ICEs).

• Via joint ventures, technology licences and technology transfer, Indian manufacturers and suppliers have built full-fledged capabilities in ICEs.
• Value engineering of these products ensured personal mobility for the Indian middle class at price points that are unmatched globally.
• Today, about 40-50% of the domestic and export sales of Indian suppliers is tied to ICE.
• The Indian automotive industry has leveraged its investments in ICEs to build scale and globally competitive manufacturing as well as engineering capability.

What are the pros and cons of the transition?

• Technology transfer and joint ventures have to be encouraged to ensure indigenization of technology.
• Customers will benefit from this transfer due to the Indian capability for cost-efficient engineering.
• Industry must play as much a leading role in electric vehicles as it does today in ICEs to ensure employment, capability building and tax revenue.
• Localization is vital to avoid replacement of an oil import bill with a battery import bill. The latter simply switches political dependency from the Gulf states to China.
• Policy clarity is a must. While a number of green technologies can be pursued, the practical reality of the Indian automotive industry is that resources for investment are limited.
• Policy consistency is equally crucial. Long-term investments are required; sudden policy changes that alter business case assumptions can drive companies into ruin.
• Multinational corporations have technology available off-the-shelf and can relatively easy decide to engage or withdraw from the Indian market, e.g., General Motors. Indian companies are sure to lose out in unstable policy scenarios.
• Technology risks such as liability issues around battery swapping, unstable battery technology, recycling of batteries and infrastructure requirements need to be assessed in detail.
• Life-cycle greenhouse gas (GHG) emissions have to be considered when comparing battery electric vehicles with fossil fuel vehicles. GHG emissions during battery production and recycling must be reduced.