Electric mobility in India: a viable option?

Context

• The government is planning to set up a committee for an institutional framework on large-scale adoption of electric vehicles in India as a viable clean energy mode chiefly for shared mass transport to help bring down alarming levels of pollution in big cities.

The new initiative

• The government think-tank NITI Aayog has sought comments from Ministries, including heavy industry, environment, road, transport and highways, and power on the issue.
• The panel will be tasked with issues related to electric mobility, including setting up of charging stations across the country and subsidizing the cost of electric vehicles on a long-term basis.
• The Centre has recently invited proposals from cities with population of above 10 lakh for extending grants under the FAME India (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) scheme to promote large-scale adoption of EVs (electric vehicles) in multi-modal public transport.

What is Electric mobility?

• Electric mobility, according to the definition of the German government and the National Development Plan for Electric Mobility (NEP) comprises all street vehicles that are powered by an electric motor and primarily get their energy from the power grid – in other words: can be recharged externally.

What type of vehicles does it include?

• It includes purely electric vehicles, vehicles with a combination of electric motor and a small combustion engine (range extended electric vehicles – REEV) and hybrid vehicles that can be recharge via the power grid (plug-in hybrid electric vehicles – PHEV).
• The National Development Plan for Electric Mobility does not just look at specific vehicles but at the overall system. Aside from electric cars, this so-called systemic approach also includes the energy supply side as well as the charging and traffic infrastructure in its definition of electric mobility, since those components are interconnected and together, they lead to sustainable mobility.
• Considering the entire energy chain, it is only electricity that offers efficiency advantages and as long as it comes from renewable sources results into a significant reduction of CO2-emissions.

Why do we need Electric Mobility?

• There is a dire need to clean up the air of our cities. Automobiles cause half of the pollution in the cities. The pollution in the air contributes to deadly diseases, accounts for lots of problems for elderly people. By electrifying vehicles, there remains a possibility of eliminating pollution from cities.
• India is world’s fifth largest net importer of oil, importing more than 2.2 million barrels a day, or about 70 percent of consumption.  India spends close to 140 billion $ on foreign oil in 2011/12, most of them put in use for transport. Using electricity that would be generated at home, India can reduce its oil imports.
• Carbon monoxide, nitrogen oxides, and hydrocarbons are released when fuel is burned in an internal combustion engine and when air/fuel residuals are emitted through the vehicle tailpipe. Gasoline vapors also escape into the atmosphere during refueling and when fuel vaporizes from engines and fuel systems caused by vehicle operation or hot weather. Thus, electrical vehicles will be pro environment.

Government schemes for Electric mobility

The National Electric Mobility Mission Plan (NEMMP) 

• Government of India launched the National Electric Mobility Mission Plan (NEMMP) 2020 in 2013.
• It aims to achieve national fuel security by promoting hybrid and electric vehicles in the country. There is an ambitious target to achieve 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards.
• Government aims to provide fiscal and monetary incentives to kick start this nascent technology. It is expected to save 9500 Million Liters of crude oil equivalent to Rs. 62000 Cr. savings.
• Government has launched the scheme namely Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME India) under NEMMP 2020 in the Union Budget for 2015-16 with an initial outlay of Rs. 75 Cr.

Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME India)

• The scheme will provide a major push for early adoption and market creation of both hybrid and electric technologies vehicles in the country.
• The thrust for the Government through this scheme will be to allow hybrid and electric vehicles to become the first choice for the purchasers so that these vehicles can replace the conventional vehicles and thus reduce liquid fuel consumption in the country from the automobile sector.
• It is envisaged that early market creation through demand incentive, in-house technology development and domestic production will help industry reach a self-sufficient economies of scale in the long run by around the year 2020.
• It is being administered by the Heavy Industries Ministry. It will provide demand incentives to electric and hybrid vehicles from two-wheeler to buses.

The Electric vehicles (EVs) Scheme

• The electric car (also known as electric vehicle or EV) uses energy stored in its rechargeable batteries, which are recharged by common household electricity.
• An  electric car is powered by an electric motor instead of a gasoline engine
• Unlike a hybrid car—which is fueled by gasoline and uses a battery and motor to improve efficiency—an electric car is powered exclusively by electricity.

What are Electric Vehicles?

• The government is procuring 10,000 electric vehicles, the competitive bids for which resulted in a 25% reduction in the price of the contracted vehicles from their prevailing market price.
• Energy Efficiency Services Ltd (EESL), which is procuring these vehicles, follows a business model of making upfront investments in energy-efficient equipment, which it recovers from customers over a period from the savings they make in energy consumption.
• In the case of government vehicles (which EESL is procuring), charging stations are used for captive consumption of electricity. There is no sale of electricity. Hence it is a good idea not to require such infrastructure to have a power distribution licence.
• India has set a target of making a complete shift to electric mobility by 2030.
• Union Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, recently announced that only electric vehicles (EVs) will be sold in India from 2030.
• The current National Electric Mobility Mission Plan (NEMMP) has set a sales target of only 5-7 million EVs and hybrid electric vehicles annually by 2020.
• The Indian automobile market, which include two, three-and four-wheeler, is expected to clock an annual sales figure of around 23 million by 2030.

Advantages of electric vehicle

Environment

• It will help India to achieve its  climate change goal of reducing the carbon emissions intensity of its gross domestic product by 33-35% by 2030 from 2005 levels.
• Reduce noise pollution in the cities

Economy

• It will cut India’s oil imports vis-a-vis current account deficit.
• Expected to boost electricity demand, helping underutilized thermal power plants as well as the surging number of clean energy projects in the country.
• Electric cars are low maintenance.

Disadvantage

• Recharge point are yet to be setup.
• Short driving range and speed
• India already faces a power shortage.

Challenges in front of India

• Lacking infrastructure such as charging point.
• The transition would require a battery capacity of about 400 GWh (gigawatt hours) each year, equivalent to increasing the current global EV battery production by a factor of five, just to cater to the Indian EV market.
• The annual EV battery market is expected to be around $30-55 billion and India cannot afford to fulfil the demand solely through imports
• Among battery technologies available in the market, variants of lithium-ion batteries such as lithium-titanate, lithium-cobalt, and lithium-sulphurare predominantly used in electric vehicles.
• Study on India’s critical non-fuel minerals by the Council on Energy, Environment and Water (CEEW), manufacturing lithium-ion batteries would require critical minerals such as cobalt, graphite, lithium and phosphate.
• India has missed several such opportunities to be integrated in the global value chain for solar cells and wafers and electronics manufacturing due to a lack of suitable policy support.

The problem of procurement of Lithium:

• 95% of global lithium production comes from Argentina, Australia, Chile, and China.
• The recent demand surge in the electric mobility market has already resulted in a two-fold increase in lithium prices from $4,390 per tonne in 2013 to $ 9,100 per tonne  presently.
• It is estimated by the CEEW that India would require about 40,000 tonnes of lithium to manufacture EV batteries in 2030, higher than the current annual global lithium production of 32,000 tonnes.
• China and the U.S., which have ambitious electric mobility targets, are way ahead in the race to secure lithium supplies.
• India has long-term trade relations with lithium-producing countries in Latin America through preferential trade agreement (PTAs).
• A recent extension of the PTA with Chile provides India some tariff concessions for lithium carbonate imports.

India’s focus

• India need to further diversify the supply risk by including lithium in existing PTAs or establishing new PTAs with other lithium-producing countries.
• There is need to formulate policies incentivizing domestic public and private mining companies to invest in overseas lithium mining assets.
• India should also focus on creating a vibrant battery research and development ecosystem domestically.
• Research should focus on developing alternative technologies containing minerals with low supply risks and battery recycling techniques to recover associated minerals and materials.
• Constantly pushing research and development for substitutes and alternatives are vital to secure electric mobility.
• Government is set to put in place liberal rules for charging stations to power electric vehicles, seeking to facilitate rapid expansion of the infrastructure needed to support its ambition of an all-electric fleet on Indian roads by 2030.
• The norms under preparation will not require government and private institutions that set up charging stations for captive use to possess an electricity retailing license. Only entities that get into the business of charging stations and retail electricity to third-party vehicles will require such a license.

Conclusion:

• Research and smart trade agreements are needed to realize India’s ambitious electric vehicles target.
• To meet India’s demands amid a global surge in electric vehicle demand, the entire mineral supply chain needs to be overhauled and expanded.