Faster Adoption and Manufacturing of Electric Vehicles
The second phase of the Centre’s scheme will not only promote clean transport but also public health, says V Rishi Kumar Electric mobility — this is one sure-footed drive that everyone’s keen on.
The second phase of the ₹10,000-crore FAME II scheme, which has come into play from April 1, 2019, seeks to create a platform for the next wave of electric mobility in the country.
The Faster Adoption and Manufacturing of Electric Vehicles (FAME) II aims to promote electric and hybrid vehicles in the country, where the infrastructure for such mobility is non-existent and there is hardly any manufacturing. The scheme, to be implemented over three years from April 2019, has a target of 10 lakh registered electric two-wheelers with an incentive of ₹20,000, five lakh e-rickshaws, looks to incentivise electric four-wheelers and support 7,000 e-buses with incentive of ₹50 lakh each, for buses with ex-factory price of ₹2 crore.
Interaction with various industry players in the nascent, yet promising, segment shows that they are upbeat on the prospects, as it is not just about offering clean transport in congested and polluted cities but a way towards a healthy lifestyle.
More choices for consumer
Shailesh Chandra, President, Electric Mobility Business & Corporate Strategy, Tata Motors, says the government’s commitment under phase two of FAME will spur corporates to invest in the EV ecosystem. There’s more excitement in the market with more choices for the consumers.
“Using Tata Motors’ in-house capabilities, coupled with Tata Group companies’ expertise and ongoing collaboration with other ecosystem players, we intend to offer a comprehensive range of electric vehicles and other ecosystem solutions to break the barriers to adoption. We have already developed cars, buses and last-mile commercial vehicles, and plan a strong product portfolio,” Chandra says.
He sees the primary market for EVs for the next 4-5 years to primarily be fleet. Tata Motors will have multiple products directed towards the fleet segment. Currently, the Tigor EV, apart from serving the EESL order, is also being sold in the fleet segment.
“We showcased Altroz EV in the Geneva Motor Show, as an example of the kind of cars we would like to offer to drive aspiration among personal buyers,” explains Chandra.
Cutting huge oil bill
Santosh Kamath, Partner and Lead-Alternate Energies, KPMG in India, says the growth of the EV industry will be a big boon for India as we import over $100 billion worth of oil, a large part of it being used for transport. It can thus contribute to energy security. Combined with renewable energy, it can help address an important aspect of climate change and local pollution in cities. “The reduction in battery costs and development of an electric vehicle ecosystem in the coming years will lead to a pick-up in adoption,” he points out.
Kamath expects initial adoption to happen in the commercial fleet segment and two-wheeler space due to a higher return on investment in these segments. The uptake in the passenger car space will likely pick up post 2022, as costs come down further, a network of charging infrastructure is in place and appropriate models are launched by auto companies. The incentive design under FAME II also appears to take this approach, feels Kamath.
Sohinder Gill, CEO, Hero Electric, underscores that India is among the fastest growing economies globally. Tapping opportunities in the EV space will propel it further. Hero Electric believes in ‘zero pollution’ transportation in the country through its range of electric vehicles, he stresses.
Barriers in the way
But to ride the growth wave, the EV segment has to surmount a few challenges, including the prospect of losing benefits from FAME I.
N Nagasatyam, Executive Director, Olectra Greentech, says the industry did not expect such a big move, especially the push for 7,000 public transport vehicles. Backed by the State Transport Undertakings, the target of 7,000 set by the Government will be surpassed and may cross 15,000 units within the next three years, he says. “The move has given a boost to the electric vehicle ecosystem, including component manufacturers. As this grows, the cost will also come down. Now that there is clear visibility with regard to where we are heading, the original equipment manufacturers will also get their act together for local manufacture,” he asserts.
However, for the EV industry to grow at a much rapid pace, there is need to strengthen finance options for electric mobility as lenders are extra cautious. Since this is not just public transport but takes care of public health too, we need a concerted effort,” stresses Nagasatyam.
Saurabh Kumar, MD, Energy Efficiency Services Ltd, says EESL has been working towards removing various hurdles to electric mobility in the country.
“With our approach of demand aggregation and bulk procurement, we have been able to address significant challenges like low demand, the high upfront cost of adoption, and lack of charging infrastructure. Our objective is to create universal access to electric mobility, enable more energy savings and emission reduction for a sustainable future. Our target is to replace all 5,00,000 cars in government service with electric variants while ensuring supporting infrastructure. Towards this, EESL has procured 10,000 e-cars and 2,125 chargers via the tendering process,” Kumar says.
As of now, EESL has already received an encouraging response from Central government departments and across States, and there are about 2,000 electric cars on the road. The MoUs signed include the Prime Minister’s Office, Cabinet Secretariat, Ministry of Economic Affairs, Ministry of Health, Ministry of Environment, Ministry of Labour, the Government of Andhra Pradesh, NITI Aayog, the Ministry of Power, and the 15th Finance Commission, amongst others.
EESL is in advanced negotiations with other State governments.
The second phase of the FAME-India scheme lays a lot of emphasis on establishment of public charging infrastructure. In fact, the scheme recommends that every city with more than one million population have a public charging station every 3-5 km.
The thrill of ownership
Awadhesh Kumar Jha, Vice -President, Charge & Drive & Sustainability, Fortum India, is confident that FAME II will provide impetus to e-mobility. “Though details of modalities for charging infrastructure are not known, we expect that private Charge Point Operators will get to participate in creating charging infrastructure through this scheme,” he says. Additionally, FAME II has provided support for vehicles fitted with Li-ion based battery that have the potential to scale up, particularly for high performance and high range vehicles.
This was required as there was lack of clarity wherein the two streams of battery technology – lead acid and Li-ion battery – were being considered similar, mistakenly, Jha explains.
Also, private four-wheelers could have been included in the ambit of FAME II as that would have pushed general consumer adoption of electric vehicles. An aspiring Indian middle class would enjoy ownership of cars alongside intermittent rides in shared vehicles.
“At Fortum, we are operating 40 charging points in three cities out of which 36 are DC fast charging points for less than 100V vehicles. We are evaluating the Indian market for opportunities for charging infrastructure,” Jha says.
Clearly, the EV segment has to cross a few hurdles — reducing battery cost and enhancing charge capability, apart from setting up charging stations.
Some players are talking of battery swapping too. In China, there is great traction already with Olectra partner BYD playing a role there. It won’t be long before India too embraces e-mobility more comprehensively. The EV buzz is in the air.