India Needs An Electric-Vehicle Policy; Here’s How It Can Go About It

  • For a large-scale electric vehicles push, the government will have to think beyond incentives and tax cuts.What’s required is a comprehensive programme spanning years and involving several government departments and focused implementation.

In May 2017, the then Union power minister Piyush Goyal said India was looking at an all-electric car fleet by 2030. Several countries across the globe have also made similar plans, with France and the United Kingdom proposing a ban on all petrol- and diesel-powered cars by 2040. This had come after the announcement by Chinese automobile manufacturer Volvo Cars that it would manufacture only electric vehicles from 2019.

In India, the Union Minister for Road Transport and Highways, Nitin Gadkari, had later said that the government would “bulldoze” the automobile industry out of petrol and diesel vehicles. He also said that the government was looking at setting up exclusive lanes for electric vehicles on highways, with overhead cables for power supply, similar to how electric locomotives operate.

At the state level, Karnataka approved an electric-vehicle policy with an aim to drive more research into these vehicles and to encourage manufacturers to set up shop in the state. Maharashtra unveiled its policy much later, offering incentives to prospective electric-vehicle owners and also for setting up charging stations. Significantly, the Union government said there was no need for an electric-vehicle policy at the federal level.

At the city level, Nagpur geared up for an electric mass-transit project through a tie-up with Ola Cabs, Mahindra and Mahindra, and Kinetic Green for e-rickshaws and electric cabs. Unfortunately, the project didn’t take off as expected due to unsustainability of the initiative.

The government has, however, done quite a bit to promote the use of electric vehicles in India. The problem lies squarely with the direction of these policies. For starters, the policy in Maharashtra primarily subsidises vehicles and the charging infrastructure without going into the intricacies. While Karnataka’s electric-vehicle policy talks about research and development, it is also focused heavily on manufacturing within the state, which isn’t really going to go anywhere significant.

So, what should India’s electric-vehicle policy look like?

Adoption of electric vehicles in India will take a multi-pronged approach that goes beyond incentives and tax cuts. It would require a large programme stretching over several years, covering multiple departments across various ministries, and needs proper implementation in a federal manner that includes all levels of government – Centre, states, and cities.

Hybrids as a bridge between fuel-powered and electric vehicles

The first step towards going electric would be to start moving towards hybrid vehicles. Globally, diesel-electric commercial vehicles and petrol-electric small vehicles have been on the roads since 1999. As of 2016, hybrid electric vehicles (HEVs) had a market share of 2 per cent in the United States (US). Data from the American Public Transportation Association said that in 2015, 41 per cent of the buses used in public transport in the country ran either on alternative fuels – biodiesel, propane, ultra-low Sulphur diesel, and compressed natural gas – or were HEVs. In India, it is only in the last few months that HEVs have made an appearance on the streets, in Mumbai. Research in alternative fuels took off in the last decade, the most well-known one being Karnataka State Road Transport Corporation’s plans to blend honge, palm, sunflower, groundnut, coconut, and sesame with biodiesel in 2009.

In the context of cars, the HEV concept is still new in India. Automotive majors such as Maruti and Honda are yet to launch their HEV models in the country.

The reason to go in for hybrids is simple. Due to its dual-fuel nature, it has a longer range. HEVs also have a greater fuel efficiency. For example, the latest model of Suzuki’s Swift in Japan has an ideal fuel efficiency of 22.6km per litre while its hybrid variant with a 10kW battery has an efficiency of 30km per litre. The largest-selling HEV in the US and Japan, Toyota Prius has an average fuel consumption of less than four litres per 100km. It has an average of 95mi per gallon (40 km per litre) gasoline (petrol) equivalent. “Miles per gallon gasoline equivalent (MPGe)” is the unit used by the US Environmental Protection Agency to measure the energy consumption of vehicles running on alternative fuels and HEVs.

While the US and Japan introduced HEVs decades ago, it is not too late for India to push for HEVs today. These vehicles will allow the market to set up the requisite charging infrastructure that will then form the backbone for a full-fledged shift to electric vehicles.

The Road Transport and Highways Ministry’s plan to allow older vehicles to ply as hybrid vehicles in 2016 can be considered as the first step in this direction. However, it seemed to be a move merely to allow older vehicles to remain on the road when a Supreme Court ban was looming.

Going after large fleets

The first priority of the government should be to target larger vehicles and fleets of vehicles such as buses for public transport and not go around subsidising personal cars. Since public transport in India is a near-monopoly of various governments, thus operating on public funds, it would be easier for the government to go in for a scheme similar to Jawaharlal Nehru National Urban Renewal Mission (JNNURM). State transport undertakings also have a lot of land available with them to set up the required charging infrastructure as well as storage facilities for the power required. Along with intra-city buses, the focus should also lie on short-distance inter-city routes such as the Mumbai-Pune or Chennai-Puducherry corridors, which are less than 200km apart.

Getting the bus fleet to go electric should be a priority simply because subsidising cars would add more vehicles on the roads across cities. The next step would be to target fleets of commercial vehicles, primarily taxis and ride-sharing vehicles. While Ola’s Nagpur pilot didn’t take off as expected, lessons need to be learned from the failure, and those issues need to be fixed first. News reports suggest that the project failed due to unsustainability for the drivers. The first step would be to find out why and then look at how it can be solved, whether using the existing framework in place, or after formulating a newer policy. Similar to Ola, Uber also decided to focus on an electric fleet in partnership with Mahindra. Along with taxis, the autorickshaw segment is also slowly gaining ground with Kinetic, Mahindra, and other manufacturers launching electric variants.

The logic behind getting taxis and auto-fleets on board is the same as buses. Taxi stands or rickshaw stands across cities can set up the necessary charging infrastructure easier than others.

A positive step was the government’s Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) scheme, under which buses were given 60 per cent subsidy while cars were given 10 per cent subsidy. Government think tank NITI Aayog’s plan to go electric for public transport in select cities and set a deadline for diesel vehicles further adds more momentum to the conversion.

Augment power capacity and set up an independent grid

India’s power consumption is increasing rapidly. The key reasons for this are: large-scale rural electrification, electrification of the entire railway network, more metro rail projects becoming operational, and increased requirements of the industrial sector. In addition, there is also the electric-vehicle sector that will have a role to play in the near future. India will have to focus heavily on power generation and distribution. While the coal sector will remain active for some time, the country needs to focus on long-term capabilities, especially nuclear. To supply to the high demand that electric vehicles alone will raise, we will certainly need more than a 100 operational nuclear reactors across the country.

While solar energy is touted as the cleanest source of energy, it is no secret that solar generation is high on maintenance, toxic in nature, and causes instability in the grid – something we can ill-afford if every vehicle is running on electric power.

The second thing to consider is whether the grid can handle the load. American bus manufacturer Proterra in 2016 introduced its fast-charging platform (while also opening up the patents) which would allow a bus with a 100kW battery to charge in merely 10 minutes. However, to supply so much power in such a short period, the grid must be capable of doing it. The safest way to ensure that would be to set up a separate grid for the charging sector.

The 2012 blackout in North India was caused due to Punjab and Haryana drawing more power from the grid, causing the frequency of power supply to fluctuate, leading to the grid collapse. Mumbai, on the other hand, has managed to escape from most blackouts due to its Island Grid, which isolates it from the rest of the network. The electric-vehicle charging grid also needs to isolate itself from the rest of the supply and distribution network to prevent blackouts. Otherwise 20 buses using the fast-charge option simultaneously will see the entire sector plunge into darkness.

An alternative to a separate grid would be to have the charging stations have battery storage, which would not draw heavy power from the grid. This functions in many ways similar to a stabiliser, but may not be suited for all locations.

Deregulation of charging infrastructure

Now, for any plan to succeed, the government will have to leverage the private sector into working together. In case of the electric vehicle sector, charging infrastructure has to be deregulated to allow any interested party to set up charging points. This can include malls, apartment complexes, and other commercial spaces. However, proper regulation must be in place to ensure that they are connected to the right grid.

Making sure that residential areas have charging points will enable faster adoption of electric vehicles, and deregulation will motivate developers to implement it on a larger scale to allow the general public to use it. Further, the government could allow individuals to lease out parking spaces similar to Japan or the US – it would aid in setting up an ad hoc network of charging points across cities.

Leveraging the EESL and going domestic

The state-run Energy Efficiency Services Limited (EESL) – which shot to prominence for distributing low-cost light emitting diode bulbs, tube lights, and fans – is the nodal agency that the government has appointed to work on investments relating to powering up India’s electric-vehicle scenario. EESL is procuring nearly 20,000 electric vehicles, investing heavily in grid storage in Canada, fast-charging technology, and more.

EESL’s work is laudable and it needs to continue. However, as far as procuring electric vehicles is concerned, EESL should change its focus to batteries. Batteries are the most expensive component in an electric vehicle and therefore, it makes more sense if the EESL procures them for automobile manufacturers in India rather than procuring the entire vehicle itself. The cost of importing and then selling subsidised batteries to manufacturers would work out cheaper in the long run. This would also spur domestic manufacturing of electric vehicles.

Another factor to be considered is that most of India’s electric buses today are manufactured by China’s BYD – the world’s largest electric-vehicle manufacturer – and only assembled in India by Hyderabad-based Goldstone. Three of India’s major bus manufacturers – Ashok Leyland, Tata Motors and Eicher – have electric models ready, but they are not popular. Pune-based KPIT also has a range of electric buses, one of which was flagged off by Prime Minister Narendra Modi in Parliament.

This is where NITI Aayog’s proposal to have only electric vehicles for public transport comes in. The shift must be in phases, and to avail of the subsidy, the government must put in a simple condition – the bus must at least be assembled in India. While four domestic manufacturers already exist, with the fifth one, Goldstone, investing Rs 500 crore for its second assembly plant in India – this will certainly work.

A good model to emulate here partially, once again out of the US’ playbook, is the Buy America Act of 1983 and its implementation by the Federal Transit Administration (FTA). Under the Act, the FTA provides only financial assistance if certain components of the rolling stock – particularly steel, iron, and manufactured goods – are produced domestically. While India need not go to such extremes, it can set the bar at local assembly for starters, essentially making us a screwdriver manufacturing ecosystem. This can be slowly extended to sourcing a bare minimum of components domestically towards a later stage. Last year, the Centre mandated that 75 per cent of the coaches for all metro projects be sourced domestically.

Investing heavily in R&D and overhauling the Indian education system

The most important part of India’s electric-vehicle policy is a massive push towards research and development (R&D). The fruits of R&D in the sector will not only have an effect on electric vehicles but also on other sectors, including the power sector, space sector, and more.

While we are still getting used to lithium-ion batteries, the world is moving to newer technologies. For instance, China Railway Rolling Corporation (CRRC) manufactures electric buses that run on a 60,000 farad supercapacitor and can be fully charged in 30 seconds.

Researchers at Cambridge are looking at the lithium-air battery – considered the holy grail of batteries – to replace lithium-ion batteries. Lithium-air batteries contain oxygen in them that allow for a higher energy density in the battery and can operate across more charge cycles than a standard lithium-ion battery.

The Japan Aerospace Exploration Agency (JAXA) in collaboration with Mitsubishi Electric has been working on a prototype system to transmit electricity wirelessly using microwaves. While the primary purpose of the system is to transmit electricity from solar power satellites to the Earth, Mitsubishi has stated its intentions of using the system to charge electric vehicles in the future.

Sweden recently inaugurated what it called an ‘electrified road’, which is basically an electrified track running along the road that vehicles can charge, much like the third rail used in railway systems. France and China have opened up ‘photovoltaic highways’ that generate electricity using solar energy and then transmit them to vehicles driving over them.

To keep up with all this, the government needs to establish scholarships in the field of battery storage, charging technology, and efficiency of the vehicle’s overall components. Research grants need to be set up, and engineering colleges need to be granted more autonomy to inculcate a research atmosphere.

Skilling the populace

Going entirely electric will have a huge impact on jobs in a country like India. Due to the lack of fuel-related components, the total number of components in an electric vehicle comes down by a huge margin. Further, most of these are completely electronic, thus requiring highly skilled personnel to fix problems that may crop up. This would undoubtedly put a lot of roadside mechanics out of a job, but it is the right time for us to start skilling our population for the move.

When Gadkari said he wouldn’t allow driverless cars in India because of the jobs lost, clearly the job losses due to electric vehicles – potentially higher – were not given a thought.

Introducing a sunset policy

No electric-vehicle policy will work without a proper sunset policy in place to phase out the existing system. In order for the switch to electric vehicles to succeed, the government will have to focus on two separate sunset policies.

The first sunset policy, as suggested by NITI Aayog last year, would be to slowly phase out diesel-based vehicles. It should then be extended to petrol and then compressed natural gas vehicles as well. However, it needs to be done in a phased manner. Last year, Himachal Pradesh was forced to operate only electric buses through the Rohtang Pass by an order of the National Green Tribunal (NGT). The NGT’s order was to use electric buses to “protect the fragile ecology” of the area. While charging points were installed at Manali and Marhi, it is pertinent to remember that Himachal Pradesh is located in the Himalayas and therefore electric buses may not be well-suited to handle the rough terrain. Further, if the battery does run out and needs to be charged, it merely increases the amount of time taken to complete the journey.

The sunset policy needs to uncover in phases, starting with public transport and fleet services. Once the switch to electric vehicles starts, an additional pollution control cess can be levied on existing vehicles to encourage the shift.

The second sunset policy is for subsidies within the electric-vehicle policy itself. At some point, government subsidies would have to give way to allow the market to take over and start filling the supply-demand gap, and the electric-vehicle movement would have reached critical mass. Subsidies can then be slowly reversed and market economics can take over.

Conversion of existing fuel stations to charging stations

According to the last count, India has over 56,000 fuel stations, of which nearly 51,000 belongs to the three state-owned oil companies – Indian Oil, Hindustan Petroleum, and Bharat Petroleum. Keeping in mind that electric vehicles will first arrive on the urban scene, the government can start by adding a charging point at all the urban ones alone. These charging stations can be equipped with a fast-charge option at a premium rate. For most people, a trip to these stations would be for a quick 20 per cent charge to reach home or work, where the vehicle can then charge normally. The time required to charge the battery minimally would then be on par with the time taken to fill a tank with petrol or diesel.

Revenue augmentation

India, like many other countries, builds its transport infrastructure partly using a cess charged on fuel sales. If fuel sales go down, then an important source of revenue will also go down. Since electricity will certainly be cheaper than fuel, a cess per unit of electricity can then be added once the electric vehicle switch reaches critical mass to compensate for the losses from fuel sales. However, since India’s fuel imports will go down, the money otherwise spent on importing and processing crude oil can be repurposed.

A 2016 study, released by the American Lung Association, found that zero-emission vehicles would reduce expenditure on healthcare and the environment by a huge margin. The study found that if by 2020 every vehicle sold is either an electric vehicle, HEV, or hydrogen fuel-cell vehicle, and these vehicles formed over 65 per cent of the total vehicles on the road, then the 10 states that have adopted stringent emission norms in the US would save close to $20.5 billion (Rs 13,370 crore) annually in healthcare costs. In India, where population densities are higher in our urban segments, the saving on public healthcare would drop even more drastically. The healthcare budget can then be repurposed, similar to fuel import savings.

India does need an electric vehicle policy badly, and a vast and complex one at that which can address the multiplicity of issues that are otherwise bound to crop up. While subsidising electric vehicles as the first step seems fine, heavy vehicles need to be targeted first. At the same time, threats to the industry to fall in line won’t work both when the demand and supply are negligible, and those cheering such statements should tread cautiously.

The author would like to thank Kundan Srivastav and Jaideep Prabhu for their inputs.