Powering mobility

The decision of Tesla, the world’s most valuable automobile manufacturer, to debut in India next year is the latest indication that 2021 could see electrical vehicles get a major push across India. Every global auto major is rolling out electric vehicles (EVs) and the Indian auto industry is following suit with many launches of EVs due. To its credit, the government has pushed EV adoption with tax breaks, stricter emission laws, and other policy support. But a lag in the creation of charging infrastructure could be a deterrent for prospective users, and policymakers need to examine this. There is preferential treatment for EVs in terms of tax rates under the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) and FAME 2 policies. Goods and services tax for EVs is charged at 12 per cent, which is much lower than for internal combustion vehicles. Plus, public vehicle fleets are increasingly electrically powered under FAME 2.

This shows policymakers are serious about the goal of phasing out fossil-fuel engines by 2030. While that may be too ambitious, EVs could well hold 30-50 per cent of the vehicle market by then. But there is a lack of EV charging infrastructure. A McKinsey report has estimated India will need five million public charging points, at an investment of $6 billion, by 2030. A city like Delhi could require around 300,000 fast-chargers by 2030, assuming 30 per cent EV penetration. The 2020 Budget made provisions to set up 2,600 public-charging stations in cities and another 1,700 along highways but even these relatively modest targets have been missed due to the pandemic. While much of this infrastructure would be funded via private investment, policy support will surely help. For example, there could be incentives for apartment buildings to build charging stations, in analogy with water-harvesting systems, and renewable energy provisions.

One positive step is treating EV charging as a service, allowing anyone to set up and operate EV stations. Another positive step is lower power tariffs for EV charging. But more support is required to drive the necessary exponential growth and that could perhaps come from the Budget. In addition, a look at public safety is required. EVs are safe mechanically but they can catch fire if the battery is exposed to heat, and batteries can even explode. If an EV catches fire, or if there is short-circuiting, in an accident or breakdown, fire-safety departments need to deploy different protocols, and use non–conducting foam and other specialised equipment. Fire-safety departments and traffic police will need to be trained to neutralise such situations.

There could be an interesting situation if fuel-cell technology also catches on. EVs are clean in terms of being zero-emission. But India’s electricity is still primarily thermal, which means the power source is not necessarily clean. The alternative technology of hydrogen fuel cells will offer even cleaner power — the “waste product” is plain water. Fuel cell technology may soon become viable at scale, in which case we may see a situation where vehicles on the road will concurrently use diesel, petrol, gas, electricity, and hydrogen. The transportation value chain, including repair and maintenance, as well as the components ecosystem, would change in complex ways. The impact on employment may be net positive but this process will surely be disruptive as well.


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