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Editorial Articles

Issue no 3, 16 - 22 April 2022

India's Decarbonization Mission Adoption of Electric Vehicles

Darpan Mago

Despite being a developing nation, India's efforts towards sustainable development largely hinges on freeing the economy from carbon emissions. Be it the target of achieving 50% power production from renewable sources by the year 2030, introducing the National Hydrogen Mission, or initiating innovative Carbon Financing models as incentives, India is committed to decarbonising itself. One of the biggest initiatives that have become a matter of the moment is the recent effort toward transitioning to electric vehicles.

From a global standpoint, the transportation sector alone is responsible for about 37% of carbon dioxide emissions. Interestingly, now the reliance on fossil fuels for transportation is being weaned away with the rapid adoption of electric vehicles throughout the world. The biggest shift that has recently been ushering a new spirit in this space is making electric vehicles cheaper and more convenient to adopt. While electric vehicles are not new, the Indian Government's thrust on their adoption is futuristic.

 Need for Transitioning to Electric Vehicles

The transport sector in our country is huge, and India has established itself as the sixth largest manufacturer of vehicles globally. This sector is paramount to aiding the infrastructure and logistics of the entire nation. Being one of the biggest employers today, the transport sector contributes a total of 22% to the manufacturing GDP of the economy. With such brilliant statistics, we cannot ignore this sector but need to devise methods to make it environ-mentally sustainable. The Indian automobile industry is growing rapidly, with demand for passenger vehicles, commercial vehicles and two wheelers set to rise exponentially in the coming years.

As per the International Energy Agency's (IEA) report, the transportation sector is the second-highest contributor to carbon dioxide emissions globally. With India's growing energy demand, the dependence on fossil fuel is set to rise and be more problematic for the environment in the coming years. The transportation sector is gigantic, and to prevent the dependency on fossil fuels from going up any further, there is a pressing requirement to transition to a greener future with sustainable electric mobility. This switch to electric vehicles becomes even more pressing when we learn that India is home to 22 of the world's 30 most polluted cities. With these numbers, there is an immediate need to construct a methodology to facilitate the usage of immediate alternatives to fossil fuels.

 Government Departments Leading the Way

Owing to the high prices of batteries, primarily because of the metal and compounds used in them, electric vehicles are more expensive compared to internal combustion engine vehicles. At present, in the Indian market, an electric vehicle costs almost double the price of an internal combustion engine vehicle.

Considering this factor, the Government of India came up with an innovative idea to accelerate the adoption of electric vehicles. The plan was to popularise these electric vehicles in Government departments first, which have the financial capability and capacity to bear even higher initial outlays. With this method, the Government will not only be the first change maker but will also surge the demand for electric vehicles in the Indian market, leading to a slight reduction in their overall costs. This soaring demand from the Government compounded over months and years would lead to a huge reduction in costs, enough to make the vehicles more affordable for common folks in time to come.

To execute this idea, Energy Efficiency Services Limited (EESL), a power sector Joint Venture company under the administrative control of the Ministry of Power began India's first-ever project of leasing out electric vehicles to Government organizations. EESL works in the energy services space. It is a unique company, which in the past has bulk purchased energy efficient products like bulbs, fans, tubelights, streetlights and smart meters to get the benefit of the volume discount through this procurement method. While they aggregate the demand for energy-efficient products, the benefit of price reduction is passed on to the end consumers. As this company has already worked on similar procurement methods of scalability and demand aggregation, a corresponding method was mapped for electric vehicles as well. They put out tenders for the procurement of electric vehicles from private manu-facturers in big volume and began leasing them out with full maintenance services, along with chauffeurs, to Government departments. Not only did the bidding process and bulk procurement lead to the discovery of cheaper cost of one car, but also credited the Government departments as one of the first change makers. This way, the Government was the first customer of electric vehicles and was able to propel its demand without entirely burdening the private owners and the general buyers. The onus of transitioning to an expensive electric vehicle fleet was well shared by the Government. EESL launched its electric vehicles project throughout India on March 7, 2018. The project was inaugurated by the then Honourable Minister of Power. Leasing a Maruti Swift Dzire for 3 years in Delhi costs nearly Rs. 40,000 a month, and EESL's electric vehicles can be hired at almost the same expense, for a lease period of 6 years, with a well-mannered chauffeur and full vehicle maintenance contract.

As on November 16, 2021, electric vehicles deployed by EESL completed 6 crore green kilometres on roads and reduced about 12,076 tonnes of carbon dioxide emissions. Further, to this date, over 1,700 electric vehicles are running on the roads attached with different Government entities all over India. With this big number, it is projected that about 4.51 million litres of fuel has already been saved in addition to monetary savings of INR 383 million in fuel. To supplement these numbers, it is also projected that these cars are leading to about 1,690 kilograms of reduction in particulate matter emissions. EESL has brought out all the numbers and statistics on a real-time dashboard available online with the following web address: http://ev.convergence.co.in/#/.

When the scheme began to pull off, it was understood that a simple push and introduction of electric vehicles was not enough as the next roadblock was the driver's range anxiety. This means that electric vehicles had less range (or mileage) as compared to internal combustion engine cars. To solve this problem, EESL began to enhance the charging infrastructure wherein to date it has installed about 396 charging stations across the country. With such a step, and already strengthening the infrastructure of electric vehicle charging stations, the problem of charging and range anxiety has receded. Nevertheless, many innovative solutions in terms of improving battery storage are still needed to fully solve the problem of range anxiety amongst electric vehicle drivers, and make these as feasible as internal combustion engine vehicles.

 FAME 1 and 2 Subsidy Schemes

Department of Heavy Industries under the Ministry of Heavy Industries, Government of India, had introduced the National Electric Mobility Mission Plan 2020, wherein it has instituted a scheme titled - Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME), which aims to widely increase the usage of electric vehicles on roads.

Under this scheme, a subsidy is being provided on the purchase of electric vehicles. The current rate of subsidy for different category of vehicles is as under: z

·         Two wheelers: Rs 15000/- per kWh upto 40% of the cost of Vehicles

·         Three wheelers: Rs 10000/- per kWh 

·         Four wheelers: Rs 10000/- per kWh 

·         E Buses: Rs 20000/- per kWh 

·         E Trucks: Rs 20000/- per kWh

This scheme supports the ambition of making electric vehicles more affordable for the common people by reducing their overall price through subsidy mechanisms. Under this scheme, an outlay of Rs. 10,000 crore has been set aside by the Government of India for subsidy disbursement for 3 years starting from April 1, 2019. The process of subsidy is simple and hassle free, wherein the manufacturers are authorised to directly claim the subsidy from the Government when they complete the sale of an electric vehicle to a consumer. For subsidy, the consumers do not need to claim anything, but the manufacturer will simply pass on the subsidy benefit to the consumer first and then claim the subsidy from the Government directly after concluding their sale.

There are multiple models under the two-wheeler, fourwheeler and three-wheeler categories available under the FAME part-2 scheme, wherein various manufacturers from around the country have registered themselves. The FAME scheme is divided into two parts, namely FAME part 1 and FAME part 2, in the first part about 2,80,987 hybrid and electric vehicles were subsidised through the scheme. Further to this, under the National Electric Mobility Mission Plan 2020, the Department of Heavy Industries sanctioned 425 electric and hybrid buses in various Indian cities at a cost of about Rs. 280 crores. It is interesting to note that, Phase-2 of the FAME scheme focuses on supporting the electrification of public transportation by subsidising approximately 7,000 electric buses, 5 lakh electric three-wheelers, 55,000 electric four-wheeler cars and 10 lakh electric two-wheelers. These efforts by the Government are ambitious to reduce the overall carbon footprint in India.

Private Cabs Going the Electric Way

The private sector has become another torchbearer of this initiative by actualising the use of electric vehicles and pushing their sale in the market. We have already gained a plethora of electric vehicles manufacturers in India, however, their marketing and practical onroad usage are being flourished only because of private cab aggregators. For instance, we witnessed the growth of cab aggregators like Blu Smart Mobility in the year 2019, who are providing cab services in Delhi NCR and Mumbai through a big fleet of electric vehicles.

They have a fleet strength of about 300 electric vehicles with over 200 driver-partners, who run their operations in these cities. Blu Smart's business model involves the leasing of all its electric vehicles from Energy Efficiency Services Limited and then providing taxi services to the general public. The Blu Smart Mobility's fleet has vehicles from manufacturers like Tata, Mahindra and Hyundai Motors. The initial range of Mahindra e-Verito cars in their fleet was 140 kilometres, but the newer variant offers 181 kilometres, similarly, the newer variants of Tata e-Tigors and Hyundai Kona offer a range of 213 kilometres and 452 kilometres respectively, which are part of their present fleet. Blu Smart also offers electric charging stations in the city in collaboration with Exicom Power Solutions. Another such cab service provider working in Delhi NCR is Prakriti E-Mobility Solutions Private Limited. They provide electric cabs in Delhi under the banner of EVera with professional drivers, who are engaged by the cab company through a third-party fleet management agency. They have a fleet strength of about 250 cars, and as of now, operate only in the Delhi and NCR region. The cars in EVera include Tata Tigors, which are owned by the company itself. Their sales pitch is based on the premise that they provide comfortable cabs with qualified drivers without compromising on the customer experience. This is possible because they own the cars themselves. Additionally, another reputed cab aggregator like Ola has expanded and entered an altogether different domain of manufacturing electric vehicles instead of electrifying their fleet. They have introduced their smart and sleek electric two-wheelers in the market. Currently, they are offering two variants Ola S1 and Ola S1 Pro with a range of 121 kilometres and a true range of 135 kilometres respectively. As on date, the Ola S1 two-wheeler is priced at Rs.85,099 in Delhi, while the Ola S1 Pro is priced at Rs.1,10,149. Another international taxi aggregator, Uber has tied up with start-ups like Lithium to introduce 1,000 electric vehicles in metro cities of India.

 Impact of Electric Vehicles on Employment

The European Climate Foundation has estimated that through reducing oil demand by more efficient electric cars, global employment will increase by 5,00,000 to 8,50,000 by 2030. Another report estimates that about 2 million additional jobs will be created by EVs by 2050. Further, as imported oil is replaced by electricity and batteries, large employment is possible in enhancing power generation and distribution, and in battery manufacturing, including battery-recycling. As far as the automotive sector is concerned, a large part of the supply chain will get transformed in the power train segment. Traditional suppliers will move from supplying parts such as exhaust pipes and ICEs to perhaps battery materials, electric motors, and regenerative braking systems. EVs will create opportunities in durable and lightweight thermoplastics, higher demand for electricity, storage and many others. In addition, EV battery charging and swapping would create a large number of jobs throughout the country. (Reference NITI Ayog)

Future of Electric Mobility in India

The future of electric mobility is bright and India is focused on its prime environmental agenda to reduce its dependence on fossil fuels. With electric car manufacturers already flooding the market with new models, it is but time that the prices of electric vehicles will soon become equal to internal combustion engine vehicles. A roadblock that remains is the charging time and range anxiety, wherein the time taken to charge the car battery has to be the same as the time taken by a car at the fuel station. With newer battery technologies coming each day and the advent of fast chargers, we will gradually see the range anxiety fade and charging time also being reduced significantly. India is clear with its decarbonization goals and is surely doing enough to reduce the overall carbon emission through the electric vehicles project.

(The author is Assistant Manager (Public Relations), Energy Efficiency Services Limited, a Joint-Venture Company under the Ministry of Power, Government of India.

 He can be reached at darpanmago@gmail.com). Views expressed are personal.