Delhi drives push for electric vehicles in India

For most of the noughties, Bangalore-based entrepreneur Chetan Maini was the creator of the world’s top-selling electric car.

Mr Maini sold about 4,000 units of the G-Wiz to buyers in multiple countries, despite withering reviews about its sluggish performance and toylike appearance, before selling his company to Indian group Mahindra & Mahindra in 2010 — the same year Nissan launched its Leaf model.

Nine years later, the entrepreneur has returned to a more crowded electric vehicle scene. But instead of targeting environmentally-minded drivers in Europe, he is focused on the scooters, three-wheelers and buses that account for the vast bulk of the passenger road transport in his home nation.

“From experience elsewhere, you might think that cars are where the focus should be,” Mr Maini said at the Bangalore headquarters of SUN Mobility, the company he set up in 2017. “But India is very different from the West.”

The Indian government agrees with this view, judging by a major policy announcement this month that dramatically ramped up its financial support for electric vehicles. Under the new scheme, New Delhi has allocated Rs100bn ($1.5bn) for electric vehicle subsidies over the next three years — up from just Rs9bn given out since 2015.

And while countries in Europe and elsewhere have focused their EV subsidy efforts on car drivers, India has earmarked subsidies for 1m electric two-wheelers and 500,000 three-wheeled rickshaws, as well as 7,000 buses. 

The plan envisages subsidies for only 55,000 cars — and they must be taxis or other fleet vehicles, not private cars. The market is being pursued aggressively by local Uber rival Ola, which this month raised $58m for its new electric mobility unit from investors including its US backer Tiger Global.

The policy’s focus on scooters and “shared mobility” reflects the severe gridlock dogging India’s crowded inner cities, as well as the still limited car market in a country with average per capita income of around $2,000. Last year, 2.2m cars were sold in India, compared with 21.6m two-wheelers.

With sales of all types of vehicles projected to boom as disposable income grows, a shift to EVs would have a meaningful impact in the fight to tackle climate change, as well as the air quality in India’s major cities, which rank among the world’s most polluted, according to the World Health Organisation.

The new policy has been greeted with enthusiasm by EV businesses in India, who see it as a major shift in New Delhi’s approach to the sector. “The government has finally taken a good, clear stance,” said Tarun Mehta, co-founder of Bangalore electric scooter maker Ather Energy.

Ather last year started delivery in its home city of scooters with prices starting at $1,600 — much higher than the typical price point for Indian two-wheelers, the bulk of which sell for well under $1,000.

With features including a touchscreen dashboard, the company is starting off by targeting image-conscious young professionals in Bangalore, famed for its huge IT sector. “People have started looking at EVs not just as something to save the environment, but as the most exciting product on the market,” Mr Mehta said. “Tesla has really helped for building that image.”

Most in the industry agree, however, that truly large-scale adoption of EVs in India will happen only once consumers are convinced that it will save them money.

A growing number are already being persuaded on this front, said Nagesh Basavanhalli, managing director of engineering group Greaves Cotton, which last year acquired a two-thirds stake in Ampere Vehicles, an electric scooter maker backed by industrialist Ratan Tata, for Rs770m ($11.2m).

Over several years, he says, the total ownership of Ampere’s two-wheelers typically works out being significantly cheaper than equivalent petrol-fuelled vehicles. With top speeds of 25kph, Ampere is marketing its vehicles at pragmatic, frugal small-town buyers such as students and the retired.

But beyond cost factors, analysts warn that there will be serious obstacles to making charging spots available in India’s overcrowded cities, with their limited parking spaces and weakly enforced traffic regulations.

Mr Maini’s SUN Mobility claims to provide a solution: instead of plugging in their vehicle to charge for several hours, users of his system can deposit a spent battery at a charging station and immediately replace it with a fresh one.

In recent months, the first of about 500 e-rickshaws using the system have hit the roads in Greater Delhi, as well as buses in the western city of Ahmedabad, and SUN is in talks with delivery companies about deploying scooters with swappable batteries.

The more diverse specifications of electric car batteries complicate the deployment of a SUN-type system — but it could be ideal, Mr Maini argues, for car fleet operators who want to minimise vehicle “downtime”.

At the same time, Ola, which runs ride-hailing services in more than 100 Indian cities, is making a major push into electric car fleets. The company has set up an electric unit that is currently running a large-scale pilot project in the central city of Nagpur, and this week received a $300m capital injection from Hyundai, much of which it said would be invested in electric mobility, following the separate $58m investment earlier in the month. The company has also previously announced an EV collaboration with Mahindra.

At this month’s Geneva Motor Show, Mahindra’s Italian subsidiary Pininfarina unveiled a $2.6m EV that it claimed was the world’s most powerful road-legal car, with 1,900 horsepower. But for the domestic EV market, the group is focusing on fleet applications, said Pawan Goenka, managing director of Mahindra.

The reason comes down to the relative economics of today’s electric cars, with their higher upfront prices but lower fuel costs, he said. While this makes them uneconomical for occasional drivers, commercial drivers running their cars for long hours can realise savings. 

“India is a very price-conscious market. Some people might buy EVs because it’s right for the environment, but most will do so only if it’s right for the wallet,” he said.

Mahindra faces competition from local rival Tata Motors, which is working with affiliates such as Tata Chemicals and subsidiary Jaguar Land Rover in its EV efforts. Tata has produced an electric variant of its Tigor compact sedan in limited numbers, and is considering a full-scale EV launch next year.

The government’s new programme will give suppliers incentives to start developing an industrial ecosystem, said Shailesh Chandra, Tata Motors’ head of electric mobility. 

To be eligible for subsidies under the scheme, EVs must contain at least 40 per cent locally produced components. Companies in the sector are still awaiting detailed guidance, however, on how the proportion of “local content” will be calculated. The decision not to subsidise private car purchases, Mr Chandra said, risked creating an impression of electric cars as a “taxi category”, slowing the uptake among private drivers.

Yet momentum in the sector appears to be growing, he added. “Earlier electrification was always seen as something that might or might not come. But now it is clearly imminent.”




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