For the past decade, we have been fed a constant flow of information that electric vehicles are the future. And indeed, I have just returned the Hyundai IONIQ 5 that I drove for eight months. After living with an electric vehicle for eight months, the sheer operating economics of an electric vehicle are unmatchable. It is not without reason that sales of high-usage commercial vehicles, particularly light goods-carrying three-wheelers, have shifted almost completely to electric, and you can see them all around you.
Sales of electric two-wheelers have also been climbing but have been aided in the recent past by massive discounts from leading players like Ola, which is expected to have an Initial Public Offering (IPO) soon. Tata Passenger Electric Mobility (TPEM), the electric passenger car arm of Tata Motors, also announced significant price cuts on most of their range recently. The Indian carmaker, which has an 80 per cent share of the electric car market, has recently launched its second-generation EV technology on the Punch.ev. Electric versions of the Harrier and Curvv SUVs are expected to be launched by Tata in the next few months. By the end of the year, the country’s largest carmaker, Maruti-Suzuki, is expected to unveil the production version of their EVX electric car.
These launches, as well as a slew of launches expected next year from Mahindra, which will bring their first ‘Born Electric’ vehicles, and from Korean carmakers Hyundai and Kia, as well as Vietnamese manufacturer Vinfast starting construction of their plant near Chennai, are signs that the electric vehicle market in India is in robust health.
However, things are not the same across the world and, to an extent, even in India. Recently, Mercedes-Benz announced a U-Turn; the carmaker had said that it would move toward becoming an ‘electric-only’ company by 2030 but has put that off. It has announced that it will continue to make internal combustion engines for some time despite mandates from certain European governments to shift completely to electric vehicles because customer demand is flagging.
In the United States, the world’s second-largest car market, both domestic manufacturers, General Motors and Ford, have announced a slowdown in EV production plans. Demand for electric vehicles such as Ford’s Mustang Mach-E sports car has been disappointing, to say the least. While electric-only car makers like Elon Musk’s Tesla Motors have continued blockbuster sales (although even they expect sales growth to slow down in 2024), other electric vehicle startups such as Rivian, which recently showcased their new R2 and R3 SUVs, have just laid off a tenth of their workforce, citing a slowdown in demand.
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Challenges for EVs
You would expect that after years of trying to promote electric vehicle sales, governments across the world, supposedly to reduce pollution, would continue to support EV sales with subsidies. But in India, the FAME-II subsidy for commercial electric vehicles and two-wheelers is expected to lapse soon, and the next FAME-III phase, which will be announced after the Lok Sabha election, is not expected to have demand-side subsidies. This is similar to moves across the world. In the United Kingdom, subsidies for EVs have been withdrawn by the government, the same is true in some other European countries and in several states in the United States as well.
There is no easy answer for why this is so. While I drove the Hyundai IONIQ5 over 8,300 kilometres in the eight months that I had it, running costs worked out to just under Rs 1.70 per km, which compares to Rs 10-12 per km in fuel (petrol) costs alone for any other similarly sized vehicle, such as the Hyundai Tucson. But despite lower GST rates and the lack of road tax and registration in some states, there is almost a Rs 10 lakh̉ difference in the on-road price of the two vehicles from the same carmaker. Sure, the green number plate on an electric vehicle has a certain snob-value, and on days where air pollution is bad, these are not stopped, but that is still a significant gap.
Even between the top models of Tata’s Nexon and Nexon.ev, there is a nearly Rs 5 lakh difference. So despite the huge running cost advantages of an electric vehicle, one will need to run it significantly to extract an advantage. Of course, this assumes that petrol and diesel prices stay the same, but it seems likely that there will be a cut at the pump ahead of the Lok Sabha election because the Oil Marketing Companies have significant margins to do so. At the same time, as I have argued in previous articles, the best way to extract the cost advantage of an EV is to have a home charging solution, and that is not an option for many apartment owners across the country, let alone those who have no guaranteed parking spot.
While sales of two-wheeler and three-wheeler electric vehicles in India have climbed, sales for electric passenger cars have not. Vivek Srivatsa, chief commercial officer at TPEM, told me during the Punch.ev media drive that a single carmaker dominating the market, despite it being his company, is not great for the market. “There need to be more products from more companies because that is what will drive more people to consider going electric,” he said. And while that might be solved, there are some other issues that plague the demand for electric passenger cars.
But not the one some of you might be thinking of; there are enough and more EV chargers across the country right now. And while I do think most of them are ‘too slow,’ as they will take an hour or two to charge a vehicle, there are more ultra-fast chargers coming, like the one I recently experienced in Gurugram’s Golf Course Extension road, a 150-kilowatt charger that gave the IONIQ5 10 per cent of charge in under five minutes and charged it from 10 to 80 per cent in under half an hour. Well, it costs Rs 30 per unit; you pay for the convenience of time, but then again, you can tank up an ICE vehicle in under ten minutes.
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Beyond the cost
The problems are manifold. One is cost, as mentioned above. The second is quite clearly that Hybrid cars, despite being much more complex, are a great amalgam of capital costs (purchase) and operating costs. Demand for the Toyota Innova Hycross, which still has a year-long waitlist, is evidence of this, and Maruti-Suzuki is planning to bring in a Hybrid variant of its Fronx crossover later this year, which is believed to promise over 35 km per litre. This is actually evidenced by demand shifts in Europe and the United States as well; the carmakers mentioned above – Ford, GM, and Mercedes-Benz – will be going the Plug-In Hybrid EV (PHEV) route. These vehicles have slightly larger batteries than traditional hybrids, which can be charged at home, but also a petrol-driven motor that ensures longer range.
One reason Americans and Europeans are falling out of love with electric vehicles is that the huge upsurge in demand means that infrastructure is lagging. And governments, particularly those in Berlin and Washington DC, have seen the clear and present danger from Chinese carmakers such as BYD, who have finessed EV production and dramatically brought down costs. In fact, BYD India just launched their BYD Seal product in India last week, and despite the government of India preventing them from starting an assembly plant in India in the aftermath of the Galwan clash, the Seal is cheaper than the competing products. One expects the Commerce and Heavy Industries Ministries to protect ‘Made In India’ products going forward, and there is nothing wrong with that in my opinion.
And then there are the environmental issues; mining for Lithium and particular Rare Earth Metals, the latter playing a role in the permanent magnets required in EV motors, have started to be asked about. This is apparently why some activists attacked the Tesla plant near Berlin recently and cut off the power supply to it. But there is also a kicker here: I’ve argued in the past that for a ‘not so rich’ country like ours, subsidies on electric vehicles have been mainly mopped up by richer consumers. Maruti-Suzuki is now planning a ‘Series Hybrid’; think of it as a ‘range extender’ where the petrol engine functions as a generator to charge the battery, and it is the battery that drives the wheels, much like modern diesel locomotives on the railways. And just like Automated Manual Transmissions (AMT) started the ‘clutchless’ revolution in India, this could make for cheaper Hybrids. And with the fuel economy numbers promised, not only will India save on its crude oil bill but also on pollution.
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Prashant)