2022: The Year Of EV Ecosystem Building
India faces two key challenges: first, the availability of lithium and second, an EV charging infrastructure
"Action is the only way to make progress. Take action now; don't wait for a convenient time." A quote by Mike Michalowicz best describes the Indian government's initiative to build an electric vehicle (EV) ecosystem in the county. The Union Budget 2022 with its clear policy framework comes at a time that is critical to building the country's EV ecosystem. From interoperability standards to improve the efficiency of EVs to the focus on battery swapping, 2022 is going to be a defining moment for EV ecosystems in India.
India faces two key challenges: first, the availability of lithium and second, an EV charging infrastructure. Lithium is not found commonly in most parts of the world and the lack of the element means that India is likely to depend on China, Japan and Taiwan for lithium-ion batteries and this import adds to the cost of the EV and stands in the way of India's goal of becoming the global hub for making EVs. Offering hope, Gujarat is likely to have India's first lithium refinery that will process lithium ore to produce battery-grade material. If it goes in the desired direction, it will certainly add an edge to the Vision 2030.
As an added measure to help advance the country's battery manufacturing capacity, the recently announced government-backed production-linked incentive (PLI) scheme for manufacturing advanced chemistry cell batteries invited bids from companies. As per the scheme, manufacturing facilities would have to be set up within two years, with incentives being disbursed over a period of five years on the sale of batteries manufactured in India. This will not only help accelerate EVs adoption in the country but also reduce dependency on batteries exported from other countries.
In a move indicating the government's intention for 2022 to be a defining moment to build India's EV ecosystem, the Union Budget 2022 announced that it will be rolling out a new EV policy on battery swapping with interoperability standards. This measure will help boost the efficiency of the EV ecosystem as it offers the perfect solution for space-constrained urban areas. This policy will help accelerate the electrification of the transport sector with its large volume of three-wheeler vehicles.
Credit rating agency ICRA estimates that over 30 per cent of new vehicle sales of two-wheelers and three-wheelers in India will be EVs by 2025. With the launch of battery-as-a-service, price parity foe electric two-wheelers and three-wheelers will be reached, further allowing the proliferation of these EVs. Another advantage with the launch of battery-as-a-service will be the drop range anxiety allowing EVs to take more long-distance service and also reduced downtime. This will help boost the confidence of the driver community of commercial vehicles encouraging others to adopt electric three-wheelers. This will have a notable impact on shared mobility and the last mile or e-commerce delivery sector.
Leveraging the new policies and schemes introduced by the government, several mobility and energy startups and industry leaders are partnering and working toward building a robust EV ecosystem. The country will witness a major shift in the commercial transport segment space as more e-commerce, food delivery and shared mobility players shift to adopt EVs, specifically electric two-wheelers and three-wheelers. Lower cost of ownership, price parity, tech advancement and reduced downtime and reduced carbon footprint offers companies great incentives to replace their ICE fleets with EVs.
The introduction of special mobility or exclusive EV zones will further help India meet its targets for EV sales penetration of 30 per cent for private cars, 70 per cent for commercial vehicles and 80 per cent for two-wheelers and three-wheelers by 2030. In the next couple of years, India is set to witness major developments in the EV ecosystem.