Bureaucracy, Infrastructure May Hinder Electric Car Industry In India

Rapidly increasing carbon dioxide emissions and growing concerns over depleting fossil fuel reserves have forced the mankind take a hard look at itself and the blatant greed humans had displayed over the past century. Now let us add India to that equation and see where we stand. It is the second most populous nation and has what the marketers like to call a ‘thick layer’ of fast-earning, middle-class consumers.

It means our people are now moving up the income and the location ladders. Most of them are earning more than their predecessors and most of this new money is coming from location shift as people move from rural areas and smaller towns to big cities. There was a time when the Indian dream evolved around ‘Roti, kapda aur makaan’ (food, clothes and shelter). But with the markets opening up in the 90s, the rapid inflow of modern consumer goods took place and ‘owning a car’ became a part the modern Indian dream. However, a huge number of personal vehicles running on petrol or diesel would surely undermine India’s role in reducing carbon emission. Does it mean Indian consumers must give up on their dream? Or is it possible to tweak it a little and pave the way for eco friendly electric cars?

Yes, India needs electric cars. But will they flourish here? According to Deepak Ahuja, chief financial officer of Tesla Motors, “India is a huge potential market where we need to be. I think sometime in 2015 seems to make sense to enter India, but it’s difficult to make an official announcement.”

But the reason why the global leader in electric car manufacturing space cannot pin a specific date for launching in India is quite obvious – there are many gaping holes in infrastructure that need to be plugged before electric cars can become a wide reality in the country.

Major challenges
The most crucial challenge faced by the electric car industry in India lies in the way India produces electricity. Around 70% of the country’s electricity is generated from coal, which itself is a limited resource. This defeats the entire purpose of shifting power vehicles to electricity because at the end of the day, Indians will be still burning up natural resources and the reduced emission from electric cars will negated by the huge coal usage, required for additional power generation for charging stations. Unless India starts producing most of its electricity from renewable energy sources like solar or hydropower or from nuclear plants, the whole concept of electric cars would be moot.

The next challenge for electric car owners in India is a serious lack of charging stations in the country and this includes the metros as well. Electric cars are expensive and when an Indian consumer sees that his expensive car cannot be used for a long trip as there are too few charging stations, he is less likely to say a good word about such cars. In contrast, this is where the CNG-enabled (compressed natural gas) vehicles steal the show in India. They are cheap, cleaner and most cities and towns in India have CNG stations for refilling.

Government’s role
On the bright side, the Indian government is actively working its way towards ensuring that 5-7 million electric cars should be running throughout the country by 2020. Keeping that in view, the Finance Ministry is set to offer subsidies worth Rs 14,000 crore to auto companies that are building electric cars. Mahindra Motors already produces the Reva, a small electric car, and runs a factory that produces 40,000 units annually. Tata Motors and Maruti Suzuki are also set to benefit from this huge subsidy once they start producing electric cars in the country. Delhi government will also announce a subsidy for car owners who want to shift from fuel to electric by adding a special conversion kit. But the big question remains – when will India start producing most of its electricity from renewable sources?

Electric car market in India
As we mentioned earlier, Tesla does have plans to launch operations in India in the near future. It is most likely that the company will start with the Model S Sedan or the Model X SUV, which is already running in China. In the list of available options for electric cars in India, the key name is Mahindra Reva NXR. Soon-to-be-launched cars include the hatchback called Tata Megapixel (expected price – Rs 5-7 lakh) and the luxury hatchback Nissan LEAF (Rs 24-28 lakh).

Pricing of these cars is going to be a crucial factor in India. Also, cars like the BMW i8, which are launched as CBUs (completely built units) and hence priced at Rs 1.35 crore, will be a distant dream for the middle class. Unless major car brands start building the electric variants within the country, the electric car industry cannot really take off. As car lovers and environmentalists, we can only keep our fingers crossed.
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