The Geo-Political environment, year 2020 brings is the opportune time when India can project its natural candidature to be the factory of the world if not in general but for EV supply chain.
COVID-19 will shift preference to Individual mini transport with high affordability on one side and bigger spacious public transport for enough social distancing namely buses/Metros on the other side. However, COVID hangover will for sure affect the vision of shared mobility in mid-term while India’s need to focus on this Bi-pole comes with its own hurdles. Mini Individual EV transports can never match the ‘economy of scales’ and the maturity without dependency on china and continued local subsidies till that scale is reached. Chinese market for electric 2-3 wheelers is hundreds of times larger than anywhere else in the world.
We should not be systematically counterproductive to our vision of Smart Cities as Gustavo Petro, Mayor of Bogota rightly said “a developed country is not a place where the poor have personalised transports, It’s where the rich use public transportation”. Moreover, with symbolic trade atmosphere worldwide in reference to China be it import duties, restrictions in FII/FDIs, De-listing from Stock markets or more nationalistic fervour in the form of “Local pe Vocal”, it’s going to be difficult path ahead without a clear strategy specifically for the budding entrepreneurs who are in this Gold Rush specially for 2-3WH EVs and still a many more afoot.
Current FAME policy promotes public transport off-course but it may need tweak for exponential focus on bigger & better public transport system with Swift moves to develop supply chain in-house. The hiatus by COVID is not going to show impact of China trade restrictions but once we open up it will bring a lot of distress on Table. So, its best time to utilise this lull to build strategy in this global shift as US, Japan, Australia, Taiwan etc are pro -India.
Public transport focus can help India’s 15 cities which are in Globe’s 20 most polluted. It would not only help improve air but noise pollution and congestion too. Already laggard on EV hurdle race and having lost opportunity in last wave of electronics manufacturing, it’s a time for India now. But it’s not easy, China built and nurtured the ecosystem over last 10-15 years with 1000s of active first rung players, just imagine the scale, it holds more than 75% of Li Ion battery market share globally while US produces only around 15% where actually most of key researches happened on LIB. Same way the Solar panel though invented in US but china is global leader with 80% control. China has not built it just with a business intent, there is a big Global political intent of which industry has been naive.
China remains the world’s largest electric car market, followed by Europe and the US, while Norway is the global leader in terms of electric car market share. China has the hold on Li Ion batteries which are 40% of EV cost and demands major infrastructure not only in manufacturing but also on its management throughout life cycle which is the biggest barrier for EV market. CATL, BYD alone enjoys 40% of the Lithium ion battery market share while other big producers in other parts of world are LG Chem, Tesla, Panasonic etc. to name a few. All this is powered by Lithium (Li) which is boon for EV market and a few countries. Lithium is rare earth metal used for Lithium Ion Batteries (LIB). Chile, Australia, Argentina, China & US have biggest reserve in world in ratio of 14:5:3:2:1 while the production/mining by these countries are in ration 10:25:4:5:1 which shows the disparity but at the same time opportunity outside china.
Australian operation satisfies roughly 30% of the world’s lithium demand and supplies 75% of Chinese demand. With purchase of mines in countries like Bolivia, Chile, Australia and Congo, China has emerged as a key supplier of these metals leaving aside biggest reserves of Cobalt (Co) in China which is equally critical for LIBs. Also, China is global leading source for graphite anode and electrolytes thus holding control on complete supply chain of Batteries. So, we may imagine moving battery manufacturing out of China but I am not sure if we can move China out of Battery value chain. However, the way China EV volume is set to grow, it is set to rely on foreign lithium raw materials in future though they have acumen for key processing and purification techniques to make it usable for batteries.
Thus, playing the mass EV game is not going to be sustainable without De-risking this supply chain along with global partners. Big political & trade moves together with Australia & US who have big reserves of Li can turn tables on global front as Australia might contemplate making own batteries. India can be good base for new Giga factories with new found Post COVID partners we got amid this geo-political tension. Govt. must take Swift actions towards this else EV dream of India can’t be fired.
Surprisingly, whenever we discuss EV, all the time everyone is stuck at talking a lot about only 2 elements i.e. batteries and it’s charging infrastructure but I believe there is much more to EV than this alone, though point conceded that these are biggest barriers. While these 2 elements are depended on global politics and local govt’s willpower respectively, other elements of supply chain are the ones to care and plan by OEMs amid China trade disruption.
Where batteries are heavy and complex, other EV components, such as motors tend to be smaller and “perceived” simpler than conventional transmission. If I believe it, EV motors may get commoditised due to limited opportunity for OEMs to use it as product differentiator, it may push outsourcing and consolidation in motor manufacturing which is eminent from recent news of M&M, Ashok Leyland and few Indian OEMs begun talk to supply Electric Powertrain for better scale.
Will Brand differentiation with Powertrain really go away with EV?
In context of India the first problem in hand is to have the EV itself, 2nd is to have cost effective EV while finer Powertrain performance differentiation would be last priority for now for Indian manufacturers. However, it remains first priority for EV Pioneers & Premium Car manufacturers in the world. While greater emphasis is coming on emission and EV performance, electric motor manufacturers are also forced to innovate and build in depth competence for emission, weight, size & performance disruptions and for independence from rare earth materials.
As we all know Powertrain performance is always an ultimate differentiator which can’t go away easily. However, considering 120 years of history of IC engines we have got keen sense for diesel/gasoline engines unlike EV Powertrain. It will take time to get mastery thus key global carmakers kept motor as a core in-house element. Generally, EV motors are not spoken much about, giving us impression that they are not important probably because of complacency that we got perfect engine with max torque at initial rpm which is a dream in ICE and efficiencies of 80% against ICE of 20-25%.
Motor cannot be spoken without its controller and vehicle controller which reminds me of Engine ECU which has been black box for most OEMs at least in India. Moreover, Bosch business model would be known to vehicle engineers well, even for smallest calibration for minor variants would cost humongous if not planned well. Vehicle D&D costs had big chunk of this cost thus had been barrier to variant management sometimes as I had experienced in Product Portfolio Management role in my past.
Biggest
EV market China is dominated with home brand controllers, while foreign brands
hold a fraction of market due to higher prices. So, this too is not a smaller
issue when Automotive industry is inherently Capital Intensive and hungry with
need of product differentiation. A few OEMs who understood the dynamics may
exponentiate R&D of motor electronic control and manufacture inhouse after
getting know-how; however, a great number of OEMs will rely on outside sources
to start with, till capability is built, the companies with core technologies,
pioneering experience, and closer cost grip would be beneficiaries.
Having understood this broader context, we must prioritise on public transportation in context of EV, it would need limited investment in Charging Infrastructure too while we know charging infra is biggest barrier. Govt to invest in rampant phase in Giga-factories, medium duty motors & controller manufacturing and must step up design & development of electronic controls and it’s mass manufacture to play it as a bigger gamble and harness the global equations of today. India who is set to surpass Japan Auto TIV in years to come, cannot propel EV dream till we have dissection of the strategy towards this PI. It’s now or never, it could be first stepping stone for us to be factory for the world if not in general but for EV supply chain for “Public Transport” at least, aligning with smart Cities mission
My next write-up, I shall illustrate on my first-hand experience at China supply chain and impression I got for a few battery manufacturing lines, motor manufacturing and swapping stations and its suppliers.
Disclaimer – This article is written in full personal capacity and free of charge. This has no conflict of interest with the organisation I work or the current role I perform in the organisation or the information I have access in the organisation. This write-up expresses personal views purely based on information easily and widely available in public domain. Rights to reproduce is protected with self.
Pravesh Soni
Guest Writer, Thought Leader and Non-Profit ‘Student Start-Up’ Mentor.
Credits for data & facts;
- https://www.statista.com/statistics/268790/countries-with-the-largest-lithium-reserves-worldwide/
- Economictimes.com
- Electric vehicle web
- Reuter.com
- Elitetimes.com
- Evwest.com
Autonebula is a connected transportation vehicle accelerator and investment fund that nurtures startups in this realm by mentoring them across business, technology & marketing – Check out Softlanding with Autonebula
For Sponsored Ads and Collaborations:
Contact:
Harsha Sanil : hsanil@autonebula.com
