Electric Vehicles: Hype or the Future of the Auto Industry In India

At the time of this writing, there is a mounting concern in India over rising petrol prices. Petrol prices hit Rs. 84/liter in Mumbai and Delhi. Many experts have talked about cutting down VAT and Excise Duties on fuel and bringing petrol and diesel under GST, but this can only be a short-term solution to the problem. A better and more effective solution, in the long run, would be to make the switch from fuel-based vehicles to electric vehicles. The Indian government is quite serious about this, but the question is whether the auto industry in India is ready or not.

Making the switch to EVs requires a major change in outlook, a massive investment in infrastructure and change in direction by Indian and multinational automobile companies that operate in the country. While the government is committed to making the switch to EVs by 2030, the auto majors have been advising caution. Mercedes-Benz and Toyota have urged the Indian government not to rush with the EV-push. They say that a 100 percent EV fleet is not possible by 2030 and want the government to slow down with policymaking.

This doesn’t mean that the auto majors aren’t doing anything. As a matter of fact, every automobile company in India – local or MNC – has been building their portfolio of EV vehicles. EV sales have gone up from 10,321 in 2015 to 72,482 in 2017. This may be an improvement, but only a small part of India’s total passenger car sales of over 3 million a year.

Clearly, EV technology in India is still in its early years and has a long way to go. But the benefits are clear. There is no question that moving to full EV mobility will cut India’s dependence on petrol and diesel, which accounts for a substantial part of the nation’s import bill. Also, EV’s will bring down carbon emission, improve air quality in many Indian cities and change the business landscape as we know it. Automobile companies such as Mahindra & Mahindra are cautiously optimistic.

Hemant Luthra, chairman of Mahindra Group’s auto component arm Mahindra CIE Automotive Ltd said in an interview with Mint that his company “is prepared for the EV drive and will continue to watch the trend.” He says that the Mahindra Group is a “strong supporter of electrification, and has the engineering talent and R&D capability to design EV components. Not much capacity addition is required since existing machining systems can address EV requirements; besides, it doesn’t make sense to put up a production line solely for EVs, given the low volumes.”

But when the trend accelerates, there is little doubt that the Indian automobile industry will reinvent itself, especially since there is tremendous pressure not only from the government but also from the public for auto majors to take to EVs in a way that matters. The rising costs of petrol and diesel have introduced a sense of urgency, which was lacking before – as has the need and want for green cities.