- October 27, 2021
- Posted by: Vishnu Krishna
- Category: Global growth
I’m planning to phase out my 7-year-old diesel car and buy something new in 2022. As usual, I am spending time looking out for information on new models, new features, safety, service network and fuel economy. As a resident of Delhi NCR I also have to be mindful of the fact that if I buy another diesel vehicle, I can only use it for 10 years after which I need to sell it off and drive it outside the NCR limits. I have heard some Electric Vehicle options as well though not a whole lot.
The second wave of Covid-19 which started around mid-April 2021 and the ensuing lockdown all but put a lid on the hopes of the automotive industry. However, as soon as the lockdown were partially lifted the car sales (often a barometer of the health of the economy) zoomed by 49% in July 2021 (as opposed to July 2020). August 21 sales were higher by 39% but September 21 sales dropped by 36% over the corresponding month in 2020. Despite this, every car manufacturer is launching new car models or variations of existing ones on monthly basis. To say that the buyer is spoilt for choice would be a gross understatement.
On the other hand, as the global economy recovers from the pandemic, global demand for crude oil has increased in 2021 resulting in a sharp rise in prices. Prices of petrol and diesel in India that are pegged to a 15-day rolling average of the international prices of these fuels, have been climbing unabated since past few weeks. High taxes by the federal and state governments too have contributed to fuel retail prices being far higher in India. Noting that India imports over 85% of it’s crude requirements it’s very difficult for the government to hold prices of these fuels at lower levels. The losses would wipe out the net worth of oil marketing companies. So, it may seem that there is no respite from these increased level of prices in the near future.
So an aspiring car buyer in India has no choice but to buy a new car and also pay climbing price of petrol or diesel? Or, is there something that is not yet out fully in the open. Enter the world of Electric Vehicles (EV). By definition, EVs are vehicles that are either partially or fully powered on electric power. EVs have low running costs as they have less moving parts for maintenance and also very environmentally friendly as they use little or no fossil fuels (petrol or diesel). EVs have revolutionized the world of road transport. The global EV market grew 43% annually on average over the last five years, and the worldwide automobile market penetration rate of EVs stood at about 2.6% in 2019. Since then, EV sales have surged, with growth in all three top auto markets: China, USA and Europe. Sales increased by 160% in the first half of 2021 from a year earlier, to 2.6 million units, representing 26% of new sales in the global automotive market. China is the world’s top EV market, with 1.1 million vehicles sold in the first half, accounting for 12% of sales. Surprisingly, Japan is not come to the EV party.
Where does India stand in this EV market upsurge? For the sake of clarity, India is not a new entrant in the global EV list. Almost 97.5% of all electric vehicles sold in India were two-wheelers, indicating an especially strong market in the two- and three-wheeler segment. Of this, three wheelers dominate at 60% while cars are way behind at 3.5%. So, why do Indians not prefer to buy an EV instead of a car that runs of expensive gasoline? The answer lies in two simple words – infrastructure and choices.
I read that India has adequate infrastructure for Internal Combustion Engine (ICE) vehicles with as many as 70,000 fuel stations across the country. This should give the drivers the confidence to travel anywhere without the fear of being stranded. Current estimates suggest that 80% of the charging occurs at personal spaces like private residences and in some rare cases, at the workplace. The lack of publicly available charging stations comes with what is referred to as range anxiety. There is no surety that a driver can top up in case the charge is running low whilst on a medium to long drive (100-500kms). So, it seems not viable to have an electric car which you can use only for short distances and daily commute and a gasoline driven car for longer drives.
An electric car needs more time to charge. A two-wheeler has a battery capacity of 2-3 Kwatt per hour while four-wheelers battery sizes can go up to 45 kw per hour The standard chargers, called L1, used at home take over 9 hours to charge for an electric vehicle. The other more evolved technology is the L2 chargers, which take about 7-8 hours to completely charge the vehicle.
The other challenge is the unification and standardization of adaptors and electric chargers in India. Today the Indian EV manufacturers are following the DC-001 protocol for their vehicles as per the charging guidelines issued by the Ministry of Power in the year 2018. In the past couple of years, the Indian government and many private players have installed Bharat DC-001 standard EV charging stations across the country expecting the carmakers to follow the same protocol. DC-001 chargers are designed to be low-cost, eco-friendly, and for entry-level powertrain-based vehicles. In Delhi alone, more than 300 DC-001 charging stations have been installed. However, foreign electric vehicle manufacturers are following global standards like CCS and CHAdeMO. So, there seems to be some gap in standardisation.
Finally, I studied the choices available in the market for EVs: Currently, there are 10 electric cars on sale in India. The most popular one being Tata Nexon EV which sells in a range of INR 14-16.5 lakhs (ex-showroom). Despite the obvious advantages of saving on gasoline costs, I think the car is still overpriced. There are at least half a dozen more electric car models that are being planned to launch in 2022 but the pricing is under wraps. Obviously, the choices are very limited… So, all said, if I have to do my bit for the environment and switch over to an electric car – I better make sure that my drives are short and within the city, I do give enough time to my car to recharge and I pick a model that may not necessarily fit my budget. I think I would prefer to use my diesel for a couple of years more….