Although various schemes and initiatives are being launched by the government of India to boost the growth of electric vehicles in the country, experts still believe that there is a huge crack in the sector due to which it is still in the nascent stage. The segment has the probability to grow by 5 percent in the next few years, but sadly it is less than 1 percent of the total vehicle sales. Around 90 percent of the EVs on the Indian roads are electric scooters that offer a speed of only 25km/hr, and most importantly, these vehicles do not need any licenses and registration. These scooters are operated by lead batteries, which also makes the price low. But, these batteries do not have longevity and there are immense failures that are impacting the sales of these vehicles. To tackle these problems, many companies have undertaken the task to install battery charging stations, but their success is very limited. The industry is already geared up for the blast-off, but for the incentives. In this regard, we spoke exclusively to Sohinder Gill, official spokesperson at SOCIETY OF MANUFACTURERS OF ELECTRIC VEHICLES (SMEV) and also the Global CEO at Hero Electric about the current challenges faced by the industry, the basic requirement from the EV makers, and also the impediments of sourcing EV components.
Q. Can you please let us know in detail why SMEV was formed and its purposes? What is its core mission and vision?
It was started as an association registered to act for electric vehicle manufacturers and the components required to craft the vehicles. Its purpose is to provide a platform to the manufacturer and work closely with the central and state governments to assist in the formulation of policies and processes supporting the EV ecosystem. SMEV’s core mission and vision is essentially about building the right future for Electric Vehicles and putting India on the global map of EVs. It is actively involved in building a comprehensive ecosystem that accentuates the positives and mitigates the negative impact of EVs on our environment and the Indian economy. The association has donated significantly to the growth and development of electric cars in the nation with the assistance of the National Electric Mobility Mission Plan (NEMMP 2020) and Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME), the deduction of levies and domestic taxes and the rationalization of import duties. It is very eager to spearhead a pivotal role in the discussion of various challenges faced by the EV sector and practical aspects to assist perk-up the development of EVs for meeting the objectives of the country.
Q. What is your current business model and how far has it changed since the pandemic?
SMEV is an association for the manufacturers of EV and runs on a non-profit motive. Thus, we don’t have a business model. It is a platform to exchange ideas, learn, innovate and make the EV ecosystem stronger with time. SMEV is committed to providing active support to the EV industry and Govt. of India in shaping the right future for Electric Vehicles and to put India on the Global map of EVs. SMEV would assist in creating a comprehensive ecosystem that accentuates the positives and mitigates the negative impact of EVs on our environment and the Indian economy. We work closely with NITI Aayog, Ministry of New & Renewable Energy, Ministry of Heavy Industry, and State Nodal agencies on policy framework & pilot projects for the implementation of Electric Mobility across the many Indian States and Union Territories. SMEV has played an important role in bringing policy changes to strengthen the Indian EV industry. It was actively involved in bringing the FAME India scheme ( NEMMP 2020) and lowering the GST rate for Electric Vehicles to 5 percent. It was also pivotal in bringing subsidies like MNRE and DPCC Subsidies. At the state level also, SMEV has been an active contributor in bringing tax changes in terms of EVs and bringing electric vehicle policies.
SMEV has always been working with all levels of the government to bring in changes beneficial for the overall industry and citizens.
Q. What are the various current challenges in manufacturing or unleashing new EVs in India, especially four-wheelers? What's the basic requirement you hear from EV makers?
There are a few challenges in the four-wheeler segment that can be overcome with time and the process has already been initiated. Firstly, the industry is facing a lack of Semiconductors which has also been filed by the IC vehicle industry. Secondly, there is a lack of affordable four-wheeler Electric vehicles in the market. Thirdly, there is a lack of robust charging infrastructure which acts as a psychological barrier in the purchasing of EVs. Electric vehicles need to have comprehensive plans and there are three steps involved in it. First is the direct incentives, subsidies, where the customers get the benefits in terms of money and the second is the ecosystem where a lot needs to be done and planned. The third is the mindset change, which needs to be triggered perhaps by the agencies including the government and the society. The first step has been well-done as there are initiatives taken on road tax, direct incentives, but the ecosystem part is not in place yet. Within the ecosystem, the setting-up of adequate charging infrastructure is another challenge because if we do not look to settle those problems according to the growth and demand people will have anxiety. That is where the state government must take steps. We are now having talks for a low-cost charging solution and we hope to see 500-1000 charging stations alone in Delhi in the coming few years.
Q. Now, when it comes to EV components, where do you see its growth in the country in the coming five years? As of now, India sources a huge chunk of important auto components from other countries. So, how can we stabilize the situation?
In spite of registering a strong growth rate and sales over the past few years, the Indian automobile component manufacturing cluster has been facing several challenges, which consist of talent crunch, scaling-up the sector, infrastructure deficiency, availability of cost-effective capital, cutting-edge practices, and insufficient state-of-the-art technology. Now, when it comes to the trade policy, a huge obstacle faced by the manufacturers in the country is the slumping investment in the OEM domain in the auto industry and the escalation of imports majorly from the ASEAN countries. In the coming five years, it is expected that 70 to 80 percent of components will be manufactured locally. It has more to do with the volume increment as this will boost sales and incentivize investors to invest in building a local component market.
Q. Which are the major EV components India has started manufacturing and which are the ones the country is looking to have on board in the coming years?
The government has already announced a PLI scheme to promote the manufacturing of key components. With schemes for Auto Components and batteries in place, we will soon see local manufacturing of key components of EV which includes the battery, controller, and motor. The policy has witnessed big players like Reliance, Tata taking interest in manufacturing batteries. Thus going by the trend it can be said that in the near future, full batteries will be manufactured in India.
Q. Do you believe that India can achieve its target of EVs by 2030, which the government is aiming for? What are your roadmaps by the end of 2025?
The industry is growing at a decent pace and it is expected that electric two and three-wheelers will lead the market by capturing 50 percent to 70 percent of the market share. As more affordable options come under the four-wheeler range, the share will be accelerated from this segment too. Thus by 2030, we will definitely reach our target. By 2025 we expect to have at least 5 million electric two-wheelers and three-wheelers on the road. Increasing the volume creation is also another goal so as to increase sales and establish a local component market to accelerate ease of manufacturing and business.
