What CEOs say India can learn from China to get more electric vehicles on the road

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  • “In India, if you look at the Indian auto component industry, there is no specific incentive you get to develop EVs,” said Arvind Goel, TATA AutoComp Systems chief.
  • This came after Union minister Nitin Gadkari last week said the country has the potential to become a major manufacturing hub for electric vehicles in the next five years.
  • China supplies key components for EVs, including Lithium-ion battery cells. Large parts of these imports from China (except alloy wheels) are sourced by vendors, whereas tyres are sold in the aftermarket, according to Motilal Oswal.
  • According to Goel, India can certainly become an EV leader without importing manufacturing parts from China, but for that, Indian original equipment manufacturers (OEM) need to look at the collaborative effort to localize everything.
While India is propelling its plan to become a major electric vehicle market in the next 20 years some auto industry players think there isn’t enough support from the government for the EV making companies.

“In India, if you look at the Indian auto component industry, there is no specific incentive you get to develop EVs,” said Arvind Goel Managing Director and CEO of TATA AutoComp Systems at ETAuto EV Conclave.

“China started making EVs in 2007, and 2008 and the Chinese government saw to it that local investments were made and youth support and local R&D benefits and so many benefits in terms of tax were given to local industries,” he added.

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Here’s what China did to promote EVs

ChinaIndia
China started the "863 EV Project" in 2001India unveiled the 'National Electric Mobility Mission Plan 2020' in 2013
As of 2019, China has invested $60 billion in subsidies and incentives for EVs.India released a two-pronged strategy aimed at both buyers and manufacturers, in which it offers $1.4 billion in subsidies to buyers.
The subsidy for EV customers is RMB 60,000 (₹6,40,000) for battery electric vehicles (BEV) and RMB 50,000 (₹533,000) for plug-in hybrid vehicles (PHEV).India offers a purchase subsidy of ₹10,000 per kilowatt to which CEO's want to be extended to ₹15,000 per kilowatt.
China has over 1.2 million charging points as of 2019 and it plans to add another 600,000 charging pointsCharging infrastructure in India is at a nascent stage
China extended a 10% purchase tax exemption on EV sales until 2022.Indian government also lowered the GST rate on electric vehicles to 5% from the previous high of 12%

Gadkari also revealed that the Centre is looking at initiating a pilot project for developing an electric highway on the upcoming Delhi-Mumbai green corridor.

READ ALSO: Here are the startups fuelling India’s electric vehicle dream

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India’s EV industry wants more from the government

But the industry wants more. “You have to start thinking about it for eight or ten years in advance. You can’t start in two years, decide to switch to EVs, and say that I want to localize. What happens then is you start importing the technology and components from outside. So everything has a timeline that requires support and regulatory push from the government,” he said.

One of the pending demands from the EV makers is for a 50% rise in purchase subsidy to ₹15,000 per kilowatt. “The government and OEMs have to work together to reduce the cost by making in India and making it locally, even the batteries and cells. If it happens, we will win the race and become the largest EV market in the world," Sulajja Firodia Motwani, founder and CEO of Kinetic Green, earlier told AUTOCAR professionals.

Union minister Nitin Gadkari last week said the country has potential to become a major manufacturing hub for electric vehicles in the next five years and the Centre is trying to extend best possible concessions to this sector.
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The final assembly is just one part

China is a key supplier for sub-components used in an engine, electrical /electronics, alloy wheels, tyres, etc. It supplies key components for EVs, including Li-ion battery cells. Large parts of these imports from China (except alloy wheels) are sourced by vendors, whereas tyres are sold in the aftermarket, according to Motilal Oswal.

Hindustan Petrolium corporation limited Launch Electric vehicle Charging Station in 2017

The other major barrier for EV adoption in India is the unavailability of public charging infrastructure (PCS). However, the government has plans to install charging infrastructure for EVs in 70 cities and 20% of highways by 2025.
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Collaboration is the way to being Atmanirbhar (self reliant)

Atmanirbhar Bharat is the campaign, a series of reforms, declared by the Indian Prime Minister Narendra Modi to make India a self-reliant nation.

According to Goel, India can certainly become an EV leader without importing manufacturing parts from China, “but for that, Indian OEMs need to look at the collaborative effort to localize everything. You can’t put a factory requirement; the factory needs to be for an international market. For example, some capes (capital expenditure) is put by Mahindras and some by Tatas, and they utilize each other’s facility to reduce the total investments into space”

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Whereas Mahesh babu CEO & MD of Mahindra Electric thinks self-reliance has been misunderstood by other market players and asserted that India should go hand in hand with other countries. He said, “self-reliant is not about making it in India; I think it’s a misconception. In self-reliant, I believe you have to collaborate. We collaborate with European companies that help us in designing some of the hardware. We collaborate with American suppliers and some Chinese suppliers today, we are collaborating with Japanese and Korean suppliers. The collaboration has to be international.”

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