Electric cars are coming to India. Photo: iStock
Electric cars are coming to India. Photo: iStock

The Indian Government’s push to expand electric mobility and make the country a global hub for manufacturing of electric vehicles and components received a boost with global giants such as Tesla showing interest.

Tesla and China’s Contemporary Amperex Technology Co Ltd are among the firms that have shown initial interest in the plan to build large factories to make lithium-ion batteries at an investment of about 500 billion rupees (US$6.98 billion), Livemint reports.

Among the other companies that have shown interest in the mega project is China’s BYD Co Ltd, the website added.

With this move the Indian government is also aiming at reducing its oil import bill, saving on foreign exchange and reducing pollution in its cities. According to a recent Greenpeace study, among the 30 most polluted cites in the world 22 are in India.

The Indian government plans to set up 50-gigawatt hour (GWh) factories. Each gigawatt hour (1,000 megawatt hours) of battery capacity can power 1 million homes for an hour and around 30,000 electric cars.

The move to build giga plants is being pushed by NITI Aayog, the Indian government think tank, and looks to achieve what Tesla has done at its Gigafactory in the US. The move is awaiting ministerial clearance.

Tesla is yet to launch its electric cars in India and its chief executive, Elon Musk, has cited regulatory curbs and high import duties as reasons for caution. He wants India to grant a temporary waiver of import penalties and other restrictions until a local facility is built.

Electric vehicle sales in India crossed the 750,000 units milestone in FY2019, but the share of electric cars was very modest – only 3,600 units – with the rest accounted for by two- and three-wheelers. The high price of electric vehicles is proving to be a barrier in India’s price-sensitive market. In most cases, cars have been priced nearly 200,000 rupees ($2,791) higher than their conventional variants. In addition, lack of charging stations discourages the buyer.

Mahindra Electric, Tata Motors and Hyundai have already launched electric vehicles in India. The latest entrant was Hyundai Motor India’s Kona Hyundai. Hyundai is also working on setting up charging infrastructure and has partnered with oil distributor Indian Oil Corporation to install fast-charging facilities in select cities.

India’s largest carmaker, Maruti Suzuki, is currently testing its electric car. Its popular hatchback Wagon R will soon have an electric variant. It has also announced plans for a battery plant in India that will start making lithium-ion batteries from 2020. Maruti Suzuki’s electric vehicle program for India will be run alongside and with help from Toyota Motor Corporation with which it has a vehicle sharing joint venture.

In order to boost electric mobility in public transport, the Indian government is pursuing a scheme known as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles 2 (FAME-II), with an outlay of 100 billion rupees ($1.4 billion). It plans to offer incentives for electric buses, three-wheelers and four-wheelers to be used for commercial purposes. It will also focus on setting up charging stations with the active participation of state-owned and private players.

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