Why ( Indian ) government and industry need to rethink the electric vehicle business model
You’re likely a fan of Formula 1 but how about Formula E? Launched in 2014, the cars may be slower but mercifully much quieter than the F1 hot rods. They are, after all, electric vehicles (EVs). Formula E has 12 races in 10 cities – from Hong Kong to Montreal – and 20 drivers in 10 teams of some of the leading automakers such as Audi, BMW, DS (the new upmarket brand from PSA Peugeot Citroen), Renault. And, yes, there’s also India’s Mahindra Racing, along with Chinese labels like NextEV and Techeetah.
Mahindra would, of course, realise that his venture won’t come close to this target alone. In 2016, Mahindra Electric had the capacity to make 2,000 electric cars, which will go up to 5,000 this year. These are small beginnings, which is perhaps why the chairman reacted on Twitter to Tesla CEO Elon Musk’s thumbsup via a tweet to the government’s EV target. Mahindra tweeted: “Time you got out here Elon. You don’t want to leave the whole market to Mahindra, do you? The more the merrier and greener.”
Tesla was planning a 2017 summer launch in India, but recently indicated it has been delayed. If power minister Piyush Goyal wants his target of only electric cars on Indian roads to be met in 13 years, it will call for a significant ramp-up by Mahindra, an entry of Tesla, along with many more new ventures. Goyal has said the government will financially support this initiative for two to three years, but the production of EVs will be “driven by demand and not subsidy” after that.
Yet, should EVs be the only option, wonder auto analysts. Why not hydrogen-powered fuel cells and other alternative clean energies? Given current technology, lithium-ion batterypowered electric cars – like Tesla’s – are the most affordable zero-emission vehicles on sale. Then there is graphene battery technology that boasts of 50-100 times the power density of comparable lithium-ion batteries, and 5-10 times the energy density at a significantly lower cost. Meantime, rapid progress is also being made with hydrogen fuel cell technologies, and costs are coming down too.
And just like pure EVs, fuel cell cars are zero-emission too and have some big advantages: they can be refueled as quickly as petrol or diesel vehicles, versus the eight hours needed to fully recharge a typical EV. Fuel cell vehicles can also travel further between fill-ups. But getting those fill-ups is the biggest problem, as each fueling station costs up to $2 million (`13 crore) to build.Natural gas and CNG still remains significantly cleaner than petrol or diesel fuel-powered vehicles (but are not zero emission). Emissions of NOx and particulates from both LPG and CNG powered vehicles are significantly lower than those from diesel vehicles.
Moreover, emissions of nitrogen oxides from CNG vehicles are half those from equivalent petrol-engine vehicles. But emissions of CO from CNG powered vehicles are of the same order as those emitted by diesel vehicles.
Experts feel the Indian government’s thinking of a blanket technological direction may not be the best answer for India and its many different cities. For instance, cities like Paris and Beijing have taken very different approaches to solve their respective pollution problems keeping in mind their topography and density. Beijing city officials give priority to public transport vehicles and have decided to electrify these before any others. Paris, for its part, is encouraging a bicycle share programme.
A somewhat similar beginning has been made in Bengaluru with the startup Lithium Urban Technologies providing an electric-only alternative to the Toyota Innovas used by the city’s many BPOs to transport their staff. Yet the going has not been that easy, says Lithium Urban Technologies founder Subhabrata Ghosh. “The key issues for EVs still remain the aspects of range and capital costs. What the end consumer is looking for is an EV mobility solution for an uninterrupted journey, as well as capital costs, excluding battery, to match those of existing petrol or diesel engine vehicles.”
“Vehicle technology needs to change too,” points out Gautam Sen, an auto consultant based out of Paris. “Manufacturers make the mistake of retrofitting electric power and drivetrain into existing platforms, which are excessively heavy in the first place. It is necessary to think electric ground up and newer platforms as well as material usage is a must for progress.”
Beyond encouraging and incentivising new technologies, the government and industry will also need to rethink the EV business model. Ghosh points out: “As EVs are ideally suited for urban transport and specifically last mile connectivity, the government will need to promote the idea of working with fleet aggregators. The vehicles will also need to be customised for their needs.” For instance, Mahindra has executed some customisation for Lithium Urban. But more importantly, a drastic change in mind set is a must, a move from vehicle as a product to mobility as a service. “One must understand that EVs are essentially tablet on wheels. And that calls for a newer understanding of the product, the ecosystem, their usage and the business model,” adds Ghosh.