Last year, when I presented* at a big institutional investment conference in India, there was a lot of talk about solar, but little about electric vehicles. Of course, a large portion of my presentation was about Tesla and electric cars. The presentation* from Indian Minister of Coal, Power, and New & Renewable Energy, Piyush Goyal, highlighted the highly competitive cost of solar power but didn’t really touch electric vehicles.
But something must have been brewing (or inspired there at the conference), because Mr. Goyal announced a month later that India was working on a plan to make every vehicle in the country electric by 2030 (that excludes planes, of course), and that plan has been reiterated since then.
More recently, in January 2017, when Michael Liebreich asked Mr. Goyal if India would scale back its climate commitments if Donald Trump pulled the US out of the Paris climate agreement, Mr. Goyal basically said*, “What, are you crazy?” The fact is: cleantech has largely become cost competitive, it is only getting more cost competitive, and it offers many other benefits (like clean air and more jobs). Any country that wants clean air, more jobs, a stronger economy, less dependence on foreign sources of energy, and low-cost electricity and transport should now be working hard to stimulate and quickly grow the cleantech economy. Mr. Goyal gets this, and his January comments got backed up by Prime Minister Narendra Modi recently after Trump made that insane climate move.
But India faces some significant challenges when it comes to electric cars. The upfront cost of an “affordable” electric car is still just the US average for a new car (which is mighty expensive compared to the average price of a new car in India). India doesn’t have a strong electric car manufacturing base. India puts up steep barriers to cars imported into the country. Tesla CEO Elon Musk noted a few weeks ago that Tesla’s entry into India was going to be delayed by local production requirements there.
Maybe I'm misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn't yet exist in India to support that.
— Elon Musk (@elonmusk) May 22, 2017
Knowing how things go, there were likely some high-level communications after that. And the topic arose again before long. Anand Mahindra, one of the richest and most powerful men in India, and Executive Chairman Mahindra Group, tweeted to Elon that it was time to get Tesla to India. Elon agreed with the sentiment and the open arms from one of the country’s largest automakers.
Good point 🙂
— Elon Musk (@elonmusk) June 2, 2017
Things seem to have gotten real since then. Yesterday, Elon admitted that Tesla was in discussion with the Indian government about a way around the auto import barriers until a local Tesla factory was built (hint, hint).
In discussions with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built
— Elon Musk (@elonmusk) June 14, 2017
That looks promising.
But how big of a market could India be for Tesla? How quickly could India’s population really electrify its fleet? Could India genuinely become the first country to go fully electric? Could it go electric by 2030?
There are a few things to consider here, but there’s a lot more to explore in order to answer these questions.
On the plus side, India is propelling itself into a clean energy (solar and wind energy) future super fast. It is more or less the hottest renewable energy market in the world**. And this is despite long struggling with blackouts, brownouts, and large problems with grid connectivity and stability. But the point here is that all of that solar and wind energy could benefit a great deal from a responsive grid full of EV batteries that could absorb extra renewable output when needed and perhaps also pull from those EV batteries in times of great stress.
Another thing: while the upfront cost of electric vehicles is still steep by India’s norm, we are on the verge of commercial self-driving vehicles, and electric vehicles will rule the day there. Elon Musk has noted that Model 3 electric cars will all be produced with hardware that is sufficient for fully autonomous travel, and that Tesla is working on a system that will allow drivers of Tesla vehicles to send their cars out as robotaxis when not in use, even potentially creating more revenue for the owners than they spent on the cars. On the one hand, that would make it highly economical for anyone who can foot the upfront costs to buy a Tesla Model 3 or Model Y instead of … well, basically any other car. On the other hand, those electric robotaxis will provide cheap, convenient, flexible transport for the riders as well … especially in highly populated places (like India).
So, at a quick glance, despite the barrier of upfront costs, electric cars look like they could be very pragmatic and beneficial solutions for grid stability and, indeed, cheap transportation.
One of the first high-profile situations I landed in as a cleantech blogger was in 2010 when CNBC interviewed me in its London studios for an “Energy Opportunities” series supported by Harvard Business Review and Shell. I ended up talking a lot about how India and other developing countries could leapfrog the dirty energy problems the developed world has spent decades suffering through, because clean energy allowed for an increasingly cheaper, more democratic, and more flexible solution to their growing energy needs. Back then, the uninitiated were probably rolling their eyes when I looked the other way, but then India ended up plowing full force into clean, renewable energy — because it was obviously the best solution for the country’s economy, air, and people.
I think we’re at a similar point with electric vehicles and the developing world. Again, it seems logical on the surface that rich, developed nations would be first to electrify all the vehicles in their parking garages and driveways (and, frankly, I think any country will indeed be hard-pressed to catch up to Norway and beat it to 100% electric transport), but there’s a case to be made that betting on developing nations, especially India, is a strong bet. Looking at India’s currently meager electric vehicle share of the market could be deceiving, and ignoring the strong potential of a national government teaming up with the experience curve of batteries and electric cars could leave you snickering or rolling your eyes about India’s aim to be the first fully electric nation.
I’d keep my cash in my pocket a bit longer before betting on India passing the finish line first, but the possibility is something we’re going to delve into more deeply in the coming months (and probably years). Furthermore, reaching the finish line first isn’t the most important thing — what’s important is that India is committed to an EV future, is working to bring it about, and may even usher Tesla into the country under special conditions in order to speed up the rEVolution.
*Here are three CleanTechnica videos of the presentations mentioned above:
**Though, China has a good case for why it’s #1.
- India Considers 100% Electric Vehicles By 2030
- India Will Fly Forward With Cleantech & Climate Action Despite Donald Trump (CleanTechnica Exclusive)
- India Commits To Continued Climate & Cleantech Leadership In Spite Of Trump (CleanTechnica Exclusive Video)
- Cleantech Disruption — My Presentation At Institutional Investment Conference In India (Video)
- India Proposes Making All Vehicles Electric By 2030
- EV Battery Prices: Looking Back A Few Years, & Forward Yet Again
- Tesla Throws The Gauntlet: All Cars Made Starting Today Have Self-Driving Hardware
- rEVolution (Video)
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