With a major boost for electric vehicles planned in private and public transportation by the Indian government over the next few years, a similar push is now being planned in the battery manufacturing sector as well.
The Indian government’s planning arm, NITI Aayog, expects that a push for electric vehicles can deliver a $300 billion market for domestic battery manufacturers by 2030. India plans to stop the sale of fossil fuel-powered vehicles by 2030.
A study conducted jointly by NITI Aayog and US-based Rocky Mountain Institute revealed that the demand for batteries in India due to the planned EV revolution would account for two-fifths of the global battery demand creating a market worth $300 billion. Initially, the Indian manufacturers can capture 25-40% of this market.
Various arms of the Indian government have proposed a policy for easy swap of batteries once they outlive their usage. This would, again, create a huge market for battery manufacturers as well as other intermediaries.
The joint study also proposes implementation of a ‘feebate’ scheme to promote manufacturing and use of electric vehicles in the country. Inefficient vehicles, such as those using fossil fuels, will face a surcharge while electric vehicles would receive rebates which can be passed on to the end consumers to encourage sales.
Initially, Indian manufacturers may import lithium-ion cells and assemble battery packs for sale in the country. Once the manufacturing capabilities mature they may start production of lithium-ion cells domestically. The approach would be similar to one followed in manufacturing solar cells and solar panels. Using this approach, Indian manufacturers can capture as much as an 80% share in the domestic market valued at $240 billion.
Once the automobile and battery technology matures, India may well turn an exporter to other countries.
However, in order to make this plan a success, the battery prices must fall sharply over time, like the fall we have seen in the solar panel prices. The Indian government has taken steps to ensure that a low-cost ecosystem is ready for the end-consumers to aggressively adopt electric vehicles.
Learning from the renewable energy competitive auctions, the Indian government has launched tenders for electric vehicles as well. Tata Motors and Mahindra & Mahindra, both Indian companies, are set to deliver a total of 500 electric sedans by the end of this month. They, along with several others, are expected to participate in a follow-up tender for 9,500 electric sedans, and potentially another tender for 10,000 EVs in March 2018. Additionally, tenders are being planned for setting up charging stations as well.
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