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PluginIndia Electric Vehicles

Indian EV Industry is on life support

27/8/2014

17 Comments

 
By Kamlesh Mallick
The Indian EV industry can really do with some help. Companies shutting down, lack of government help, manufacturing plants facing closure, poor sales of EV's. Will we even meet the ambitious targets set by the National Electric Mobility Mission Plan (NEMMP) ? Well, there is only one direction the industry can move from the current depths. And that is upwards!
Reading about the state of the Indian EV industry does not make for pleasant reading.
  • Sales of EV's have come down by 70 per cent in the year
  • Around 950 dealers of e-bikes closed their operations
  • High VAT rate of 12.5% on EV's in some states are hindering sales of EV's
  • In 2013-14, electric two-wheeler sales crashed to a mere 21,000 units from 100,000 two years ago
  • Companies like Ultra Motors, BSA Motors have quit the e-bike industry 
  • Bigger players in the e-bike market like Hero Electric too are suffering - Hero electric two-wheeler sales dropped from 100,000 units in 2011-12 to 42,000 in 2012-13 and 21,000 in 2013-14. 
  • The only electric car maker - Mahindra e2o only has sold around 1000 cars over 15 months. They had a target of selling 500 cars per month.
  • MNC automobile companies like Nissan, BMW,  GM are postponing any ideas of selling their EV's in the Indian market

Rise and Fall
The Ministry of New & Renewable Energy (MNRE) announced a financial incentive scheme for EV buyers in 2010.  
The scheme basically provided incentives of up to 20% on the ex-factory prices of the vehicles.
The cap on the incentive was – Rs 4,000 for low speed electric two wheelers, Rs 5,000 for high speed electric two wheelers. The electric car, Revai too qualified for the incentive of around Rs 1 Lakh. 

This help from the government propelled the sales of e-bikes and everything looked good until the government pulled the plug on the subsidies in 2012, which resulted in over 70% fall in sales of EV’s.

Is Government Inaction the only problem?
Its very clear that the lack of subsidies or help from the government has resulted in this downward spiral for the EV industry. But is there another factor that has not been considered - The quality of EV's.
In this blog - "The ghosts of EVs past", Mr Tarun Mehta, co-founder of Ather technologies (an innovative startup making next generation e-bikes), highlights how people embraced EV's with lots of enthusiasm but have been let down by the products themselves. 
The products (e-bikes and first generation Reva electric car) generally had the following issues
  • They used inferior lead acid batteries, which needed frequent changing
  • Poor suspension and ride quality
  • Bad performance compared to ICE alternatives
  • Usage of cheap Chinese manufactured plastic body panels
Picture
The Ghosts of the EV's past
In general, not many EV companies gave thought about actually engineering a quality product.  Most wanted to get into the market with the only intention of selling them.  No wonder that the smart Indian consumer stayed away. And now we hardly see any electric bikes on the road.  Spotting an electric car is also a rare sight in major Indian cities.

The Future = Government Support + Next Generation EV's
The government has approved theNEMMP 2020 scheme. Under the plan, the government will invest up to Rs 14,000 crore in creating infrastructure and promoting the use of environment-friendly electric vehicles in the country.
According to study commissioned by the heavy industries ministry, in collaboration with industry stakeholders, India has the potential for sales of six-seven million electric cars and two-wheelers by 2020. 
"A Scheme under the National Electric Mobility Mission 2020 has been proposed for Expenditure Finance Committee and Cabinet. The scheme is to be approved by EFC and cabinet,". This was quoted by our Deputy Heavy Industries Minister P Radhakrishnan.

So its a matter of time, before we get help from the center.  What about the quality of EV's? We should be confident in expecting much better from the industry.  Mahindra e2o is a serious upgrade from the first generation Reva.  Once the policies are in place, MNC's could flood the market.  Mahindra plans to launch other options like the Verito Electric Sedan once the subsidies roll out.  There is a market for the likes of the Nissan Leaf, Chevy Spark EV in India.  

When it comes to e-bikes, companies like Hero Electric, YoBykes are planing to launch better quality products. 
Innovative companies like Terra Motors and exciting startups like Ather Energy are planning to launch next generation
e-bikes that will ensure owning them will be an attractive proposition.

Final Words
The electric and hybrid vehicle industry is at a nascent stage in India. The current crisis is only a small hickup for the industry. With strong support from the Government on R&D investments, establishing a charging infrastructure and subsidies on electric vehicles through the National Electric Mobility Mission Plan 2020, the EV industry does indeed showcase a positive outlook over the next 5-8 years.
17 Comments
Johnson
28/8/2014 08:40:48 am

I will like to make two points about the ebikes.

1. Those electric bikes found in India are Chinese solution for their own people, which we are trying to adapt to Indians. Chinese people are slightly lighter in weight compared to Indians. So these bikes will not do for us especially for riding pillion.

2. All bike makers are importing hub motors and even bike bodies from china and just assembling them here with slight change in finishing look. Doesnt all of the ebikes look alike... unlike the motorbikes which are made in India?

3. We in India have good quality local battery but even the heavy LA batteries are imported from china. Thats how dumb the business currently is. Most of them dont know what they are in.

90% of the complaints and user un-satisfaction in the ebike business is due to the poor quality chinese battery. Replacing the battery to a local brand is an easy option.

Another factor in ebike is that they cannot carry load uphill as they are designed for only 100kg loads.

There is great demand for electric ebikes with good battery and that can carry loads of 300kg. Proof is the initial market of 100,000 and also proof is ERickshaws which can easily have a market of 2,000,000 vehicles annual sales only within India. If exported it could have a market of 10,000,000.

I had a discussion with multiple ebike manufacturer... I requested them to design heavy bikes that can easily carry loads of 300kgs...that will sell in millions rather than copy paste the chinese ebikes and end up selling in thousands.

But they all like to do the same thing... make similar looking bikes that are in the market and are not selling! Make something like electric Pulsar and then dream of selling in millions!

Reply
Kamlesh
28/8/2014 11:54:42 am

Hey Johnson,

I agree the e-bike boom from 2007 to 2011 was mostly driven by companies who wanted to make a fast buck while there was demand without considering the product quality.
Also they never diversified their products. As you say, all they sold was the un-geared 25kmph scooters.

This has caused a serious problem. Most Indians assume EVs are of poor quality bcos of the impression created by these inferior products sold between 2007 and 2011.

It will take some really cool EV products that will wow Indian consumers to get back the confidence.
I'm positive that this will change. But it will take time.

Reply
Rakesh
30/8/2014 07:45:09 am

In the case of two wheelers: the makers sought to cash in on the 'low per KM cost' based on dubious math which does not include the price of the battery which is a consumable. Secondly, the prices of the electric two wheelers were set to gouge the 'customer', the manufacturers fully understanding the short term nature of their offerings. No wonder that the SMART INDIAN CONSUMER stayed away. Other bogus claims and questionable technology also added to the failure of sales to take off. In the 4-wheeler segment, nothing less than a Tesla Model-S will do. Sorry. I for one am glad that the govt. did not fund/subsidize these scam artists.

Reply
Kamlesh
30/8/2014 01:01:06 pm

Who knows. The withdrawal of subsidies maybe a blessing in disguise.
Its about time the Industry looks at creating better products.

Reply
Vivek Rai
31/8/2014 04:24:21 am

I was reading somewhere the other day that a nissan leaf battery replacement option would cost about 100 $ a month. Yet another article stated that the replacement cost for a Focus (Ford) Electric car would be in the $15000 Range. Knowing that fact that India is yet to produce hi tech batteries and shall be importing them makes me wonder if an EV is indeed an economically vaiable option. Had the EV been so awsome as stated in this site, people would have adopted it long ago. I am myself supported of clean enegry and non polluting machines but that doesnt mean i will pay the price of a Toyota Camry to own a puny Reva . Thats just being penny wise and pound foolish.

@Kamlesh : Respect for you for starting this site and blog. Its a great source of eye opening knowledge for millions who have no idea how good an EV is. But unfortunately as long as this car (E2O) would not be brought to the 3 or 4 L range and a battery replacement option is not brought down to the sub 1L range, it would be very difficult to justify the purchase in a country obsessed with reasle value and milage !.

Reply
Kamlesh
31/8/2014 11:46:20 am

Hi Vivek Rai,

Thanks for expressing your views. The vehicles you mentioned - The Leaf, Focus have big battery packs (24 kWh capacity) compared to the e2o as they are large vehicles, go further and will need more energy.

I do agree that Lithium Battery packs are expensive. Making the Lithium Ion battery pack is a major cost of the electric car. Thus the range of an electric car will always depend on the amount of Lithium ion cells that are stacked in in the car. More range will mean more cost.

In the beginning the cost of the batteries was higher as it was new technology and industry was having to spread over the cost of developing the technology. But as we are going forward here the cost of the batteries have dropped dramatically.They have dropped in half in the last 4 years. Experts in the field say that they will drop further half in the next 4 years. Hopefully soon, we will reach a point where the incremental cost of an electric vehicle will compare to that of an internal combustion engine and we will start having vehicles with higher ranges.

Regarding the e2o, I agree that it has to break the sub 4 Lakh price range to make people really really start thinking bout the car.

But also people need to understand that with Electric cars, you need to look at the total ownership cost spread out over a period of 5+ years. When you do that , you realize that amount of money you pay the OIL companies and government when you go for a Petrol car can be really significant.

Regarding Battery replacement - Lots of people fear bout the cost of replacing the battery packs. People need to trust Lithium Ion packs more. There have been Leaf owners who have driven 1 Lakh miles on a single battery pack and still going strong. There have been REVA (Lithium Ion version) owners who have used a single battery pack over period of 6+ years.
Am absolutely sure that battery packs will not cost so much after 5-6 years (when u see Global minds like Elon Musk working on this problem)

And hey, there are social implications when it comes to owning an EV - You do your bit for your country (by not using OIL) and the environment. Then you realize that EV is more than a vehicle. I represents hope for a better future. Now wouldn't you sign up for that?

Reply
Vivek Rai
31/8/2014 04:25:32 am

Added the link :

http://online.wsj.com/news/articles/SB10001424052702304432704577350052534072994

Reply
Nikhil
2/9/2014 12:13:41 am

Vivek,
Wall Street Journal is the most biased anti EV media house in US. The electric vehicle costs are higher but their overall lifecycle costs are smaller. Imagine EVs are charging you upfront for fuel cost as well. so if you buy a 4 lakh car and pay to drive 15,000 kms per year for fuel for 10 years With Rs 70 per liter you are looking at 600 liters per year. So now at the end of 10 years you paid 4+4.2=8.2 lakh Rs. But for ev you pay 7 lakh upfront and 1 lakh for fuel. So eventually it will be same.
In that you never considered cost of healthcare. How many people suffer because of pollution and what is the cost of that. You eventually pay it as tax payers money goes for medical care of people.
It is important to look at overall cost and not upfront cost. Many bad quality products are sold cheap that does not mean they are good.

Reply
Ashwin Rath
31/8/2014 04:10:26 pm

Nice discussion.

Reply
Ashwin Rath
1/9/2014 08:27:15 am

@Vivek Rai : "Toyota Camry" ? are you sure you meant a camry and not an Etios ? . I agree that battery tech is not that advanced yet atleast in India but i am quite sure that we shall have something quite good in the coming years till the existing battery of the E2O lasts .

Also just an update for Kamlesh : current petrol price in Pune is about INR 77 and the diesel cost is INR 67. Thats a INR 10 difference. This is enough to drive people back to Petrol cars which are less polluting compared to Diesel. Time to cheer eh Kamlesh ?

Reply
Johnson
2/9/2014 10:40:28 am

The benefits of EV are much more... the sense of freedom and liberation is hardly commented on! The freedom of just getting in your car and driving of to somewhere is not available to the guy with a petrol car as the fuel-cost is always on his mind. How many college kids can travel 45kms every single day... possibly even 200kms per day if there is quick2charge stations available.

The cost over time of an EV is pretty cheap...lets consider 10yrs.
Cost of e2O=800,000
Cost of 1 extra battery after 5yrs = 150,000
Charging cost per day = Rs36 x 365days x 10yrs = 131,400
Total cost = Rs 10,81,400

Cost of Alto or similar car = Rs 300,000
Cost of petrol at say Rs 70 x 7 Ltrs (to travel 100kms) = Rs 490 per day. Now Rs 490 x 365days x 10yrs = 17,88,500
Kms travelled = 3,65,000 (@100kms per day) = 36 services costing @ Rs 3,000 every 10,000kms = Rs 108,000

Total cost of Petrol car = 300,000 +17,88,500+ 108,000 =
Rs 21,96,500

Cost of that tiny petrol car is DOUBLE I didnt include a lot of parts you might have to replace. Also consider the cost of the battery will surely come down and also the EVs can improve its range just by software updates and also by battery upgrades. So the range of the EV bought today could easily be increased to 300km in 10 yrs time.

If this aspect is considered then the total cost of the petrol car is about about 3 to 4 times the cost of the EV!

Reply
Vivek Rai
7/9/2014 05:01:34 am

@Johnson : I am not sure if the average college kid travels 100 KM every. And in any case the average college student will use a bike NOT a 800,000 INR car.

I am a working professional and have a car that cost me Rs 4.8 L on road (Its a 2009 model Swift VXi) I have covered only 32000 KM till date. The avg milage that my car gives me close to 15 KM per litre of prtrol. So considering the current average of petrol price i have spent about 1.5 L . My total servicing charges have been close to 30 K over the past 5 years. So my total cost of ownership is about 7 L (Rounded). That makes a LOT more sense than buying a 8L car that cant even carry more than 4 people comfortably . There would also be the 'tension' of running out of charge and not finding a charging point. Added to that the 1.5 L battry replacement that would cost me about 10 L in 5 years. About 3 L more than a petrol car.

The electric car may make some sense for a certain usage not for mine which represents the majority of the usage.

My assumption is that the creators of this blog and the users of the EVs herein are people who most probably have small families possibly even single and who 'pleasure drive' a lot and donot have to carry much baggage . It may make sense for you .

@Ashwin : You are right i actually meant a Corolla .

Reply
Johnson
7/9/2014 02:58:47 pm

Vivek Rai...

1. Why would he use bike? Because of the fuel expense not because bike is more comfortable... I travel 120km daily and I dont want for the life of me to travel by a bike. I put on the AC... catch Commedy nights with Kapil...through 3G or put music videos/or FM channel the music to Bose speaker I put in the car.. I really enjoy every single moment of the ride...whether stuck in traffic or zipping at 140kmph... I enjoy every bit and most importantly my time is not wasted.

32,000 km in 5 yrs = 17kms per day, which equals around 8 kms one way. Which again shows you are not using your car to full benefit, again due to fuel expense or some other reason.

But if you drive so less wouldn't taking a cab be a better economic choice? Note in 5 yrs you have already touched 7 Lakh in another 5 yrs with the inflation in petrol price I can foresee you spending another 2Lakh on fuel alone, add 30,000 for service and once the car crosses 50,000 mark the cost of service expense mount.

Speaking of luggage space I could have understood if you were comparing a Pajero with e2o... but the advantage of luggage space of Swift over E2O is marginal... if at all...

Reply
Vivek Rai
30/9/2014 04:42:17 am

Johnson
A college kid would use a bike because it costs 50K to get one . Not 4.5 L . And i am pretty sure NO College kid traves 120Km daily to get to college !. First of all i think you are either insane to travel 120 Km daily or you just put up somewhere in the US where you have no choice BUT to travel 120 Km daily to work.

8 km a day one way is all i need. To use to full benefit is to be able to use a car where ever and when ever i want to . Not be bogged down by 'charging time'.

Sure i can use a cab but then i want to be able to travel , like is said, when ever where ever without having to wait for someone.

And regarding space, the E2O cannot hold more than 3 adults comfortably.


Reply
Sateesh Reddy
19/10/2014 02:53:36 am

While Johnson's use cases are flawed, Vivel Rai - I have comfortably taken 4 people in my e2o - You need to actually use the car.

Johnson
8/9/2014 06:39:00 am

I updated the blog:
http://www.pluginindia.com/blogs/e2o-vs-swift-alto-wagonr-i10-santro-nano

If you scroll down you will see the E2O accident where the e2o did not get a dent yet the hundai car was smashed... also I included the luggage space comparison... the difference doesn't look much really.

Reply
Kamlesh
10/9/2014 06:23:00 am

Johnson and Vivek Rai,

I suggest u compare Apples and Apples and not Apples and Oranges.

Comparing and e2o with an Alto does not makes sense.
Compare the e2o with a Petrol hatchback which gives u the comfort of Automatic Trasnmission (Auto cars are freakin expensive).

Also Johnson - I agree with Vivek that its hard to find use cases of people traveling 100 km per day for 365 days a year. That is an insane usecase!

Also Vivek Rai - Fuel Costs for next 5 years will more than 2 Lakh 50 thousand given the current rates (assuming traveling 45 km per day). So your numbers are wrong.

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