Nitin Gadkari - Tesla told to setup Electric Car manufacturing in India

By Kamlesh
​We had an opportunity to listen to Mr Nitin Gadkari about Electric Vehicles in the "The Raisina Dialogue 2021". The Dialogue is India’s flagship conference on geoeconomics and geopolitics and is held annually since 2016. The Dialogue is jointly organized by the External Affairs Ministry and Observer Research Foundation. This article contains salient points spoken by Mr Gadkari on Indian EV industry and we also give our take on the discussion.

What is needed for India

• India is importing crude oil of Rs 7-8 Lakh Crores and this has to be reduced. As a transport minister, Mr Gadkari's priority is public transport running on electricity. 
• Alternative fuels like Electricity and bio fuels like Ethanol, Methanol, Bio-CNG are all being promoted.
• Ethanol economy is now Rs 20,000 CR and we plan to take the ethanol economy to
  Rs 5 Lakh CR. 
  • Permission has been given to make Ethanol from molasses and sugarcane juice. 
  • India has rice, wheat, corn surplus and now we can make ethanol from corn, rice and food-grain.
  • Government is also promoting flex engine for vehicles to run on petrol and bio-ethanol
  • Government has given permission for ethanol pumps.
• For Electric Vehicles
  • 81% of Lithium batteries is made in India
  • Within 6 months to a year we will have, 100% Made in India Lithium batteries.
  • Alternate chemistries like Al-Ion, Zn-Ion are being worked on for batteries
• Green Hydrogen 
  • IIT-Madras has invented a process to get Hydrogen from sea water. Research work is going on.
  • Green buses using Hydrogen are being tested.
• Scrapping policy 
  • Scrapping policy is introduced.
  • This will ensure Steel, Aluminum, Copper will be available for recycling which will reduce costs

Costs of Electric Vehicles will reach price parity in all segments. 

Mr Nitin Gadkari at The Raisina Dialogue 2021

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Tesla in India

• Mr Gadkari had a conference call with Tesla management and he suggested for them to start manufacturing in India. Tesla already is purchasing auto components from Indian manufacturers. 
• Tesla will benefit from manufacturing here in India by creating industrial clusters, make vehicles and export to other countries. 
• Initially Tesla will import the vehicles and sell in Delhi, Mumbai and Bengaluru.
• Mr Gadkari is confident that within two years, Indian manufacturers will also create vehicles that will match Tesla.
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FAME 2 Extension

• The extension of FAME 2 subsidy scheme is to be decided by the finance ministry.
• Mr Gadkari feels after a year, we will not need subsidy. Due to mass manufacturing, cost of vehicle will come down. 
• Cost of electricity is also reducing and 100% EV's will be viable, people will automatically choose EV's.
• Mr Gadkari did not comment on the next steps for FAME 2 scheme. Department of Heavy Industry and Finance will take the final call.
• Vehicle Manufacturers are complaining that the government needs to continue to provide subsidies for Electric Vehicles. Mr Gadkari counters that the GST for Petrol/Diesel vehicle is 48%. The GST for Electric Vehicle is only 12% and that is a big support. The most important issue is the manufacturing volume. Once OEM's increase scale of manufacturing, then be able to reduce costs.
• Mr Gadkari is also requesting all state governments, public undertakings to give priority for purchasing electric vehicles to increase awareness.

Do watch our discussion on Telsa in India

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Electric Buses and Public Transportation 

• Mr Gadkari says 100% the focus is on electrification of buses. The London transport model is ideal and that policy from transport ministry is been sent to all state governments. 
• Diesel bus cost is Rs 115 per km, Ethanol Bus is Rs 78 per km, Electric is Rs 50 per km. The cost of Electric is reducing and will go down to Rs 25 per km. 
  • Electrification is a priority which will result in public transport will be cheaper, with cheaper fares and no air and noise pollution. Mr Gadkari said, people will love them and that is dream and it will be fulfilled.

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Charging Infrastructure

• Mr Gadkari purchased an electric car at his home and he said how easy it is to charge your vehicle at home and at work. There will be charging systems at work, businesses, petrol pumps and highways. 
• The government is prepared to support any installation of charging systems.
• Petroleum ministry and institutions are also working on charging stations as seen with IOCL charging stations.

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National Green Hydrogen Mission

• Niti Aayog and IITs are working on creating green hydrogen. In course of time, all the research will be made into a policy.

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Targets for Electric Vehicles - Should India have a deadline?

• Mr Gadkari says we don't need to set any target!  Assume you have a petrol car and your expenditure is Rs 25,000 per month and and electric car only costs you Rs 2,000. So there is no need for any deadline. People will automatically purchase EV's! Within two years the entire situation will change and there will be huge demand for electric 2 wheelers, 3 wheelers, cargo vehicles and electric buses. We are also working on Electric Trucks and construction equipment machines like JCB.  This transformation is going on and it is economically viable and 100% people will accept this change.

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Building the green transport ecosystem

• Present volume of India's industry is Rs 7 lakh fifty thousand crore and our two wheeler companies export 50% of their vehicles. We also want to develop electric cycles in India, which we inaugurated a factory by Hero cycles in Ludhiana. 
• 70% of auto components are made in India and Mr Gadkari has suggested to make all components in India. 
• India will become a manufacturing hub for the automobile industry in 5 years. 100% India will become a number 1 hub for electric vehicle making.
• We need the auto makers for co-operation in the flex engine. If they do, then Mr Gadkari will talk to them about delaying the rollout of the phase 2 of fuel efficiency norms.

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PluginIndia's Take

We love listening to Mr Gadkari and it is due to his vision that we are seeing this push towards electric vehicles. 

• First, let's talk about Mr Gadkari's call with the Tesla management, and about Tesla manufacturing in India. This is pretty cool actually. A senior minister of the government of India is pushing a company like Tesla to make their electric cars in India and also tells them how it would be profitable to have a gigafactory in India. The Indian giga factory can serve as an export hub for Tesla. Despite this kind of push, we feel Tesla will take a year or two to setup and stabilize their operations in India. Initially we expect Tesla to import the Model 3 and the new hatchback being designed, from the China gigafactory. We also expect these cars to have the Lithium Iron Phosphate battery packs that are suited for India. We also spoke to a friend of ours Mr Manuj Khurana, who has been working as a consultant in the EV investment space and has worked closely with the Indian government. And we were excited to know that he is part of Tesla India's management team. He did not say more, but if we get more information, we will definitely add them here.
  
  
• Regarding FAME 2 extension, there are some subtle hints that the scheme might be history within a year or so. It is not confirmed yet. But Gadkari was clearly highlighting that demand for EV's will shoot up in the coming years, so there is no need for further support. Actually we support Mr Gadkari here, we have been seeing how companies in the EV industry are inflating prices and 'eating' any subsidy given by the government. The Indian vehicle OEMs are not honest and if we can clearly see the game, surely the government too can. Also there are other areas, where money has to go given we are in a pandemic.
  So will the EV industry collapse if there are no subsidies? Not at all, resilient EV manufacturers who are innovating and investing in RnD and are not dependent on subsidies will win out in the long run. So it's time for the EV industry to be prepared.
  
  
• The focus is on Electric buses. We have observed how the demand for Electric buses had been spiking even in 2020 and that will continue. Cities and municipalities are betting big on electric buses as they will save huge amounts of money for them. Pune city has expanded their Olectra-BYD electric buses to 300+ numbers in 2020. Mumbai's BEST has ordered 300+ buses from Tata Motors. Tata Motors has supplied 215 electric buses in 5 cities across India. The electric buses have clocked more than 4 million km. Olectra-BYD has contracts to supply 30 electric buses to Dehradun, 150 to Surat, 25 to Silvassa. Electric buses have been in operation Shimla, Himachal Pradesh. 50 electric buses are plying in Shimla town and 25 electric buses in Manali.
  This will only increase in the coming years. 
  
  
• Mr Gadkari was bullish on Ethanol Flex Engines.  It is fascinating that ethanol can be used in these new generation engines as an alternative to petrol. But we are not sure about this. Using foodgrains for fuel instead of feeding people does not seem to be a morally right thing to do. Also with ethanol engines, we still have emissions and it's not as if there are vast swathes of arable land that is available in India to grow grains and make Ethanol. We should use that land food production instead.​

Finally there was talk about India's Hydrogen mission policy. The policy document is yet to be developed as research is still going on. 
And Mr Gadkari also said there is no need for a deadline to get people to switch our vehicles to electric. We actually feel the ICE vehicle manufacturers currently have no incentive to make EVs. Maruti, MNC Car OEMS, two wheeler makers like TVS, Bajaj, Hero, Suzuki, Honda still don't want to sell electric two wheelers. These companies don't have even a single EV model. Thus consumers are blindly buying ICE vehicles as there are not many choices from large vehicle makers. Unless regulations are imposed on these OEM's, we don't see how Mr Gadkari can confidently say things will change in two years time. But overall we loved the vision and direction being provided by Gadkari's team and government when it comes to electric mobility. 

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Watch the full interview here