RESEARCH ON FEASIBILITY OF ELECTRIC VEHICLES IN INDIAN AUTOMOBILE MARKET

Problem Statement

In a developing country like India with population of almost 1.3 billion, the total number of vehicles that are being registered is increasing every year, especially passenger cars and two-wheelers, which has resultedin excessive fuel consumption and aggravated thegreenhouse gasses emissions to a precarious level. As a consequence, it is having adverse impacts on environment like increase in global warming, climate change and not to mention the health related problems resulting from those fumes. So in order to address this issue one practical way could be the introduction of Electric Vehicles in Indian Market.

Problem Background

Emissions from fossil fuel vehicles has been the main problem growing at fast pace in both developed and developing countries, resulting in climate change and global warming, especially in a country like India. India is the second highest populated country in the world after china, with more number of middle class. As India is a developing country, the income level of people is growing every year, increasing the spending capacity of the people. This is the main reason for the growth in total number of vehicles. The amount of greenhouse gasses and the fuel consumption is growing every year with respect to the increase in total number of vehicles. This is making the transport sector to turn into one of the main contributors to the total greenhouse gas emissions and also making it the main consumer of petroleum products. The oil production capacity in India is very low and as the demand for the petroleum products is being increased every year, India has become one of the world’s largest importer of petroleum products to meet the demand. This has increased the price of all petroleum products in the country.

The use of electric vehicles and hybrid electric vehicles instead of fossil fuels can not only reduce the emissions but can also decrease the amount of fuel consumption. The electric vehicles are well known for their zero tail pipe emissions, which had made them quite popular among all the existing alternative fuel vehicles. Many developed countries across the globe have already introduced the electric vehicles into their markets to potentially reduce the carbon emissions. Considering the above facts, this research is being conducted to analyze the feasibility of electric vehicles in Indian automobile market.

Methodology:

As mentioned earlier there are number of things which go unnoticed, when feasibility of Electric Cars in India is discussed generally. The methodology adopted to carry out this research is as follows. Analyse all the overlooked factors such as charge points for electric vehicles, time required for full charge, Fuel cost, Service cost, Cost of electric cars, sustainability, energy overload, Infrastructure and economic situation one by one i.e. how these factors are affecting the feasibility of electric vehicles. To aid the analysis a survey is to be conducted and based on the results of survey and general analysis, a conclusion will be drawn describing the feasibility of “Electric Vehicles” in India.

It has a top speed of about 80 km per charge and consumed about 8 units of electricity and need takes about 8 hours for full charging.

Figure: Methodology

Hypothesis:

The public opinion would be acquired from limited no of people living in specific region of country, it will be assumed that it is applicable to whole India.

Literature Review

The automotive industry in India is currently experiencing a tremendous growth. The reason being is largely because of the increase in number of middle class, and the significant increase in their income levels. The last two decades in India have seen vehicles growth of about 5 times, i.e. the vehicles figures have reached to 114 million in 2009 from 21 million in 1991(MORTH, 2011). Analysts have predicted that the motorization rate by the year 2020 will be increased to 40 vehicles per 1000 and 72 vehicles per 1000 by 2025, from 12 vehicles per 1000 in the year 2000. By the year 2020 the sales of passenger vehicles, heavy vehicles and two-wheelers are expected to rise to 10 million, 2.7 million and 34 million respectively(Samveg Saxena, 2014). According to (EAI, 2012) from the year 2004 there has been tremendous growth in sales of passenger vehicles in India with an annual growth rate of about 13.5 %. India was the second largest vehicle manufacturer of by the year 2010 and by the year 2013 the country has moved upward to sixth position in the world (Mozumder, 2015)(Saroj Kumar Sahu, 2014). The growth in population and the income levels of people has led to increase in total number vehicles, mainly passenger cars and two-wheelers. This in turn has led the transport sector to contribute more carbon emissions to the total emissions in the Country, thereby resulting in increased global warming, climate change and fuel consumption. According to (INCCP) Indian Network for Climate Change assessment the transportation sector in India contributes 18% of total greenhouse gas emissions in the year 2010 (INCCA, 2010). By the year 2000, India was already in list of top 10 countries having highest exhaust emissions from road transport sector (S. Baidyaa, 2009).

Cars are the second highest category in the Indian road transport sector in which most of them are personal cars and the remaining are taxis. According to survey done by Ministry of Petroleum & Natural gas, Government of India, the transport sector had consumed 70% of total diesel sales in the year 2014, out of which the major chunk is consumed by cars, three wheelers and utility vehicles. In regard to petrol, 99.6% of petrol is consumed by transport sector which is mainly consumed by cars and two wheelers (India, 2014). According to Energy Information Administration (EIA), after United States, china and japan India has been the fourth largest consumer and as well as importer of crude oil in the world. The total petroleum production in India is only limited to 1.1 million barrels per day, whereas the total demand is about 3.7 million barrels per day (EIA, 2014). This clearly shows that the total demand of petroleum products is three times more than the amount of petroleum produced in the country. It is projected that India would import 92% of its oil by 2020. This situation of growing vehicle sales and growing concern in energy security the central government of India has released National Electric Mobility Plan (NEMP) which acts as a pathway for the promotion of electric vehicles and other alternative fuel vehicles to replace the use of fossil fuel vehicles (Samveg Saxena, 2014).

Electric cars are generally powered by electricity which is stored in battery attached to the cars, using an electric motor (Boxwell, 2010). Electric vehicles are usually classified into three types like Battery electric vehicles (BEV), Hybrid electric vehicles (HEV) and Fuel cell electric vehicles (FCV). Unlike the battery Electric Vehicles which are powered by batteries the Hybrid electric vehicles consist of an electric motor with battery and a combustion engine with fuel tank which simultaneously powers the vehicles (Pistoia, 2010).

Figure. 1

The fuel cell vehicles use fuel cells to generate the electricity which powers the car. James Larminie and John Lowry in their book “Electric Vehicle Technology Explained” has stated that the electric vehicles are drawing more attention across the globe not just because they reduce the carbon emissions and decrease noise pollution, but also they can potentially reduce the use of oil in transportation (James Larminie, 2012). Michael F. Ashby in his case study on electric vehicles had predicted that the production of electric vehicles including hybrid electric vehicles, battery electric vehicles and fuel electric vehicles will rise to 16 million units per year globally, by 2021 (Ashby, 2015). An official from one of India’s auto giant Mahindra predicts that electric vehicles may take 2 to 5 % of Indian market share in coming few years (PTI, 2015). Electric vehicle is the technology which contributes to attain sustainable transport and the main advantage of electric vehicles is that they are capable of zero emissions if they are powered from clean energy sources like biogas, wind energy and solar power (Michael A P Taylor, 2009). However the authors had also mentioned the main disadvantage of electric vehicle, that they have limited battery range and takes longer time for their recharge. The Government of India has recently taken an initiative to club its hand with Electric Vehicle Initiative (EVI) of Central Energy Ministerial which is looking to deploy 20 million Electric vehicles by the year 2020 (Samveg Saxena, 2014). Government this year has provided Rs 800 Crore to subsidies electric cars, which is expected to reduce the carbon dioxide emissions by about 1.5%by 2020. (Source:http://economictimes.indiatimes.com/industry/auto/news/auto-finance/union-budget-2015-government-earmarks-rs-75-crore-for-electric-vehicles-in-2015-16/articleshow/46409897.cms)

All the information above mostly deals with general facts and figures regarding electric vehicle in India and all over the globe. There are several other things which should be taken into account to find if the concept of having electric cars in India is feasible or not, this research is focused on such factors which are being overlooked.

Factors Overlooked:

Economic Viability

The government of India in its Union Budget has decided to provide a subsidy of Rs 800 cr to the electric cars which is a good move as it would cut the emission of carbon dioxide to about 1.5 percent by the year 2020. Other reason why the customer would like to go for electric car is that the state government is providing a subsidy of 15% on price, 12.5% VAT refund and 50% discount on the road tax which brings the road tax to about 2%. It is also expected that the price of the electric vehicle will come down under the National Electric Mobility Mission Plan.

Apart from these benefits, the fuel cost of electric vehicles is very less as compared to petrol or diesel vehicles. Also, the mileage is high and the running cost/km is less for electric vehicle. However, the cost of maintenance is high for electric vehicles as the batteries which is the main component of electric cars is very expensive and needs replacement after every two to three years which costs around 80,000 Rs. But, the Electric vehicle users can enjoy other benefits like reduction in parking fee, subsidies and other economic benefits which makes the electric car more viable.

Fuel Cost and Cost of Car
	Electric	Petrol	Diesel	CNG
Cost of Fuel	5.00	56.46	46.01	38.15
Mileage	20.00	15.00	18.00	22.00
Running cost/KM	0.5.	3.80	2.60	1.70
Incremental Acquisition cost over a Petrol Vehicle	2,00,000	-	1,50,000	55,000

The following is the data showing the support from Central government for Electronic Vehicles in India-

	Buses/Mini Buses*	Three Wheelers*	Cars**
Features	For 10 or more seater with range of 70 km and top speed of 40 Km/hr	8 or more seater with 90 km range and top speed of 45 km/hr	For 4 seater and range of 90 km and top spped of 50 km/hr
Subsidy per Vehicle	33% of cost or Rs.3.50 lakh	33% of cost or Rs. 80,000	33% of cost or Rs.75,000

* to government organizations/undertakings, autonomous institutions, public/private limited companies, voluntary institutions registered under the Societies Registration Act, professional associations of repute registered under the Societies Registration Act.

**to government organizations, public sector organizations, educational institutions, hospitals, and tourism and archaeological sites. Grants to Research Institutions, National Laboratories & Industry 50% of costs for R&D and demonstration activities (but Approved Outlay for 2009-10 was only Rs.2 crore). Preferential Tax Treatment to industry Concessional Excise Duty @ 4% on all electrically operated vehicles (cars, 2 and 3 wheelers) as well as on goods used in the manufacture of such vehicles (Battery Pack Battery Charger AC or DC Motor AC or DC Motor Controller) till March 31, 2013.

Fuel Cost

After the first launch of electric cars commercially in the year 2011, REVA model was available in India which is powered by the lead-acid batteries. The electric vehicles also reduce the GHG emissions and dependency on the costly fuel imports and have very low fuel cost and maintenance cost. This is because they do not have air filter, oil filters, radiators and spark plugs. They help environment to remain pollution free and free from harmful gas like CO₂, SO₂and NO2 etc. The electric cars are also energy efficient as compared to petrol cars and they are about 4 times much efficient than petrol cars.

Service cost

If you compare the electric cars with conventional vehicle then electric cars seems to have an advantage in terms of the cost of lifetime ownership. But, these cars have not taken off well as the car electric car features are very basic as compared to the smaller sized petrol cars in terms of functionality i.e. power, speed and range. Also lack of retail outlets and proper charging infrastructure is not good in India.

The table below shows the analysis of IDFC when REVA (electric car) is compared with the Hybrid vehicles which use two sources of power.

Figure: Lifetime ownership cost of REVA as compared to small petrol car(Rs/Km)

Source: IDFC, Policy group Quarterly, No 9, September 2010

· General: 10-year useful life for commercial carrier; vehicle financing for 2 years @ 15%, EV battery pack not financed, inflation @ 6% p.a., daily driving distance of 100 km, discount rate for NPV: 10%. Diesel three wheeler: Cost @ Rs. 1.25 Lakh,

· Diesel @ Rs. 42 with subsidy & Rs. 46 without subsidy, mileage @ 34 km/l.

· Electric three wheeler: Cost without battery pack @ Rs. 1.5 Lakh, LAB pack of 6 kWh @ USD 200/kwh, range of 90 km/charge, 9 units of electricity for full charge, battery life of 750 cycles, battery degradation of 20% over life.

The main reason for the high cost of electric vehicle is the battery. The REVA model of electric car uses 8 batteries each of 48 volts and 200 amp which has price of Rs 80,000 and have expected lifespan of about 2 to 3 years. This means that it is necessary to replace the battery every three years which makes the electric car more expansive than conventional cars. This feature makes it unappealing and also the market value of electric car depreciates with time and there is hardly re-sale value.

Cost of Cars

The model e2o of Mahindra which has started as Reva before its manufacturer Reva Electric Car was acquired by Mahindra and Mahindra in the year 2010 is one of the best electric cars which sell in other countries as well. The base version of this electric car is priced about 2.96 lakh in ex-showroom, Delhi while the premium version is available for 6.82 lakh.

Table: Fuel Cost, Service cost and cost of car

	REVA	1000 cc Petrol Car¹
Fuel Cost	0.45²	2.3-3.5³
Maintenance Cost	0.6x	x
Cost of Car	6.82 lakhs⁴	2.5-4 lakhs⁵

1. Maruti 800, Nano, Zen, Alto, Wagon R, Spark etc.

2. Electricity @ Rs. 4/unit. 8. Using declared fuel economy values of 16-24 km/l for cars in this category

3. Using declared fuel economy values of 16-24 km/l for cars in this category.

4. Price ex-showroom, Delhi

5. Maruti 800 variant, ex-showroom, Delhi

Sustainability

The key point to note about the electric cars in India is that the car cannot last long drives. The lithium-ion batteries can be charged anywhere but it takes time and there is no availability of charging point in public in India. This makes the car useful only in short distance.

The car is electric but it needs electricity which is produced using the coal. So, the electric cars are green but the power needed to charge them does not help the environment.

In India, in many metropolitan cities like Mumbai, there is an energy deficit of about 5.4% in April according to the latest data by Central Electricity Authority. So, it might be an influencing factor for the use of electric cars in these cities. The use of electric cars can also create the energy deficit in most of the places in India and it is very difficult for electrical vehicles to sustain in the places having the same situation.

Energy overload

There is already deficit in many parts of India. The consumption of electricity for charging the electric vehicle will lead to energy overload. According to the Central Electricity Authority there is an anticipated deficit of 2.1% for the fiscal year 2015-2016.

Infrastructure

India is a developing country and lacks in the proper infrastructure. There are many places in India which have no electricity. Only 52% of rural households have access to electricity and about 93% have access to electricity and the overall electrification rate being 64.5% in India.(Source: Central Electricity Authority). It is also required to have consolidation of basic infrastructure for electric vehicles like good electricity lines and smart grids and smart chargers.

Charging point/station is place where electric vehicles get recharged or refuelled. At this moment there are very few cities in India like Bangalore airport which have charging points and it will take a lot of time to build them all over the country.

Charging Time

Fossil fuel vehicles take only few minutes before they are filled to top when it comes to refuelling. However, on the other hand time taken by an electric vehicle to get recharged is between 3.5 to 8 hours which is quite long considering the fact that they cannot be recharged at home but at charging stations.

Public Opinion:

Most of the people in India belong to middle class, the figure 2 shows the graph from a survey which was conducted among middle class people who owned personal vehicles, the question was simple: “Would you buy electric vehicle to replace present vehicles?”. More than 95% people were not willing to change their mode of transport. The response did not change much when inquired that will they change their mind if given 10-20% discount on electric car (figure 3).

Figure 3.

Figure 4.

People had their reasons for not showing interest in changing their vehicles. The reason mentioned by most of the people was that they are alright with the ways thing are going and are not ready to accept the change because they are indifferent with the behaviour of electric vehicles and have no idea how changing their vehicle will affect their daily routine.

Working of Electric Vehicle

The main components of an electric car contains AC electric motors, Electric Controller, battery tray, Battery charger, 12V Lead acid batteries and many motors for driving the smaller parts. The main parts of electric vehicles are motor, controller and battery.

The battery is used to drive the AC motor which is done with the help of DC to AC converter. When the accelerator is pressed the controller produces 96 V which is used to drive the motor. Some of the car use controller which is normally used for accelerating when it is on and used for decelerating when it is off.

Electric car can have maximum speed of 80 km and the weighs about 500 kg.

Comparison of battery technology

Battery technology is one of the bottlenecks for the electric cars. The current battery which is there in electric car has limited drive range and acceleration. They are also heavy and take a large space. Charging time is also high with low life expectancy. The alternative battery technology which is Lithium ion is very expensive to consider.

Table: Comparison of battery technology*

Battery technology	Lead Acid	Nickel	Lithium ion
Cost (USD/kwh)	200-300	600-800	650-1200
Energy Density (Wh/kg)	30-40	60-80	60-180
Charge efficiency (%)	70-90	60-80	90+
Charge cycles	500-1000	500-2000	2000+

*(Source: IEA, Deutsche Bank, Tata Motors)

Other factor influencing electric cars

Some of the key points are as follows-

· The infrastructure changes needs to be done so that the charging for electric cars becomes easy. Also the charging point installation cost is very negligible which can be installed in parking lots, petrol pumps or malls.

· For batteries, the battery leasing can be considered. It will help the customer to get the battery ownership and it will reduce the upfront cost and make the cost affordable at the time of purchasing the electric vehicle.

· Tighter norms for automatic emission and reinforcement will help the electric vehicles. Also, government make no petrol or diesel zones in tourist places and industrial townships. This will help to reduce the pollution caused by conventional vehicle and will encourage people to buy electric vehicles.

· Research and development programmes should be run to produce the good quality and low cost battery which will provide better Battery management with low battery charge. Government should invest in these fields as well.

· Government should also provide some dedicated fund for commercial electric vehicles.

· Government should also look for the alternatives to provide energy like nuclear energy to overcome the deficit of energy in many parts of India. This will help electric vehicles to emerge in those parts of India.

History of electric cars:

The concept of electric cars is not a new one. It has been in existence since 100 years. The first nations that have developed the electric cars were France and England in the late 1800’s. The American have stepped towards electric vehicle in the late 1890’s. Electric vehicles that were produced in the early 1900’s were so good that they possessed many potential benefits over their competitors, especially over gasoline vehicles in regard to noise, smell and vibrations. But slowly by 1910, there has been more advancements in the production of gasoline production vehicles like use of motorized production line which enabled the production of gasoline cars in high volumes and the addition of electric motor called starter to start the engine replacing the dangerous crank. Due to these advancements gasoline cars became more preferable over electric cars which have stopped the production of electric cars after First World War (EAA, 2012).

Conclusion:

Based on the above factors and results it is safe to say that India has long way to go before the idea of Electric vehicles is completely implemented. More investment and efforts should be made to develop infrastructure for electric vehicles and to raise level of awareness which will help in removing ambiguities and misconceptions related to this alternative vehicle from people’s mind. In short, it can be said that this is a systematic process which needs to be carried out in steps and it will take time to fully implement the whole process.

References

Akshima Tejas Ghate, M. K. (2014). Electric Vehicle Vs India's Energy Security.

Ashby, M. F. (2015). Case Study: Electric Cars. Materials and Sustainable Development , 151-166.

Boxwell, M. (2014). The Electric Car Guide - 2015 Edition: Discover the truth about owning and using electric cars. Greenstream Publishing Limited.

Boxwell, M. (2010). The Electric Car Guide - G-Wiz. Greenstream Publishing.

EAA. (2012). Electric Vehicle History . Electric Auto Association .

EAI. (2012). Electric Vehicles: Potential, Technology and Government Initiatives - See more at: http://www.eai.in/ref/ct/ev/ev.html#sthash.obN9VUVJ.dpuf. Retrieved from Energy Alternatives India: http://www.eai.in/ref/ct/ev/ev.html

EIA. (2014). Today in Energy. Retrieved from U.S Energy Information Administration: http://www.eia.gov/todayinenergy/detail.cfm?id=17551

INCCA. (2010). Climate hange And India: A 4X4 Assesment . Ministry of Environment & Forests Government of India.

India, N. (2014, 09 09). Press Information Bureau . Retrieved from Government of India Ministry of Petroleum & Natural Gas: http://pib.nic.in/newsite/PrintRelease.aspx?relid=102799

James Larminie, J. L. (2012). Electric Vehicle Technology Explained. John Wiley & Sons.

Martin Lockstrom, T. C. The Electric Vehicle Industry in China and India: The Role of Government for Industry Development.

McAuthor, W. The Advantages of Electric Cars. Clinton Gilkie.

Michael A P Taylor, P. P. (2009). PLANNING FOR ELECTRIC VEHICLES IN AUSTRALIA – CAN WE MATCH ENVIRONMENTAL REQUIREMENTS, TECHNOLOGY AND TRAVEL DEMAND?

MORTH. (2011). ROAD TRANSPORT YEAR BOOK (2007 - 2009) . NEW DELHI: TRANSPORT RESEARCH WING, MINISTRY OF ROAD TRANSPORT & HIGHWAYS GOVERNMENT OF INDIA .

Mozumder, T. (2015, 09 09). Indian Auto Industry. Retrieved from Knowindia: http://www.knowindia.net/auto.html

Pistoia, G. (2010). Electric and Hybrid Vehicles: Power Sources, Models, Sustainability, Infrastructure and the Market. Elsevier.

PTI. (2015, 16 03). Passenger Vehicle. Retrieved from The Economic Times : http://economictimes.indiatimes.com/industry/auto/news/passenger-vehicle/cars/electric-vehicles-may-take-2-5-of-indian-market-in-few-years-says-auto-giant-mahindra/articleshow/46581200.cms

PTI. (2015). Union Budget 2015: Government earmarks Rs 75 crore for electric vehicles in 2015-16 . Retrieved from Economic Times: http://economictimes.indiatimes.com/industry/auto/news/auto-finance/union-budget-2015-government-earmarks-rs-75-crore-for-electric-vehicles-in-2015-16/articleshow/46409897.cms

S. Baidyaa, J. B.-K. (2009). Atmospheric emissions from road transportation in India. Energy Policy, 37 (10), 38122-3822.

Samveg Saxena, A. G. (2014). Electrical consumption of two-, three- and four-wheel light-duty electric vehicles in India. Applied Energy , 582-590.

Saroj Kumar Sahu, G. B. (2014). Critical Emissions from the Largest On-Road Transport Network in South Asia . Aerosol and Air Quality Research , 135-144.

Sharmistha Mukherjee:Electric cars: An idea, but has its time come in Indian auto market?: http://www.financialexpress.com/article/industry/automobiles/electric-cars-an-idea-but-has-its-time-come-in-indian-auto-market/42308/

IDFC, Policy Group Quarterly, No. 9 (September 2014) https://www.idfc.com/pdf/publications/policy_group_quarterly_no_9_Sep2010.pdf

John, (2010). Working of Electric Cars, http://www.circuitstoday.com/working-of-electric-cars