India sparked up over electric cars

India Dispatch: Operating a vehicle in the country is becoming ever more expensive, so the government is backing a campaign to make hybrids a more common sight. But this revolution on the roads will not happen overnight.

Electric cars, such as the locally manufactured Reva, could be a sign of the future on Indian roads as major international car makers look to enter the fledgling market. Namas Bhojani / Bloomberg News

The rising cost of running a car is a favourite topic of conversation at middle-class dinner tables in the leafy Mumbai suburbs.

With petrol prices increasing and more tax penalties planned for motorists this year, many are seeking alternatives to their gas guzzlers.

The government wants to capitalise on this and is all charged up about electric cars.

Already, New Delhi has launched a push to get more electric cars on the road, while the government is widely expected to roll out a policy for hybrid vehicles next month after years of sitting on the fence. It also plans to introduce tax breaks for motorists who buy electric cars, creating business opportunities for vehicle makers and manufacturers of infrastructure equipment to support electric vehicles. Mahindra Reva Electric Carin Bangalore, India's only company making an all-electric car, is positioning itself to take advantage.

"As cities become increasingly dense, more people buy cars, petrol prices continue to skyrocket, and our road infrastructure does not grow to match, Indians will increasingly look for a better solution," says Chetan Maini, the chief of technology and strategy at Mahindra Reva. "Electric vehicles are the real solution for urban personal transport, freeing us from the chains of oil and polluting cars."

Major car makers such as Toyota, Nissan and General Motors have announced they will be introducing electric vehicles in the country soon and are eagerly courting policymakers and customers alike.

Makers of motorbikes and scooters have also jumped on the bandwagon, with Hero moving into the sector. And other major manufactures are hot on Hero's trail.

TVS, an Indian company, is planning to introduce an electric version of its scooter, and the Japanese giants Honda and Yamaha are also keen to enter the Indian market, but are waiting for improvements in infrastructure.

And that will take time.

"The opportunity exists for both car manufacturers and infrastructure suppliers, but before it becomes a viable business, a lot of advances need to happen, both from a technology side and policy side," says Sridhar Chandrasekhar, the head of research at Crisil.

Building power outlets for electric models will be crucial. Watching the developments closely is ABB, a European energy equipment company.

"Our focus would be mainly in setting up the infrastructure for charging stations, managing the demand and stability of the electrical network and energy storage systems," says Bazmi Husain, the managing director of ABB India. "The market in India is currently at a nascent stage, but opportunities do exist."

But government measures are needed to help the industry grow, as only 110,000 electric cars have been sold in India, according to the Society of Manufacturers of Electric Vehicles. So far, the sales of electric models are tiny, considering that the car industry in India is worth US$35 billion (Dh128.56bn).

With average monthly sales of petrol and diesel-powered cars topping 1 million units, according to Society of Indian Automobile Manufacturers, electric cars have a long way to go to catch up.

Industry insiders criticise the Indian government as failing to put together a concrete plan for infrastructure projects such as charging stations for electric vehicles.

"The infrastructure is simply not there, and the Indian government has made no efforts to build it," says Deepesh Rathore, the managing director of the consultancy IHS Automotive India. "No amount of tax breaks or incentives is going to make people buy cars that you can't charge easily.

"In the UK, for instance, the officials have made a big contribution to boost hybrid or electric vehicles with concession and infrastructure investment, but there has not been such a trend in India."

India's trade rival China has already spent billions of dollars in developing its electric-car industry and plans to pump a further $15bn into the sector as it seeks to become a global player.

India's investment is nowhere near that, but the country is not short of ambition as it hopes to have 7 million electric vehicles on the road by 2020, according to a government report.

This will not come cheap. A Booz Allen report, commissioned by India's department of heavy industry, revealed that manufacturers will need to invest about $4.5bn on the development of new vehicles.

"For the government, it's a chance to combat our increasing dependence on imported oil and to address urban air pollution while also helping to build the industries of the future," says Mahindra Reva's Mr Maini. "We need to encourage the adoption of [electric vehicles] by bolstering our universities' and companies' research efforts in areas like batteries, motors, control electronics and new materials."

But industry insiders believe the Indian government is being vastly optimistic with its 2020 objectives.

"The Indian government tends to be reacting to what is happening around them rather than planning ahead," says Mr Rathore. "Why start in large cities that will require huge infrastructure costs? It will not work.

The government "should look at starting at small private townships where building an entire infrastructure won't be so costly", he says. "Because the infrastructure isn't there, no amount of subsidies or tax breaks will get people buying these cars."

Many also doubt the environmental benefits of introducing electric cars to coal-centric India.

"Since a large amount of our electricity is coal-powered, there needs to be a thorough assessment how green the electric car really is," says the Crisil researcher Mr Chandrasekhar.

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