There Is No Doubt That Electric Mobility Is Irreversible

Energy Efficiency Services Limited (EESL) – a joint venture of four public sector undertakings – NTPC Ltd, Power Finance Corporation Ltd, Rural Electrification Corporation Ltd and Power Grid Corporation of India Ltd (set up under the Ministry of Power, Government of India) – has been at the forefront of India’s ambitious electric mobility programme. I caught up with Saurabh Kumar, Managing Director, EESL, for a detailed understanding of its roadmap in creating an EV ecosystem.

EESL has been championing the cause of electrical vehicles in India. How would you assess the overall EV push in India?

There are a few regulatory gaps that existed as far as electric mobility is concerned. Of course, the first key thing in electromobility is the creation of public charging infrastructure and for that you need standards and commercially viable tariffs, so that people are encouraged to put up these charging stations. There is a need for clear regulatory mechanisms, both in terms of fiscal incentives and non-fiscal incentives, rebates, etc. All these need to happen before you see a full blown e-mobility in India like you see in Scandinavian countries, China or some parts of Europe. The government is working on these areas.

A lot of things need to be factored in. It’s a new technology after all – you have to look at grid stability, what kind of prices will come up, which are the technologies that you have to leverage, what charging specifications need to be adopted. Clearly, it’s a long drawn out process but EESL is giving a fillip to this whole exercise by specifically focusing on e-mobility in the government vehicles space. As per our estimates, the Central Government, its agencies, PSUs, etc have roughly half a million cars.

The government has virtually stopped buying new cars over the last 25-30 years. The economy instructions came into force in early 90s, which meant that you can’t buy new cars. Most of the government vehicles are leased vehicles. The objective is to start electrifying the government fleet, especially those hired cars that travel not less than 80 km during the day (intra-city travel) and that’s how ESSL started this whole exercise. The first set of cars EESL procured has a range of 130 km, which is sufficient for replacing these government intra-city vehicles.

EESL offered government agencies three models. First, you can carry out an outright purchase and we’ll add some administrative cost to whatever cost we’ve incurred through the bidding process and the car is yours. The second model is a wet lease, where EESL offers the government entity the car along with a driver for eight hours, for a monthly cost of ` 40,000. The third model is dry lease, where a government department take the car and deploy its own driver at a monthly cost of ` 20,000. From the first phase of its international competitive bidding process, ESSL procured 250 cars from Tata Motors and 150 from Mahindra. As many as 200 cars are currently used by various government agencies. The next lot of 9,600 cars will be evenly procured from Tata Motors and Mahindra.

EESL has issued the letter of award for these 9,600 cars and has indicated when it wants these cars. We want to wrap up this process, which will ensure roll-out of roughly 1,000 electric vehicles every month, as soon as possible.

What kind of support have you been receiving from the State governments?

ESSL is witnessing encouraging participation from the State governments. We have inked MoUs with the Andhra Pradesh government for 10,000 electric vehicles as well with the Gujarat government for 8,000 electric vehicles. We feel that more states will gradually follow suit. EESL does not want to rush because the EV manufacturing capacity in India is still in its nascent stage. We have now floated the second tender. This tender is important as it will enable us to understand whether other players are keen to jump into the fray (apart from Tata Motors and Mahindra). The point is, if we have four to five players in the fray, then reaching out to more states makes more sense.

EESL for now is only focusing on government vehicles. We have installed around 400 charging stations for the first lot of vehicles procured from Tata Motors and Mahindra. A large chunk of these vehicles is availing AC charging points. A car that travels 80-100 km a day does not need multiple charging during the day; all it needs is overnight charging with a 15 A plug, with some safety device that does not cost more than ` 6,000. DC chargers are expensive (approximately ` 2.5 lakh) and can charge in 90 min. EESL has deployed AC charging simply because the specific requirement of the government fleet is less than 100 km a day.

As far as public charging infrastructure in concerned, there is a lack of clarity over selling electricity and the power ministry is looking into it. EESL’s EV focus is not in conflict with any quarter because the payment for charging stations is done by respective government departments. We are only putting up charging points and not selling power.

I believe fuel stations will have to turn into charging stations of tomorrow. There is no need for fast charging at offices and parking lots as one can charge the car for three hours, while in office. However, these fuel stations can be fast chargers. If you look at global trends, you will be surprised to know that only 30 % of electric vehicles avail fast charging. For example, on an average, a car in India is used for around 30 km and these cars have a range of 130 km.

It’s not only about the cost; people will not buy EVs unless they see charging stations everywhere, which is the case with fuel stations. Once all regulatory issues are addressed, you will see a robust charging infrastructure in India that will trigger fast-paced adoption of e-mobility. The running cost of an EV is ` 1.10/km, while the running cost of petrol and diesel cars per km are ` 6 and ` 5.50 respectively and are only growing.

I agree that the capital cost of EVs is slightly higher and most nations across the globe are providing capital subsidy. My take is that instead of doling out capital subsidy, it is better to offer incentives such as waiving-off road tax, registration charges or maybe dole out an interest subsidy. Providing a new green number plate is also a good thought. It is only a matter of time before the cost of EVs will come down. Battery comprises around 70 % of an EV’s cost, and the battery cost has come down by one-fifth over the last five years.

What is your take on the concept of battery swapping?

I think battery swapping is a good option for smaller vehicles like two-wheelers and three-wheelers as well as buses (both inter-city and intra-city buses as they can do the swapping at bus depots that typically have big spaces). I don’t think battery swapping is possible for cars. If you really want swapping stations to work in cars, we must ensure availability of such stations in main commercial areas and the service offered must be quick. Globally, battery swapping in cars hasn’t worked.

Industry experts believe that EVs will be taken in a big way by two-wheelers, three-wheelers and intra-city users. There is a general thinking that IC engines will stay for long distance commercial vehicles. What’s your take on the personal mobility segment embracing EVs?

The personal mobility space may adopt EVs much faster than most of us actually think. There is an inherent economic justification in switching from ICE to EV. In India, we have seen that people are willing to invest at high capital cost if their operating costs are lower. Take the example of a diesel car. Look at any model that has both petrol and diesel variants; you will see that diesel variant always has 20 % more capital cost, but people still invest in it because it has proved beneficial in the long run. As for EVs taking off in India is concerned, it is all about creating charging infrastructure and building public awareness and things will happen.

There is talk that the modular approach of importing batteries and controllers from abroad and assembling it in India isn’t quite the right recipe – what’s your take on indigenous battery cell manufacturing making EVs more affordable?

Well, various studies have shown that the battery cost is $ 200 per kWh and is expected to come down $ 100-110 per kWh by 2022. Some analysts are saying that it will bridge the 100-dollar mark, if the India demand comes into the picture. It’s all about creating an enabling policy and demand.

EESL has been recommending to the government to make an announcement to electrify its whole government fleet over the next three to four years. The point is, if you announce half a million cars in three to four years, it will generate a demand of at least three to four gigawatt hour of battery sold. Why will people not come to India and invest? It is not hard to change from ICE to EVs and Tata has shown that by putting up a car in three to four months.

What is your view on the relevance of Internal Combustion Engines?

My line of thinking is that ICEs will co-exist with electric vehicles. If you look at all the projections in India as well as globally, it indicate that the growth of ICEs may reduce but there is a long way to go before EVs takes over everything else. It is crystal clear worldwide that the future of mobility is electric. Of course, alternate research is happening on hydrogen fuel cells and zinc oxide, but there is no doubt that electric mobility is irreversible. The objective is to reduce the country’s import bill and for that to happen embracing EVs in a big way is the way forward.