EspressoLogy

Travel is an indispensable aspect of human life, driving financial growth and fostering global connectivity. Historically, travel was facilitated by beasts of burden and machines rooted in antiquated concepts. It wasn't until the 19th and 20th centuries that humans increasingly relied on oil, often referred to as "liquid gold," for transportation. Today, oil remains dominant in the global travel industry. However, a significant paradigm shift has occurred in recent years with the introduction of Electric Vehicles (EVs). Electric Vehicles, a remarkable human innovation, are ushering in a new era of mechanised transportation that prioritises energy efficiency over oil-dependent vehicles. India, one of the world’s largest automobile manufacturers, has committed to becoming a key player in the EV industry as the world transitions toward sustainability. With the implementation of new policies and the interest expressed by foreign stakeholders, India's goal of achieving net-zero emissions by 2070 could be expedited. Should these long-term plans materialise, lithium-ion batteries may hold the key to India's thriving automotive market. Let's examine some data.

Electric Vehicles (EVs) offer a straightforward yet efficient solution compared to traditional oil-powered vehicles. Unlike conventional vehicles dependent on internal combustion engines, EVs operate using rechargeable lithium-ion batteries. EVs lack a tailpipe, which eliminates the continuous release of CO2 emissions during operation. This makes EV vehicles a far more sustainable choice compared to petrol or diesel-based vehicles.

While it's true that the recent surge in popularity of EV vehicles can be attributed to Tesla, the concept of electric vehicles has a historical presence in India dating back to the 19th century. Nearly three decades ago, India created the first three-wheeler electric vehicle, akin to tuk-tuks, named Vikram Safa. These early EVs were powered by lead-acid batteries, and their emergence laid the groundwork for additional concepts within the public transport sector. It wasn’t long before the technology was applied to vans and buses. However, early EVs came with certain caveats that were difficult to ignore. They were costly to manufacture and purchase, had lower speeds compared to petrol-powered cars, and were impractical for long-distance travel. These challenges, coupled with inconsistent energy infrastructure in the country, tapered demand for EV vehicles. But the perception has changed again in recent times

In the past year, India witnessed an astonishing surge in EV vehicle sales, with over 12 million units sold across various segments. This represents a remarkable leap compared to the near 48,200 units sold in the 2020-2021 fiscal year. Several factors have contributed to this renewed demand for EV vehicles, including the introduction of more affordable options, the integration of smart connected features, and the expansion of charging infrastructure nationwide. Local automotive giants like TATA and Mahindra have devoted significant efforts to contribute to this transformation.

Simultaneously, government initiatives such as the FAME I and II schemes, coupled with Production Linked Incentives for local manufacturers, have bolstered the growth of EV vehicles in the Indian automotive landscape. According to the Indian Brand Equity Foundation, the EV industry is poised to reach a valuation of US$7 billion by 2025, potentially making India one of the largest EV markets globally.

Foreign players have also recognised the burgeoning opportunities in India's EV sector. Companies like Nissan and Renault have announced combined investments of US$600 million over the next 3-5 years to expand their presence in the Indian EV market. Notably, the well-known German automaker Audi has already commenced local production of EV cars in Aurangabad. Furthermore, prominent electronics manufacturer Foxconn has set its sights on India for its EV manufacturing plans, potentially reducing the production costs of EV vehicles in the country. This development could have a significant impact on the future demand for such vehicles in India.

The transitioning shift towards electric vehicles (EVs) stands to benefit the Indian economy in several significant ways. Firstly, it could potentially address one of India's most significant economic challenges—its reliance on oil imports to sustain the travel industry. Although lithium-ion batteries would still need to be imported, ongoing exploration efforts in Jammu and Kashmir could prove to be a game-changer for India if successful. The discovery of lithium deposits within India could significantly reduce dependency on foreign resources. Secondly, the shift to EV vehicles aligns with India's vision of achieving net-zero emissions by 2070, contributing to a healthier environment. This environmental focus is crucial for both domestic and global sustainability. Thirdly, the growth of the EV industry is expected to attract substantial investments. Projections indicate significant potential for economic growth in this sector. Additionally, the use of EV batteries is likely to drive advancements within the electronics industry.

Furthermore, support for the Original Equipment Manufacturer (OEM) industry, reduced travel costs for fleet operators like Ola, and the growth of real estate due to the establishment of EV manufacturing plants could further boost the Indian economy. Currently, India’s electric passenger vehicle market is dominated by local players, however, foreign entrants along with cheaper and more affordable options can spur healthy competition in the country. All these factors are expected to attract the growing middle-class income and youth groups.  

However, this doesn’t mean that the production of EV vehicles does not come with challenges. The absence of quantifiable natural lithium deposits within the country would likely continue to add on to import costs until exploration efforts in J&K are completed. The lack of widespread charging infrastructure is another factor weighing down on the industry. Despite these challenges, the government appears committed to increasing demand for EVs, signalling a positive trajectory for the industry.

Conclusion

For the reasons outlined above, one can argue that the emergence of lithium-ion batteries and the rapid adoption of EV vehicles have ushered in a transformative era for India's economy. This shift not only addresses the nation's historical dependence on oil imports but also aligns with its environmental goals of achieving zero gas emissions by 2070. The substantial growth potential of the EV industry, coupled with foreign investments and domestic initiatives, positions India as a key player in the global EV market. While challenges such as lithium resource scarcity and charging infrastructure gaps persist, the government's commitment to EV promotion signals a promising future for India's economic landscape.