EVs Can Drive Energy Security : Daily Current Affairs

Relevance: GS-3: Technology Missions, Developing new technology, Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Key Phrases: Electric Vehicles, Limited charging infrastructure, Lack of interoperability services, Battery technology, FAME scheme, Electric vehicle, Free trade agreement, Production-Linked Incentive.

Context:

Russia’s war on Ukraine has had a devastating impact on the global economy. It has triggered an unprecedented energy crisis as prices of commodities such as coal, natural gas and crude oil have skyrocketed.
With oil above $100 a barrel, policymakers in the country are faced with two questions:
- How to keep the energy prices down in the coming months?
- How to ensure India’s energy security in the long- term?
Almost 85 per cent of India’s oil needs are transport-related. Therefore, rapid adoption of electric vehicles would not only help reduce India’s $120-billion crude import bill but also aid in meeting our medium- and long-term emission reduction targets.

What is an Electric Vehicle?

An electric vehicle (EV) is a vehicle that uses one or more electric motors for propulsion.
It can be powered by a collector system, with electricity from extravehicular sources, or it can be powered autonomously by a battery (sometimes charged by solar panels, or by converting fuel to electricity using fuel cells or a generator).

Do you know?

The Automotive Component Manufacturers Association of India (ACMA) is the apex body representing the interest of the Indian Auto Component Industry. Its membership of over 850 manufacturers contributes to more than 85 per cent of the auto component industry’s turnover in the organized sector.
The compound annual growth rate (CAGR) is the rate of return (RoR) that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment's life span.
Range anxiety is the electric vehicle owner's fear that an EV's battery does not have sufficient enough charge for the vehicle to reach its final destination or that a charge point won't be available for charging “on the road.”
Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) is a scheme launched by the Government of India to give a boost to development of Electric Vehicles. Phase I lasted from 2015 to 2019 and Phase II of FAME was launched in 2019 and is expected to be completed by 2022.
The CEEW Centre for Energy Finance (CEF) is an initiative of the Council on Energy, Environment and Water (CEEW), one of Asia’s leading think tanks. CEEW-CEF acts as a non-partisan market observer and driver that monitors, develops, tests, and deploys financial solutions to advance the energy transition. It aims to help deepen markets, increase transparency, and attract capital in clean energy sectors in emerging economies.

Electric vehicles Market in India:

ACMA’s July 2021 report reveals that India’s EV market in FY21 comprises
- 61% electric two-wheelers
- 37% electric three-wheelers and light commercial vehicles
- 2% electric four-wheelers
- 0.2% e-buses.
The EV industry is expected to develop at a robust CAGR of 43.13 percent from 2019 to 2030.
According to NITI Aayog, EVs should account for sales of 80 per cent of two and three wheelers, 50 per cent of four wheelers and 40 per cent of buses by 2030 — must be accompanied by a rapid improvement in charging infrastructure.
Even if 30 per cent of all vehicles sold in India are to be EVs by 2030, we are looking at a figure of over 15 million EVs, against current EV stocks of perhaps under nine lakh, dominated by two and three wheelers (90 per cent).

Challenges with adoption of electric Vehicles in India:

Consumer perception: The range anxiety, lack of charging infrastructure, a wide gap between EV and Internal Combustion Engine. (ICE) vehicle prices, lack of assurance about satisfactory resale value show a weak consumer perception.
High price: There is no price parity between electric vehicles and ICE vehicles in India. For example, the Tata Nexon price starts from ₹7.19 lakh, while the Tata Nexon EV price starts from ₹13.99 lakh.
Scarce battery technology: India doesn't produce lithium and li-ion batteries either, a key EV technology. India relies on import for EV batteries which are quite expensive.
Majority of EVs are not covered under FAME scheme: The Indian Government has tried to promote electric mobility in the country via incentivising and discounts for EVs through FAME. The terms and conditions of FAME scheme don’t support a majority of the electric vehicles with low-speed electric two-wheelers, lead-acid battery powered EVs are not covered under FAME.
Lack of charging Infrastructure: The target of setting up a sufficient number of public charging stations in India is well below the mark,a discouraging factor in adoption.

Initiative for EVs

India aims to achieve EV sales accounting for 30% of private cars, 70% of commercial vehicles, and 80% of two and three-wheelers by the year 2030.
India is among a handful of countries that support the global EV30@30 campaign, which aims for at least 30% new vehicle sales to be electric by 2030.
The recently launched Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) for the supplier side.
The recently launched PLI scheme for Auto and Automotive Components for manufacturers of electric vehicles.
FAME Phase II:
- Launched in 2019 for a period of three years
- The scheme has an outlay of US$1.36 billion to be used for upfront incentives on the purchase of EVs as well as supporting the development of charging infrastructure.
- FICCI has asked for the continuation of FAME II till 2025, along with short-term booster incentives to enhance demand.

Measure for Adoption of EVs:

A long-term roadmap is needed for a smooth transition from conventional internal combustion engine to EVs.

Need to create a fast and slow charging infrastructure network. According to estimates by CEEW-CEF, this would cost around $3 billion by 2030.
Need to set standards in line with global ones and ensure inter-operability between stations and networks. The existing network of over 84,000 petrol pumps can be used as battery swapping points. Concerns related to battery replacement demand for the electric two- and three-wheelers can thus be addressed.
Need to improve the availability of affordable credit for EV purchases. As against cheaper loans for ICE Vehicles , the interest charged by banks and NBFCs for EVs is in double digits with limited options.
India needs to develop credit support structures like limited period risk-sharing facilities to allow consumers access to affordable finance.
Need to consider signing a free trade agreement (FTA) with other automobile importing countries.

Way forward:

The road transport sector is essential for India’s economic fortunes since it forms almost half of India’s manufacturing output. Therefore, implanting this long-term roadmap could deliver economic prosperity, new jobs, emissions reductions, and energy security.

Source: The Hindu BL

Mains Question:

Q. Discuss the challenges associated with the adoption of electric vehicles in India and suggest measures to overcome the same.