The bumpy road to change

Governmental support is essential to create an enabling eco-system for electric vehicles

Written by Vikram S Mehta | Published: April 1, 2013 10:17:02 pm

Governmental support is essential to create an enabling eco-system for electric vehicles

The launch of the Mahindra Reva electric city car at India Gate in New Delhi last month is one of the more positive developments on the energy front in recent years. It holds the possibility that in time,and with the right level of support from the government,we may find a sustainable solution to our energy and environmental crisis. My optimism does not flow from the launch of the product itself. That,in itself,is not remarkable. Electric cars are not a novelty. It flows from what the product embodies. The e20 is an indigenous creation. It has been built in Bangalore by combining the innovation and engineering precision of individual technologists with the design capabilities and resources of an automotive conglomerate.

I am a non-executive independent director of Mahindra and Mahindra and I thought hard before writing this article. I was hesitant because of the concern that I might be accused of bias. I decided to write it notwithstanding,because this article is not about the e20. It is about the message that even the most intractable of our problems — in this case the unhealthily strong connection between economic growth,energy demand and environmental degradation — can be sustainably tackled if and when technology,entrepreneurship,organisation and resources are brought together in a judicious and compatible mix. And the equally important message that the support of the government is an essential prerequisite for achieving scale and impact.

The demand for energy is surging and the environment is under stress. A major reason is the increase in motorised traffic and the absence of credible substitutes for petrol and diesel as transportation fuels. The petroleum companies and automobile manufacturers have done much to “green” these fuels and engines,but vehicular pollution remains a major environmental concern. The launch of the e20 is significant because it confirms that there are no structural or technological impediments to the development of an indigenous and sustainable mobility alternative. Whether such an alternative is realised or not depends,therefore,not on breaking new ground,but on how effectively the technical,innovative and resource capabilities of the private sector are conjoined with the strengths of the government. It depends on the robustness of the public-private partnership and the nature of the policy environment.

Inherent in the e20 is this essential message. The vehicle is “clean”. It runs on lithium ion batteries and there are no tailpipe emissions. It is “convenient”. The battery takes 5 hours to fully charge on any 15 amp socket and has a driving range of 100 km. It is “clever” in that the driver is forewarned as the battery depletes,and the battery receives energy when the car slows. It is “connected”. The driver has remote access through a smartphone to the AC and locking systems,and can activate a built-in solar recharger if faced with an emergency. And it is “cost -effective”. This is not obvious,for at Rs 5.96 lakh,the car is not Tata Nano-cheap. But when its running costs are compared with those of comparably sized petrol cars,the case acquires solidity. On the assumption that an average person drives 40 km a day or 1,200 km a month and the price of petrol is Rs 75 per litre,the e20 will generate a cost saving of Rs 70,000 per year.

There is,of course,the concern that in a country of endemic power shortage,the electric car will face a “fuel” uncertainty. This is a legitimate concern,but it can be exaggerated. To illustrate,one lakh electric vehicles will require only 25 MW of additional power. This is 0.01 per cent of India’s current installed power generating capacity. Set against this is the externality of less pollution and more tangibly,a savings of 100 million litres of petrol.

Mahindra’s objective is to sell 400-500 EVs a month. From the narrow perspective of a corporation,this is a realistic aspiration,as it will not be easy to persuade the consumer to make the necessary lifestyle change. But from a national standpoint and especially in view of the severity of environmental pressures,this level of penetration will be inconsequential. It will have no more than a symbolic impact. The big challenge,therefore,is to scale up such developments. Here the major role has to be played by the government. It has to create the enabling ecosystem.

The intent to do so is evident. The prime minister announced a national mission on electric mobility on January 9 this year. He stated that India should have six-seven million EVs on the road by 2020,and that it should become a manufacturing hub for EVs. This intent has not,however,been translated into policy. The announcement had raised expectations of budgetary support but the finance minister did not oblige. There was no mention of EVs in his budget speech. Most state governments also do not have it on their agenda. There are only two states today that provide explicit support to EVs: Delhi gives a 15 per cent subsidy and refunds VAT,and Karnataka has reduced the rates of VAT and road tax. All other states are silent about this industry.

Part of the reason for this disjunct between intent and support,at least as it relates to the Central government is,perhaps,the blurring of ministerial responsibility. The ministers of non-conventional energy and heavy industry,Farooq Abdullah and Praful Patel respectively,were at India Gate not because they were seeking a photo opportunity,but because both had an interest in the e20. As a vehicle that drew on electric power,it fell within the domain of heavy industry but as a car manufactured at a plant that relied on solar power for 35 per cent of its energy,and which had an inbuilt solar recharger,it was of interest to non-conventional energy. This duality of interest would be of limited consequence were it not that it impacts the nature and degree of governmental support. The blurring of institutional responsibility makes it difficult for any one ministry to allocate the funds that it might have were the project solely within its domain. In the process,the support that all admit should be forthcoming gets choked.

EVs offer a sustainable answer to the challenge of energy and environment. There are no other potentially feasible alternatives to transport fuels. The e20 has brought into sharp relief what it is that we can achieve indigenously in India. All of us — industry,government and civic society — must now work together to ensure that such developments scale beyond the interests of any one group or entity and leave a national imprint.

The writer is chairman of Brookings India and senior fellow,Brookings Institution,US

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