Gunjan Malhotra is a dedicated environmentalist and the co-founder of Komaki Electric Vehicle, one of the fastest evolving brands in the Electric Vehicle Segment. Mrs Malhotra is passionate about making India pollution free and is working every day to make it happen with an Eco-friendly mode of transportation. She launched Komaki in 2016 with a vision to make India a cleaner, greener country. With a solid 30 years of experience in the quality and precision-oriented Bearing and Driveshaft industry, Mrs Malhotra has ventured into the auto sector with a vision to make eco-friendly vehicles at affordable prices for all Indian markets. She is very actively involved in producing vehicles – from R&D to design development to incorporating innovative features.
It is noteworthy that while global auto sales collapsed during the COVID-19 pandemic, electric mobility displayed stark resilience in many countries. In 2019, electric vehicles (EVs) accounted for a record 2.5% of the global light vehicle (LV) market, with more than 2 million EVs sold globally! As soon as the pandemic struck, factories were shut to save endangered lives, and global supply chains were massively hit. LV sales plunged drastically.
The magnitude of these disruptions has rendered obsolete the previous predictions about the EV industry. McKinsey conducted several separate pieces of research and examined global markets to develop a more accurate perspective going forward. A distinct observation was made – the EV market would witness multi-fold growth in the days to come despite the ongoing pandemic, with China and Europe leading the way.
Demand Drivers Impacted by COVID-19:
The global sales of LVs are currently expected to nosedive by ~20-25% compared to pre-COVID forecasts. Looking at the repercussions of the COVID-19 pandemic on the electric vehicle segment, both battery-powered and plug-in EVs have been considered in the evaluated parameters:
1. Macroeconomic Parameters: The pandemic brought the consumers to their knees with regards to their purchasing power and plummeted the demand for crude oil. Based on the country under consideration, fuel prices were impacted differently due to varying tax policies. E.g. In the United States, a drop in the price of a barrel of crude oil from $60 to $35 will trigger a respite of ~35% at gasoline prices. But in India, where the fuel prices are not so regulated, the benefits of lower oil prices will be reaped by the government. The consumer receives no direct benefits.
In such a scenario, EVs are a cost-beneficial purchase. Not only are they eco-friendly, but they are also easy on the consumers’ pockets. A pre-determined amount of localization also contributes in part to the local economy.
2. Government Policies and Regulations: Automobile market performance is largely driven by government norms on emission (BS-VI as per Indian standards) and the affordability of that technology to the consumer. The Government of India (GoI) has been targeting the electrification of two-wheelers, three-wheelers and public transport buses aggressively.
The GoI has also been offering incentives to consumers on purchasing new EVs through the announcement of its Voluntary Scrappage Policy and the introduction of a Green Tax of ~10 – 25%. (to be firmed) Scrappage will obviously become compulsory as a fitness certificate is set to become mandatory on commercial vehicles beyond 15 years of age (20 years for private vehicles). Moreover, EVs will not have any registration fee and also offer a rebate on the tax being paid on the associated loans.
3. Technology & Infrastructure: Frost & Sullivan believes that the Indian EV value chain will touch ~$4.8 billion by 2025. There is a massive potential for component industries in the power electronics segment in India. There is a global shortfall of these ancillary parts, and India can bridge the gap with cheaper manufacturing capabilities. This opportunity is not limited to just power electronics but the assembly in its entirety, i.e. inclusive of the motor and batteries.
Currently, the manufacturing of batteries and electric motors is being led by the Chinese, Korean and Japanese players. However, about one-third of the Indian EV market will be driven by the demand from buses in 2025, F&S added. Concomitant to the same, the production of Li-ion batteries is set to boom in the near future, along with an established supplier ecosystem in place. F&S estimate that India is gearing up to install a 40 GWH Li-ion capacity, a feat that will establish it as one of the fastest-growing industries in the upcoming decade.
4. Advantage EV: Vehicle range per charge and the sensitivity of the government towards environmental preservation are the primary factors governing the growth of EV sales. Advancements in technology concerning charging and multiple investments from automakers in the EV segment make it a lucrative option to adopt. With the increasing investment in R&D, promoting the advancements of EVs, various countries have already indicated their commitment towards the future. Here are some of the indicative facts published by IBEF:
- Mahindra Electric Mobility Limited, on 29th Oct 2020, launched its new electric three-wheeler – the Treo Zor, starting at Rs. 2.73 lakh (US$ 3,687.57)
- In June 2020, MG Motor India partnered with Tata Power to set up superfast chargers for EVs at specific MG dealerships to offer end-to-end charging solutions
- Ola Electric Mobility Pvt Ltd acquired Amsterdam headquartered Etergo BV – a manufacturer of electric scooters in May 2020.
- In January 2020, Tata AutoComp Systems (the auto-components arm of Tata Group), created a joint venture with Beijing based Prestolite Electric to foray into the EV components market.
- In March 2020, Lithium Urban Technologies partnered with Fourth Partner Energy (a renewable energy solutions provider) to build revolutionary charging infrastructure across the country.
5. Consumer Demand: A lot of countries have witnessed a stable demand-curve throughout the pandemic-driven slowdown. On the one hand, the overall sales of EVs have declined in China, whereas, on the other hand, the same in the EU has risen. Obviously, EV manufacturers who offer online sales have been privy to a substantial increase in demand. E.g. Tesla has been targeting a shift towards online selling and was also the sole OEM to declare an increased sales volume in Mar 2020.
To back it up, skyrocketing fuel prices have also led consumers to consider introducing EVs into their lifestyle. An otherwise exorbitant amount to shell out, investing the same amount as years’ worth of fuel into an electric vehicle yields better long term benefits to the consumer as well as the environment.
The adaptation may take a while, and it may vary from country to country, but the fact remains that EVs are the future of the automobile industry and are here to stay in the days to come. COVID-19 has played an instrumental role in accelerating the evolution of eco-friendly technology and prominently altered consumer behaviour in favour of the same. For a change, there is one good thing to say about COVID-19, i.e. the paradigm shift in the auto industry.