India’s first electric SUV launched this week. With a substantial push on the budget and policy fronts for the manufacture of electric vehicles, 2019 could well be the year that EVs go full charge ahead
The real story is that the mass manufacturers are bringing their EVs to India
First, the bad news—Tesla is not about to launch its cars in India anytime soon, visits to its plant, friendly hugs and Elon Musk’s tweets notwithstanding. Yes, Tesla’s arrival is a matter of time; when, and not if. But is that the only portent that will mark the arrival of electric cars in India?
No, that genie is out of the bottle.
Electric vehicles (EVs) are coming, and in a more credible, appreciable way than ever before. So far, all we have got is slow, incremental progress on the EV front, and a whole lot of lip service—be it from policymakers or industry. Pioneers in the field, like Chetan Maini’s Reva cars, launched in 2001, were possibly too far ahead of their time. They came on to the scene when EVs were, even globally, a salve to social conscience at best and a hippie fad at worst. There was nothing wrong with the idea, given India’s air pollution levels alone.
Today, we are closer to EVs realizing their full potential in India. The Union Budget 2019 has recommended a reduction in excise duty on EVs from 12% to 5%. In addition, it charts out an income-tax rebate worth ₹1.5 lakh for buying EVs, low customs duty on certain EV spare parts, and tax incentives for local manufacturers of these parts. There is, however, scope for more.
The first EV available to Indian buyers was the rudimentary Reva—India’s first electric car. EV technology 18 years ago was clearly not as advanced as it is today. Subsequent to Mahindra’s buyout of the Reva Electric Car Co. in 2010, we got the second model, badged Mahindra e2o, in 2013. Since then, we have seen some experimental cars—supplied under Union government tenders for institutional use to government agencies—like the Tata Tigor EV in 2018 and the Mahindra eVerito in 2016. None of these products did enough to attract consumers or inspire confidence in EVs. There were not enough takers—as the e20 had already proved.
Mahindra did try and get taxi-fleet interest for the eVerito—but that didn’t go beyond an electric taxi startup, Lithium, in Bengaluru. The Tatas got most of the tenders for government vehicles.
Over the past five years, we have talked more seriously and earnestly about going electric, with the government getting behind the idea since the first term of Prime Minister Narendra Modi’s administration. On the ground, however, we haven’t had robust financial incentives. In most countries that are encouraging the sale of EVs, buyers get incentives that go as high as 50% of the car’s value. In some cases, if it’s not an outright cash discount, the incentives may include schemes like an exchange bonus for giving up one’s petrol/diesel car, as well as an assured buyback value for the EV that is then worked back as a discount into the purchase price. Norway has the highest number of electric vehicles per capita, exempt from all non-recurring vehicle fees, including purchase taxes, annual road tax, public parking fees, and toll payments.
At present,we do not possess a functional charging infrastructure and even the auto industry’s demand to approach electrification in a phased manner (by launching hybrids as a first step) has largely gone unheard.
Volvo offers a plug-in hybrid version of its XC90 SUV, and the Honda Accord and Toyota Camry are only available as hybrids, but these cars have seen scant sales numbers.
What’s different this time
So then why should you care? Because we can finally say with some conviction that 2019 will be the year much of that changes. We have led up to this year by hearing many announcements from the automobile industry, many of which address the issue of charging. Market leader Maruti Suzuki’s parent, Suzuki Motor Corp., is in a three-way tie-up with Toyota and Toshiba to build batteries in Gujarat. The Toyota and Maruti Suzuki brands will begin bringing hybrids and electrics to market starting 2020-21. A recent market entrant, China’s SAIC-owned MG Motors, has announced a partnership with Finnish clean energy company Fortum to install a national network of EV-charging stations. Hyundai has a tie-up with Indian Oil Corp. for fast chargers at select fuel stations in Delhi, Mumbai, Chennai and Bengaluru. Mahindra already offers charging at some of its dealerships.
And then there is all the heartening product news.
The EV fleet itself will not be restricted to compact utilitarian vehicles any longer: Tata Motors’ subsidiary Jaguar will bring us the electric SUV I-Pace in 2020; Audi will launch its e-tron electric SUV by year-end; and Mercedes-Benz has initiated a feasibility study to decide when to bring us its EQ range.
But while these are high-end products that will only be within the reach of a few, the real story is that the mass manufacturers are now bringing their EVs to India. Sure, Mahindra has tried, and there have been announcements from Maruti. But the game changer is likely to be the recently launched Hyundai Kona Electric. At ₹25.30 lakh, it’s not a steal, but the price is actually quite attractive given the duty structure.
It would have cost almost double that price had Hyundai imported these cars from Korea. Instead, it has chosen to assemble the cars locally—so duty is reduced. It is also likely to benefit further if Union finance minister Nirmala Sitharaman’s recommendation to the GST (goods and services tax) council goes through and excise duty on EVs is slashed. Consider the fact that Hyundai is taking an obvious hit to push the EV agenda to its benefit (let’s call it a marketing cost), and that price is indeed attractive.
It works like this: If the GST on electrics does go down, the price of the car is likely to reduce further. Hyundai plans to sell just 500 of these every year, but sees this as a first step to introduce the consumer to a credible electric car option.
The car is the size of a Creta but the price is close to that of the larger Jeep Compass. Given the fact that most people had expected the Hyundai Kona Electric to cost upwards of ₹30 lakh, however, it may give a relatively larger number of people the opportunity to go electric.
You may ask why electric cars are still so much more expensive than comparable combustion engine models. EVs are more expensive because they use specialized parts and the battery accounts for the biggest chunk of costs—unlike regular cars, where a lot of the costs are spread across model lines.
This is bound to change when a majority of cars go electric.
The Kona Electric uses a 39.2 kWh battery. Its 100 kw electric motor puts out a decent 131 bhp of power and a generous 395 Nm of torque (to help you compare, the Creta diesel version has 260 Nm torque and 125 bhp power). It has precise steering and is smooth to drive—nothing golf-cart-like or “compromised” about this EV.
This is the most encouraging part. The early days of EVs—back in the 2000s—had us sampling these cars and coming away disappointed. They drove like the compromise they were. But not any more. The fact that EV development today is not just about range or distance travel possible, but also about being dynamically exciting cars to drive, has changed the game. The Hyundai Kona benefits from the fact that its development has happened in this new era where capability and dynamics come first, and the electric bit is just a matter of functionality.
That is the way the world is going. An EV now does not look or drive differently from its combustion engine counterparts. That is now part of a company’s selling point to the consumer. Gone are the days when you could spot a “green” car like the Toyota Prius from miles away. EVs today are more modern, trendy, and, dare I say, mainstream. Even the Kona has petrol and diesel versions in other markets, and except for the front grille, the cars are similar, inside and out.
The Nissan Leaf was the world’s first mass-produced EV globally. It was in its first generation in 2010, and the car was a slightly differently styled vehicle. But the second generation, which launched globally in 2018, is a lot more contemporary and stylish—and is by no means trying to look different from a regular premium hatchback. It is the second generation of this vehicle—the Nissan Leaf EV—that will arrive in India by the end of this year. The large and roomy hatchback has a range of close to 250km (the distance it can travel on a single charge).
The pricing of EVs is an important and sensitive factor in their large-scale adoption. The Nissan Leaf will need to stay at, or below, similar prices, for there to be any interest. That’s because in India, selling an SUV as premium is relatively easier than doing so with a hatchback—just ask Volkswagen, which tried to offer the very powerful and sporty Polo GTI hot hatch at just over ₹25 lakh. It had virtually no takers.
Nissan would do well to keep the price of the Leaf well below ₹30 lakh, even though it’s unclear whether the company will assemble the Leaf in India. I will also take into consideration the likelihood of the GST council indeed lowering the GST on electrics—which will help Nissan.
What will be built here, though, is MG Motor’s next, the MG eZS, coming by the close of the year. The first electric SUV from MG promises a 300km driving range, and, like Hyundai, MG is already setting up charging infrastructure to support its rollout. Others, like Renault, Honda and Ford, are also looking at electrification, though they were keener to first go hybrid.
Mahindra has said an electric XUV300 subcompact SUV is on the cards in the next two years, and it is also working on an electric KUV100 micro-SUV that should arrive next year. Tata promises the same on the production version of its H2X concept, but more immediate is the forthcoming Altroz hatchback, which will also get an electric avatar by 2020.
It’s good that these cars will arrive almost simultaneously with their luxury counterparts—this should give a much needed image boost to EVs. The impact that a car like the Jaguar I-Pace—a great performer, World Car of the Year 2019, and incidentally an EV—can create is enormous. The Audi E-tron—previewed in India in June, with a launch promised this year—will play a similar role. And once Maruti Suzuki and Toyota get into the game, the sky is the limit.
Full charge ahead
These cars will in all likelihood range in price from ₹8-50 lakh eventually, so we are talking about an EV for virtually every price point. Once the sale of electrics starts accounting for a sizeable chunk of the market, one can expect smaller, cheaper EVs (under ₹6 lakh). Range anxiety, or the concern that you will run out of charge, may be your chief worry today—but remember, with the move towards more EVs, the charging stations will come. And hopefully, we will also have an answer to where the electricity to charge these cars will come from, as India hopes to move towards greener, non-coal-based power plants.
As a consumer in the short term, however, you could legitimately worry about how to charge these cars. You could splurge and get the fast chargers, but it is unlikely too many brands will offer consumers that option. So make peace with using a regular power socket and “slow-charging” your car overnight using a portable charger cable that fits into a usual 3-pin, 15-amp socket. Usually, a 6- to 8-hour charge is enough to go from an empty battery to full juice.
Of course, if you have access to a fast charger at your workplace or elsewhere, the time taken will be about 40-60 minutes for an 80% charge, depending on the battery size. And now that those are likely to be made available by various brands, finding one near you in the metros should be as feasible as, say, finding a CNG station (keep in mind though that it won’t be as easy as tanking up on petrol. Even filling up on CNG still translates to waiting in long, tiresome queues).
It’s only a matter of time before EVs create a paradigm shift in the way we build our cities, our public spaces and our homes, and, as a smart consumer, you could do a few things to be ahead of the curve. When buying or constructing a new house, take plugs in parking spots into account. Speak to your builder/contractor, because whether it’s for a scooter or a car, chances are someone in your family will be plugging in an EV within the next five years.
Yes, that is how close this revolution is, provided some things fall into place. Policy tops that list, with the promise of products a close second. Throw in infrastructure and the fact that public transport (including ride-hailing fleets) is also likely to migrate in large numbers towards e-mobility—and acceptance will likely be quicker than cynics assume.
The two-wheeler industry is also moving towards electrics, with plans announced by Hero MotoCorp. (which has also invested in electric scooter brand Ather, see page 10), an electric bike already unveiled by Revolt Motors, and many more in the pipeline. In fact, government policy think tank NITI Aayog recommends that sub 150 cc two-wheelers should be 100% electric by 2025.
While the industry has scoffed at this suggestion and termed it impractical, it too cannot deny that a majority of its future investments will be in the battery/electric space. Costs will only start coming down when batteries are made in India and true economies of scale kick in, or if the government does decide to aggressively incentivize anything electric.
For now, Hyundai’s 500 units of the Kona Electric in the first year will be a drop in the ocean of India’s four million units car market. It is only when these vehicles begin selling in thousands of units that things will change. And that is also when we can expect Mr Musk’s attention. The Model 3, Model S, Model X and future Teslas, big and small—as well as the much talked about supercharger network.
We will get there, sooner rather than later.