India needs EV policies to be roadmap-oriented and not ad hoc in nature: Chetan Maini – Times of India

India needs EV policies to be roadmap-oriented and not ad hoc in nature: Chetan Maini - Times of India

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Based on the interaction conducted by Arpit Mahendra.

On June 1, a day after India recorded its highest monthly sales of electric vehicles at over 1.5 lakh units, the government re-jigged the FAME 2 subsidy that was a major factor driving the electric adoption. The reduction in subsidy amount of electric vehicles had an immediate effect on the demand for EVs. Two-wheelers accounting for the majority of EVs sold in the country, electric scooter manufacturers such as Ola Electric, TVS Motor and Ather Energy saw an immediate drop in their sales in the month of June 2023. Vahan Dashboard data for June clearly showed that Ola Electric sales had dropped by 38.62 percent, TVS Motor EV sales had gone down by 61.80 percent and Ather Energy suffered a demand drop of 70.52 percent among other brands who were suffering from a similar loss in EV sales. While no government can offer subsidies indefinitely, the immediate setback has certainly affected the entire industry which is growing at a massive scale.

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In a recent conversation with TOI Auto, Chetan Maini, Sun Mobility Co-Founder and Vice Chairman, shared some key insights on the existing shortcomings of India’s EV policy framework and how it may further slow down EV adoption and be a hurdle to our ambition to go full electric by 2040. While Maini agreed that no government can continue to offer infinite subsidies, He also thinks that what hit the EV industry and demand was the ad hoc, sudden change in policy that the government made. There needs to be a roadmap so that all stakeholders are aware of what is coming forth and that the changes do not catch anyone by surprise. In the short term where more spending is being diverted towards cell imports, research and development, such subsidies helped the manufacturers a lot.
“Another thing very important for the end customer is a level playing field. Today, a customer can walk into a showroom and can buy an electric two-wheeler with a fixed battery or swappable battery, if they buy the vehicle with fixed battery then they get the existing subsidy benefit, however, if they buy an EV with swappable battery then they don’t get any benefit. Then when they travel, there is the 18 percent GST on swappable batteries versus the five percent one-time cost on a fixed battery EV. This means that swappable battery EV owners are charged 18 percent tax on every kilometre they run or kWh that they consume.”

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One of the key factors that our existing government policy does not seem to support, is that in its current nascent stage, the Indian EV industry multiple technologies and multiple e-mobility solutions will co-exist. “The policy framework should not be technology or business model oriented, it needs to be open and not have bias for one e-mobility solution over the other and the customers buying the EVs should benefit. The subsidy does not come to the government or the OEM, it is there to benefit the customer and promote adoption. So I believe that whatever subsidy is there, should be applied on all categories of EVs and secondly the GST tax rate should be uniform across form factors.” Maini added.
On the matter of GST tax rates levied on EVs, the absence of uniformity seems to be anti-consumer again. Under current GST guidelines, an EV with an integrated or fixed battery has a clubbed tax rate of 5 percent. On the other hand if the EV comes with a swappable battery, then the EV is taxed at 5 percent and the battery is taxed at a separate 18 percent GST. That’s not it, even the battery swapping service is taxed at an additional 18 percent GST. Maini told TOI Auto, “This costs the customer a lot more, if the products are clubbed customers don’t pay and if you seperate them then customers pay more, in reality it should not make a difference. All we are saying is that this anomaly that exists in the GST, should be revised and the customer should not have to pay a penalty because of a difference in form factor.” He further added, “I think the government recognises this because last year the finance minister rolled out the policy on battery swapping. It talked a lot about rationalising, common incentives, helping growth of swapping business and I think the intention is there but a hard policy has not yet rolled out.”

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One could argue that the existing PLI scheme and growing number of lithium recyclers in the country could off-set these high costs to customers eventually. Not to mention the newly discovered lithium mines in Jammu and Kashmir and Rajasthan. Maini pointed out localisation of battery cells and lithium recycling as mid-term and long-term solutions, “I think it is absolutely essential, with our aspirations of where we want to be by 2023 and then by 2040. Then there are two parts to this, one is starting cell manufacturing in India and the ongoing PLI scheme has created few large companies to start working on that. But several smaller companies that did not qualify for the PLI, are also making investments towards that objective. I imagine these investments will bear results in an 18 to 24 months time frame. Those who are very aggressive, may even begin cell manufacturing in 12 months but in two years we will definitely see a lot of OEMs making battery cells in India itself.” According to Maini the aluminium and the copper are easy but elements such as lithium will continue to be imported in mid-term. However, the new reserves would give us returns in the long term because they have just been identified, a lot of geological work has to be done, then the processing of the lithium has to happen before it can be used in the cells. “So we started with making the battery packs which are 40 percent of the cost, now we are moving towards making the cells and reducing the imports which are expected to reduce 10-20 percent cost over the next five years as we build our own capabilities.” He added.
Secondly, India currently has a shortage of lithium, unless the newly discovered mines prove to be resourceful, something that will happen in the long term. This is where recycling can help India in achieving lower EV costs in the mid-term. “We are talking about a country where someone comes to your home and takes old paper to recycle because there is still value to be derived from it. Think about the amount of value in a bike battery or from a three-wheeler or car. These battery packs cost anywhere from Rs 50,000 to Rs 3.5 lakhs, so when things have so much value then they are not going to go away because someone will open them up and recycle the components. Recycling will play a very important role for us. It will allow us to recycle the material and create our own ability to reuse materials and also reduce our cost inputs. So when the financial incentives associated with recycling are so high, then the business generally becomes very big and that is the potential of lithium recycling in India.” Maini told TOI Auto.

Chetan Maini, Sun Mobility Co-Founder and Vice Chairman.

Chetan Maini, Sun Mobility Co-Founder and Vice Chairman.

Overall, the founder of India’s first electric car, REVA, believes that few simple but robust changes to India’s EV policy framework can help the country realise its goal of net-zero carbon emissions. Giving a unique perspective to the conversation of EV adoption, Maini added, “I had launched the Reva EV in 2001 and now we are at this point 22 years later. In these two decades, the advancements in electronics, motors and battery technologies have significantly shifted. The second piece is that cost structures have come down fairly, in those days lithium-ion batteries were over USD 1,000 per kWh and today that has come down to USD 100 to 150. The third issue is the cost of oil, when we compare oil prices from 21 years ago to today’s, then it has probably become three times more expensive but at the same time the cost of renewable energy has become 10 times cheaper and less than Rs 3 per unit for electricity. As a country aiming to go all-electric by 2030, this enables our entire service transportation to shift toward e-mobility renewable energy in that time frame. So the energy equation has fundamentally changed, by combination of the cost structures, the government policies and the technology.”
About the business and products at Sun Mobility, Maini said that they have been working with OEMs to develop electric vehicles across segments. The OEM has also built smart battery changing stations and currently operates 300 charging and battery swapping stations in Delhi and 100 stations in Bengaluru. “We are the only company in the world that has a single e-mobility solution across two-wheeler, three-wheeler and small four-wheeler platforms. We have seamlessly integrated with over 10 OEMs with more than 25 products. We use one battery on a bike, two in rickshaws and three in an auto rickshaw or four on a small four-wheeler platform. These are the EVs that make up for 85 percent of electric vehicles in India right now. We created one solution that could handle all these platforms and their requirements. The differentiation is around the technology, the solution and the way we created an open architecture platform that allows us to work really quickly and get OEMs on board.” Maini told TOI Auto. He further claimed that due to Sun Mobility’s open architecture, it is able to onboard OEMs 70 percent faster and at less than a third of the cost that it would usually take other another e-mobility solutions provider.



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