Indigenisation of technology key to successful EV transition for auto industry: CEEW

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With a concerted effort to indigenise both electric car powertrain and battery pack assembly, the Indian automotive industry can produce a 5.7% higher value addition under a “30% electric car sales” scenario, according to an independent study by the Council on Energy, Environment and Water (CEEW).

In order to tap into this potential, India must augment capacity in manufacturing electronics and electrical components. This would also enable it to retain its export share, given a global shift towards electric mobility.

The study, supported by the Shakti Sustainable Energy Foundation, assesses the future course of the auto industry by comparing a scenario with 30% electric car sales in 2030 against a business-as-usual scenario with limited EV penetration. It was released by NITI Aayog CEO Amitabh Kant at CEEW’s dialogue ‘Urban Mobility and Electric Vehicle Transition in India’.

Sharing that the initial cost of EVs is likely to be on par with internal combustion engine (ICE) powered vehicles in 3-4 years, Amitabh Kant said: “For India’s auto industry to stay competitive worldwide in the coming decade, we must make India a global centre for manufacturing of electric two-wheelers, three-wheelers, and compact cars. Innovations in battery manufacturing and setting up giga factories in the country will also be crucial.”

Karthik Ganesan, Research Fellow, CEEW, said, “Indigenisation is key to ensuring that the EVs transition generates a higher value add by enabling OEMs to build more cost competitive products. Since India does not have official targets for EV penetration at present, there is a delay in investments and hesitancy in developing full-fledged supply chains. Policy interventions that improve the attractiveness of electric cars vis-a-vis ICE cars, targeting both supply and demand, are urgently needed if EV targets are to be pursued for 2030.”

The CEEW study also finds that importing battery cells for EVs would help drive a more favourable trade balance when compared to importing crude oil for ICE cars sold in 2030. The import burden per ICE car is 4.1 times higher for private vehicles and 5.7 times higher for commercial vehicles than the import burden of an EV over its lifetime, considering oil and cell imports, respectively.

In addition, for India, the in-use CO2 emissions per electric car are 2-16% lower than of an equivalent ICE car over its lifetime. This highlights the climate benefits of an EV transition in India.

Looking at the trinity of jobs, growth, and sustainability, the study estimates that jobs in internal combustion engine (ICE) manufacturing would increase by 7% between 2018 and 2030, even if India were to achieve 30% EV sales during this period. However, this would be 20-25% lower than the number of jobs supported if the industry were to only produce ICE vehicles.

Further, the auto industry would require creating a trained workforce in the country to achieve a successful transition to EVs. Hence, reskilling along with vocational training would be critical to achieving the EV sales target.