R E S E A R C H E-MOBILITY
ELECTRIC VEHICLES — INDIAN COG IN THE WHEEL Petroleum derived products currently energise almost 95 % of the global transportation needs. This estimate, brought out by the International Energy Agency (IEA), substantiates the magnanimity of fossil fuel dependence that currently drives the mobility industry. Fossil fuels embody resource limitations, which are dictating continued increase in fuel prices, felt about a month ago in India. Coupled with urgencies imposed by climate change mitigation obligations, this dependence predicates a swift and decisive move towards clean, less carbon intensive transportation systems. Researchers at the Indian Institute of Technology, Delhi and the German Development Institute, Bonn, Germany discuss why electromobility is increasingly becoming popular globally.
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AuThORs
ANKUR CHAUdHARy is Researcher, Indian Institute of Technology Delhi, New Delhi, India
SHIKHA bHASIN is Researcher, German Development Institute, Bonn, Germany
Within the ambit of available alternatives, electromobility or e-mobility – powering of transportation systems through electricity – is gaining significant traction worldwide. This is most apparent by way of investments and efforts being undertaken in its R&D, as well as deployment plans being announced by different public and private agencies. Cumulative national targets for electric vehicle [1] sales, for instance, add up to almost 6-7 mn by 2020, 1. As a result, knowledge linkages, innovation and development, and job creation, along with mitigation of climate change, and local air and noise pollution are being deliberated upon as anticipated outputs of leveraging and encouraging the development of this sector. Our assertion in this article relates to India’s strength in the private sector that can help it emerge as a major player in specific niches of the global electromobility market. Before stating our argument on the Indian competitive advantage that can be, as a qualifier it is important to not underestimate the systemic and technological challenges that are impeding this sector globally. While on one hand there are few deployed solutions to technological constraints like a limited driving range due to low power densities in electric batteries, on the other hand, there are systemic challenges of building charging infrastructure, and integrating
COUNTRy
TARGET (yEAR)
AUSTRALIA
20 % (2020)
CHALKING OUT STRATEGIES
To capitalise on this challenging opportunity, automotive firms as well as national governments have chalked out strategic programmes to promote EVs, while also developing competitive advantages vis-à-vis the expectant market for EVs in the future. The Indian government too, in the past few years, has initiated and implemented policies to promote electric mobility. The Alternate Fuel for Surface Transportation Program (AFSTP), implemented by the Ministry of New and Renewable Energy, provided capital subsidies for electric vehicle purchase, while also providing some financial support for research in the field of electromobility. While the AFSTP ran from 2010 to April 2012, the government also announced a National Mission for Electric Mobility in March 2011, constituting a National
TARGET ATTRIbUTES
% of production numbers
1
540,000 (2015)
electric vehicles to the power grid for optimal energy storage and utilisation. Adding another layer of complexity to this equation is the high cost of batteries, which render EVs uncompetitive in comparison to conventional vehicles. Nevertheless, despite these impeding hurdles, it is generally accepted that electromobility will become a significant industrial sector and mobility solution over the next two decades.
stock numbers
2
CHINA
20 % - 30 % (2030) 3
% of marketshare
FRANCE
2,000,000 (2020)
4
stock numbers
GERmANy
1,000,000 (2020)
5
stock numbers
JApAN
20 % (2020)
UK
1,200,000 (2020)
7
stock numbers
US
1,000,000 (2015)
8
stock numbers for PhEV
INdIA
N.A.
% of marketshare
6
-
1 EV deployment targets announced for major automobile markets. [Sources: 1 Mitsubishi Australia; 2 Pike Research; 3 McKinsey & Company; 4,5,6 Electric Vehicle Initiative (EVI); 7 Department of Transport, UK; 8 Presidential Announcement.]
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R E S E A R C H E-MOBILITY
Council for Electric Mobility (NCEM) involving a number of ministries, including the Ministry of Heavy Industries (the nodal ministry for this programme), Ministry of New and Renewable Energy, Ministry of Power, Ministry of Surface Road Transport and Highways and Ministry of Finance to formulate a comprehensive policy programme to provide a boost to electromobility in the country. As the NCEM deliberates its final recommendations (expected to be released by end 2012), there are validating reasons to believe that India would continue to be a major player in the value chain of the automobile sector, as the technological trajectory of electric mobility manoeuvres its way into global markets. The past decade has witnessed a very strong growth in the conventional automobile market in India with an increase in volumes, variety and technological maturity of products across segments. This has been garnered through changes in policy paradigms, which have cumulatively led to India emerging as an important link in the global automobile value chain. For instance, post independence, India followed a protective policy towards its industry to help promote its development. This helped in building the indigenous knowledge base for the Indian automobile industry, which can be seen in the indigenisation of auto components brought on by import substitution[2]. Thereon, deregulation and liberalisation policies (introduced for the automobile sector in the mid-1980s) brought global knowledge to India; and since then there have been marked changes in production numbers and capacity, technology upgrading, firm ‘processes’ and ‘products’. Interestingly, several domestic Indian players like Tata Motors, Mahindra & Mahindra, TVS Motors and Bajaj Auto have been able to leverage this high growth period to build strategic competitive advantages in the market. These players have effectively moved from being importers of foreign technology to becoming adept at product development. This has been charted through an extensive learning phase characterised by inhouse R&D spending, strategic alliances, joint ventures (Tata Motors with Fiat, M&M with Ford and Renault, Bajaj Auto with Kawasaki, and TVS with Suzuki),
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Demands for electric motors, batteries, battery management systems and control systems have thrown open an opportunity for traditional and non-traditional players to invest, build and compete in the EV supply chain
acquisitions and assets-building efforts in foreign markets (Jaguar Land Rover by Tata Motors, Ssangyong by M&M, and KTM by Bajaj Auto) as well as knowledge linkages with research centres, technical institutions, suppliers and smaller firms in foreign markets. These developments, in addition to technology provision advantages, have also improved Indian manufacturers’ reach into global markets. At the same time, the presence and increasing involvement of multinational players like Suzuki, Ford, GM, Toyota, Honda, Hyundai and Yamaha has led to increased competition in the market. Moreover, it has helped build Indian technological competencies in the global component manufacturing value chain through introduction and adaptation of newer technologies. Furthermore, the Indian combination of skilled and semiskilled technological base, a large market of vehicle buyers and component manufacturers, and relatively cheaper production and labour access, has attracted almost all global component suppliers to establish operations in India — Bosch, AVL and Cummins being a few examples. The Indian automotive sector has benefitted from the presence of these global giants. Increased interaction with
them has resulted in improved technological skills and growing confidence of Indian companies. In essence, this has allowed the Indian automotive sector to build substantial technological competencies over the past decade relating to product development. Research-intensive development of vehicles like the Tata Nano and Mahindra Xylo have led to 30-40 patents each for their respective OEMs. At the same time, an increased outsourcing of automotive design to India (from US, EU and other regions) has given birth to a number of firms specialising in automotive designing. Tying these factors together with the cheaper availability of trained engineers in India, one can understand India’s competitive advantage vis-à-vis cheap product development, albeit not yet at par with cutting edge technologies.
CREATING NEW VALUE CHAINS
The growing impetus on e-mobility is gradually leading to a shuffle-up in the traditional automobile manufacturing value chain. For example, component suppliers work very closely with OEMs in conventional car and related product development, and a clear understanding www.autotechreview.com
7000000 5600000 4200000 2800000 1400000 0
2011
2012
2013
2014
National Targets
2015
2016
2017
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2020
production/ Sales reported by OEms
2 Government target and EV/ PhEV production/ sales reported by OEMs [3] (Source: IEA EV/PHEV Roadmap, 2011)
of the value chain upgrades can be attained fairly simply. However, new components required to drive the e-mobility trajectory have thrown open an opportunity for different suppliers to build competence without OEM support. Demands for electric motors, batteries, battery management systems and control systems have thrown open an opportunity for traditional and non-traditional industry actors to invest, build and compete in the still nascent EV supply chain. These efforts are by and large influenced or supported by government agencies looking to promote R&D in this sector, particularly in the US, Japan and the EU. Not only is there a new space for growth for traditional component manufacturers, but also ample opportunities for new entrants and entrepreneurs. For instance, chemical companies like Dow and BASF are investing in battery technologies; electric motor manufacturers are developing better-optimised motors for specific vehicle usage; and completely new companies are successfully mushrooming with their line-up of technologies (in the space of batteries, charging infrastructures, communication technologies, etc.). Amidst all this dynamism on the research and development front, there has hardly been any significant shift in actual deployment, much owing to the reluctance of global OEMs to introduce such vehicles in the market (albeit some exceptions). As a result, lack of production commitments from global OEMs, 2, has resulted in players – investing and developing technologies pertinent to electric vehicles – eagerly seeking partners to execute actual deployment of their technologies as products on the road. autotechreview
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INdIAN E-mObILITy pOTENTIAL
Set against this inter-mingling and emergence of new sector entrants, and repositioning of the older ones, players in the Indian automotive industry have an opportunity to create a unique and successful place in the e-mobility value chain. The emerging Indian vehicle development base and the availability of research opportunities, along with partnerships in technology development and deployment through global supplier networks and domestic integration systems could, and should, be capitalised upon. By optimising on affordable levels of technology complexity and seeking to supply this to a larger segment of more affordable cars, the opportunity lies in creating a product that is price driven, and yet, technologically viable to qualify as an electric vehicle. Is it that hard to imagine a global player like Tata Motors, partnering with researchers in the EU and producing an electric vehicle? It should not be, because in fact, this is a reality that exists today. Tata Motors has been displaying prototypes of EV versions of the Indica, Nano and vehicles like the Pixel and Megapixel in the auto shows since 2009. There are simple answers available to questions like: 1) Is it possible for Tata Motors to massproduce an electric car? – Yes; 2) Would that car be cheaper than the electric cars from the global OEMs? – Quite likely; 3) Would that car be better designed and developed than the Chinese OEMs? – Quite likely. Indian companies are well poised to
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develop electric vehicles capable of attaining the optimal trade-off within the global electric vehicles segment in terms of price and product quality. The new Reva NXR from Mahindra Reva is yet another promising vehicle that possibly draws upon the EV manufacturing expertise of Reva (selling EVs since 2004), and the process competencies of the Mahindra group. If appropriately priced, the Reva NXR could potentially cater to the domestic as well as international markets. Interestingly, in the two-wheeler segment, TVS has already developed a promising hybrid vehicle that utilises a small Li-ion battery to provide a significant efficiency improvement and is planning to launch the vehicle later this year in the Indian market, with a possibility of exports thereafter. This development is particularly relevant for electric two-wheeler proliferation in countries like India, where range anxiety, battery life and performance issues may impede the market for pure EV two-wheelers. But on the other hand, the rising cost of gasoline is imposing a significant operating cost pressure on two-wheeler owners. A hybrid vehicle provides an opportunity to allay range anxiety fears with a small battery used in conjunction with a regular IC engine, with only a small increase in the vehicle cost [4]. This endeavour by TVS is an apt testimony to an Indian firm with strong technology and R&D base, working with international research partners and producing a vehicle suited for the Indian market needs – a phenomenon that could be replicated in the four-wheeler industry.
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R E S E A R C H E-MOBILITY
TATA MEgApixEl: A CASE in poinT The Tata Megapixel provides an apt illustration of Indian automobile firms leveraging a global competence base to develop a vehicle that favourably compares with the best available electric vehicles in the world. Presented at the 82nd Geneva Motor show this year, this range extender electric vehicle (REEV) concept fashions four independent electric motors, one at each wheel. Designed by Tata’s design centres in India, Italy and the UK, the vehicle boasts of an impressive mileage of 100 km/l (under battery only power) and several innovative features like the 2.8 m turning radius and inductive charging for the 13 KWh Li-ion phosphate batteries. More interesting than the vehicle itself is the fact that a number of technologies that lie at the cutting edge of technological development
CONCLUSION
The scale-up required to attain competitiveness in the niche, global market of electric vehicles still depends largely on the unrolling of the Indian policy regime. A strong and systematic R&D incentive system and consumer-side capital subsidies are needed to unfurl such pragmatism within the domestic market. Such a product roll-out would mean incremental gains not only for the Indian industry in terms of growth, knowledge and job creation, but it would also cater to one of the most demanding car markets globally. The automobile sector is very valuable to the Indian growth story. As a direct and indirect employer to over 13 mn people [5], and a contributor of about 5 % of the Indian Gross Domestic Product (GDP) [6], it is no surprise that the government is keen to promote, accelerate and sustain this sector’s momentum. The global trend towards electric vehicles, albeit ambiguous, presents an opportunity for the Indian industry to truly leapfrog. The size of the Indian domestic market itself is reason enough to do so —
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worldwide have been incorporated into the Megapixel. For instance, inductive charging and hub motors, while being researched for a while now, have not yet been introduced in any production vehicle. Understandably, the development of this vehicle was aided by the experiential learning from developing the electric versions of Tata Indica and Nano, as well as partnerships with specialised firms and research centres (for example, the Li-ion phosphate batteries could have been sourced from A123 systems, a US-based battery maker with which the Indian major signed a supply agreement recently).
India is already the second fastest growing car market, and its urban population size is expected to increase to 40 % of the total population by 2025. Most of this urban population would look to private mobility solutions, as the lack of an adequate public transport system makes the former both a norm and a necessity. If we add to this industry-mobility nexus, the sustainability imperative that our current fossil fuel dependence keeps at bay, e-mobility seems to be an opportunity and a solution that needs to be seriously and adequately expedited. With ambiguous policy regimes at play, it is hard to say if Indian companies would go on to become significant players in the global EV market, since such market competitiveness is vulnerable also to domestic protection extended by foreign governments through various tariff and non-tariff barriers. However, despite the speculative nature of the industry globally, Indian industrialists possess competitive advantages of cheaper product development, global market reach and a relatively unsettled global technology paradigm – an almost textbook chance for technology leapfrogging.
The development of such concept vehicles provides an excellent opportunity for firms like Tata Motors to be active players in emerging technologies, forge supplier relationships and be prepared to introduce commercial vehicles, when the market opportunity arises.
REFERENCES
[1] This includes plug-in hybrid electric vehicles (PhEVs) as well as pure electric vehicles or simply EVs. A hybrid electric vehicle supplements the electric power with power from an on-board internal combustion engine, whereas a pure electric vehicle relies solely on the electric power stored in its batteries [2] Lall 1986 and Narayanan, K. (1997): Technology Acquisition, Deregulation and Competitiveness: A study of Indian Automobile Industry. united Nations university, INTECh Institute for New Technologies Discussion Paper series # 9703 [3] Production/sale capacity levels shown here are assumed to remain constant after year of construction. In practice, capacities may rise after plants enter service [4] As against the almost 50% premium that some hybrid four wheelers command over the ICE counterparts. Case in point: Chevrolet Cruze versus Chevrolet Volt. TVs has managed to achieve this through a number of innovations including a much smaller battery size (and consequently a smaller cost increment) and clever hybridisation engineering by using the battery only for regeneration when operating in the ICE mode [5] KPMG, India Automotive study 2007, http:// www.kpmg.de/docs/India_Automotive_study_2007. pdf [6] KPMG, India Automotive study 2007, http:// www.kpmg.de/docs/India_Automotive_study_2007. pdf
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