Favourable policy changes by the central government and several state governments pushing the electric mobility envelope have resulted in electric two- and three-wheelers gaining traction from manufacturers, government and consumers in recent times. These two segments have found favour primarily because of their reduced price factor, low operating cost and ease of charging – considering they travel short distances. Also, due to their form factor, e2Ws can be charged at home and swappable batteries work well, which removes range anxiety.
While the e2W and e3W segments have seen a positive uptick, the passenger cars segment has not seen enough traction because of the high acquisition cost, limited model options, range anxiety and charging issues.
Only 5,905 units of electric cars were sold in FY21, up from the 2,814 units sold in FY20. This growth was largely driven by a single model – Tata Nexon – primarily because of the minimal cost difference between its ICE and electric variants.
Many industry leaders argue that having electric cars as the mainstream transport in India has fundamental issues. Cars as a mobility solution are meant to travel longer distances, and range anxiety thus becomes a critical hindrance. Moreover, adequate charging infrastructure continues to be a dampener.
According to a survey, 60% of cars in India are parked on roads, and in such a scenario, it becomes difficult even for authorities to create a network of charging stations.
Challenges like these have pushed India’s largest carmaker Maruti Suzuki to delay its mass electric car if not shelve it entirely, and Hyundai India to pull the plug on its Kona EV.
In an interview to Mobility Outlook earlier, CV Raman, Sr Executive Director (Engineering), Maruti Suzuki India had said that after rigorous testing and considering the infrastructure development in the country, the company is not confident enough to launch it commercially.
Are hybrids the answer?
Experts indicate that to meet the overall emission goal, reduce CO2 and cut down on import bills, hybridisation of passenger vehicles is the first step towards electrification. As the fuel prices soar to INR 100 per litre, promoting hybrid technology will help in meeting the mid- to long-term goals in reducing fuel consumption, increased mileage and pollution.
Hybrids are 30-40% more fuel-efficient than their non-hybrid counterparts. Apart from this, an industry expert argued that hybrids make a good use case before we have the desired infrastructure for electric vehicles in India.
In an exclusive interaction with Mobility Outlook, Vikram Gulati, Country Head and Senior VP, Toyota Kirloskar Motor spelt out that the ultimate goal remains to become carbon neutral, and hybrid technology will play a critical role in driving faster localisation and bringing overall efficiency.
If the government comes with carbon taxation and penalises vehicles based upon how much fuel they're consuming, then it can definitely drive the industry towards technologies that are cleaner and more fuel-efficient and less harmful to the environment, he said. And those technologies can be hybrid or electric. “A lot of improvement in passenger vehicles can be done, including lightweighting and decreasing the rolling resistance of wheels,” Gulati argued.
Hybrids are a good practical step for moving towards EVs. Vehicle manufacturers, including Honda Cars India, have been discussing with state and central governments about the merits of hybrid technology, which can effectively counter the challenges of range anxiety, limited charging infra and also develop the manufacturing ecosystem for electrified vehicles.
What do Consumers want?
According to a recent Deloitte report, about 24% prefer hybrids as their next vehicle while only 4% of consumers would like to buy a pure electric car in India. However, 68% of Indians still prefer to buy a petrol or diesel car.
The report also revealed that about 26% of Indians said lack of charging infrastructure is the biggest impediment in faster adoption of EVs.
Even in mature markets like Japan and Europe, penetration of hybrids is relatively higher. “These are the most advanced markets, where penetration of hybrids ranges between 30-35%,” added Gulati.
According to India Energy Outlook (IEA) 2021, all electrified technologies – hybrids, plug-in hybrids, pure EVs and even hydrogen – will play a key role in making the country carbon neutral.
Gulati cited the IEA forecast, which says by 2040, energy demand and carbon emission from the auto sector is likely to more than double. Within this oil import dependence is going to increase 90% from 75% to 80%.
The report also states that the energy used on cars is going to quadruple. Car ownership will jump five times adding 170 million new cars by 2040.
Roadblocks and challenges
The biggest roadblock for hybrid technology is the taxation and lack of focussed policy. In India, hybrid cars are highly taxed at 43% compared to non-hybrids and EVs, which acts as a deterrent for carmakers to bring in hybrid electric vehicles into the country.
Limited options also mean there is a lack of awareness about hybrid cars among Indian consumers. The notable few include Toyota Camry, Volvo XC90 and Lexus 500h. Interestingly, there is no mass-market hybrid car in India as of now.
Experts say lower taxation on hybrids and roundup policy on then can help hybrids become an interim alternative till the time we have the right infrastructure for electric vehicles.
These steps, which promote hybrid cars, will also help carmakers to achieve upcoming Corporate Average Fuel Efficiency (CAFE 2) and Real-time Driving Emission Tests (RDE) regulations, as it will lower down the overall weighted average CO2 emission.