Could India Indeed Become 1st Fully Electrified Car Country?
Last year, when I introduced* at a big institutional investment conference in India, there was a lot of talk about solar, but little about electrical vehicles. Of course, a large portion of my presentation was about Tesla and electrified cars. The presentation* from Indian Minister of Coal, Power, and Fresh & Renewable Energy, Piyush Goyal, highlighted the very competitive cost of solar power but didn’t indeed touch electrical vehicles.
But something must have been brewing (or inspired there at the conference), because Mr. Goyal announced a month later that India was working on a plan to make every vehicle in the country electrical by two thousand thirty (that excludes planes, of course), and that plan has been reiterated since then.
More recently, in January 2017, when Michael Liebreich asked Mr. Goyal if India would scale back its climate commitments if Donald Trump pulled the US out of the Paris climate agreement, Mr. Goyal basically said*, “What, are you crazy?” The fact is: cleantech has largely become cost competitive, it is only getting more cost competitive, and it offers many other benefits (like clean air and more jobs). Any country that wants clean air, more jobs, a stronger economy, less dependence on foreign sources of energy, and low-cost tens unit and transport should now be working hard to stimulate and quickly grow the cleantech economy. Mr. Goyal gets this, and his January comments got backed up by Prime Minister Narendra Modi recently after Trump made that insane climate budge.
But India faces some significant challenges when it comes to electrical cars. The upfront cost of an “affordable” electrified car is still just the US average for a fresh car (which is mighty expensive compared to the average price of a fresh car in India). India doesn’t have a strong electrified car manufacturing base. India puts up steep barriers to cars imported into the country. Tesla CEO Elon Musk noted a few weeks ago that Tesla’s entry into India was going to be delayed by local production requirements there.
Maybe I’m misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn’t yet exist in India to support that.
Knowing how things go, there were likely some high-level communications after that. And the topic arose again before long. Anand Mahindra, one of the richest and most powerful fellows in India, and Executive Chairman Mahindra Group, tweeted to Elon that it was time to get Tesla to India. Elon agreed with the sentiment and the open arms from one of the country’s largest automakers.
Things seem to have gotten real since then. Yesterday, Elon admitted that Tesla was in discussion with the Indian government about a way around the auto import barriers until a local Tesla factory was built (hint, hint).
In discussions with the government of India requesting improvised ease on import penalties/confinements until a local factory is built
That looks promising.
But how big of a market could India be for Tesla? How quickly could India’s population truly electrify its fleet? Could India genuinely become the very first country to go fully electrical? Could it go electrical by 2030?
There are a few things to consider here, but there’s a lot more to explore in order to reaction these questions.
On the plus side, India is propelling itself into a clean energy (solar and wind energy) future super prompt. It is more or less the best renewable energy market in the world**. And this is despite long fighting with blackouts, brownouts, and large problems with grid connectivity and stability. But the point here is that all of that solar and wind energy could benefit a fine deal from a responsive grid utter of EV batteries that could absorb extra renewable output when needed and perhaps also pull from those EV batteries in times of excellent stress.
Another thing: while the upfront cost of electrified vehicles is still steep by India’s norm, we are on the brink of commercial self-driving vehicles, and electrical vehicles will rule the day there. Elon Musk has noted that Model three electrical cars will all be produced with hardware that is sufficient for fully autonomous travel, and that Tesla is working on a system that will permit drivers of Tesla vehicles to send their cars out as robotaxis when not in use, even potentially creating more revenue for the owners than they spent on the cars. On the one palm, that would make it very economical for anyone who can foot the upfront costs to buy a Tesla Model three or Model Y instead of … well, basically any other car. On the other forearm, those electrified robotaxis will provide cheap, convenient, pliable transport for the riders as well … especially in very populated places (like India).
So, at a quick glance, despite the barrier of upfront costs, electrical cars look like they could be very pragmatic and beneficial solutions for grid stability and, indeed, cheap transportation.
One of the very first high-profile situations I landed in as a cleantech blogger was in two thousand ten when CNBC interviewed me in its London studios for an “Energy Opportunities” series supported by Harvard Business Review and Shell. I ended up talking a lot about how India and other developing countries could leapfrog the dirty energy problems the developed world has spent decades suffering through, because clean energy permitted for an increasingly cheaper, more democratic, and more nimble solution to their growing energy needs. Back then, the uninitiated were very likely rolling their eyes when I looked the other way, but then India ended up plowing utter force into clean, renewable energy — because it was obviously the best solution for the country’s economy, air, and people.
I think we’re at a similar point with electrified vehicles and the developing world. Again, it seems logical on the surface that rich, developed nations would be very first to electrify all the vehicles in their parking garages and driveways (and, frankly, I think any country will indeed be hard-pressed to catch up to Norway and strike it to 100% electrical transport), but there’s a case to be made that betting on developing nations, especially India, is a strong bet. Looking at India’s presently meager electrical vehicle share of the market could be deceiving, and overlooking the strong potential of a national government teaming up with the practice curve of batteries and electrical cars could leave you snickering or rolling your eyes about India’s aim to be the very first fully electrical nation.
I’d keep my cash in my pocket a bit longer before betting on India passing the finish line very first, but the possibility is something we’re going to delve into more deeply in the coming months (and most likely years). Furthermore, reaching the finish line very first isn’t the most significant thing — what’s significant is that India is committed to an EV future, is working to bring it about, and may even usher Tesla into the country under special conditions in order to speed up the rEVolution.
*Here are three CleanTechnica movies of the presentations mentioned above: