Electric vehicles (EVs) are growing in popularity and certainly in mind space. They are cleaner and more efficient, and even fun (think Tesla). Their growth, however, is still considered just a market problem: The end user should choose on the basis of what it costs to buy and run, or how it performs, etc. Markets matter, but there is also a need for government and policy inputs. EVs, after all, operate within broader energy and transportation ecosystems with their own distortions. Unless we understand Indian-use cases, drivers, limitations and opportunities, we risk ambitious targets that remain aspirational.
Electric Vehicles IN THE INDIAN CONTEXT
Indians are famously value conscious. This is why consumers love diesel cars, despite their higher MRP and pollution relative to petrol counterparts. Even at today’s low oil prices, running a diesel sedan can cost about Rs3.8 per kilometre versus petrol’s Rs5.5. In contrast, CNG costs roughly Rs1.9/km, but it’s not widely available. The cost of EVs depends on electricity price, which varies significantly. At Rs7/kWh (kilowatt hour) of power, they cost only about Rs1.1/km This saves consumers driving 5,000km per year over Rs20,000 annually, and taxis much more as they drive 10-15 times as much.
The catch is the upfront cost. EVs are expensive, primarily because of the battery. A single kWh of electricity is enough to go about 6km, so a 200km “full tank” range requires about 35 kWh of battery. Today’s prices for lithium ion batteries are about $250/kWh globally, which comes to Rs5.7 lakh in battery costs, excluding import duties. Even with an eight-year lifespan and a 12% interest rate, justifying the battery costs on per kilometre savings alone means one would have to drive over 25,000km per year. However, when battery prices fall to $100/kWh, as projected a few years out, EVs can become a game changer.