Kolkata, India (Getty images)
India faces a wide chasm between Prime Minister Narendra Modi’s campaign to make sure all new vehicles sold in India are electric by 2030 and actual sales numbers.
While India has followed China’s lead to reduce air pollution and oil import dependency in its booming cities, it’s still far away from sales figures that carry any weight. According to International Energy Agency, China registered 336,000 plug-in vehicles last year while India only saw 450 of these new vehicles hit its roads.
One major Indian automaker, Mahindra & Mahindra, wants to change course by committing to invest $600 million in the technology. Electric versions of its current crossover SUVs will be scheduled in the near future. The company plans to eventually boost its EV production to 5,000 units a month.
Mahindra had just lost a bid for a 10,000 EV contract with the government’s Energy Efficiency Services Limited agency to its main Indian competitor, Tata Motors. Mahindra was awarded part of the contract after lowering prices to match Tata’s lowest bid; the company admitted it won’t make any profits off the sales of its eVerito electric sedan to the Indian agency.
Tata was able to win the majority of the contract even though it has yet to manufacture any EVs.
Mahindra has been in the segment for a few years with its e20 and e20 Plus small electric hatchback models, the eVerito electric sedan, the eSupro electric van, and the e-Alfa Mini three-wheeler. Sales have been slight, as reflected in the 450-unit sales total for 2016.
Maruti Suzuki has offered electric models to the Indian market. Same goes for BMW with its i8 plug-in hybrid high-performance car. And Volvo has the XC90 plug-in hybrid. For now, China remains a much more important market for BMW, Volvo, and other global automakers.
General Motors, which plays a significant role in the China market through a joint venture with a local automaker, will pull out of India by the end of this year. The company will also cancel most of a previously planned $1 billion investment to build a new line of low-cost vehicles in India
It would take GM a $500 million change in the second quarter to restructure operations in India, Africa, and Singapore.
Mahindra supports the government’s push for eliminating fossil fuel powered vehicles and EV development for the national market. The company’s subsidiary, Mahindra Electric, will operate as a separate entity supplying components to the Mahindra & Mahindra company, which will manufacture the EVs. The company currently operates a battery manufacturing plant and hopes to set up another larger facility soon.
India has seen a growing new vehicle market, with about 2.5 million petroleum-powered vehicles being sold annually in recent years. The serious challenge lies in making the monetary investments and attracting the engineering and design talent needed to build and market EVs.
Finding uninterrupted electricity supplies to charge the EVs presents another challenge to selling these vehicles to skeptical consumers. The country still sees power outages in fast-growing cities where residents crank air conditioners at full blast.
India’s national government and electric utilities—along with automakers building EVs—face a high hurdle for EV charging stations. The country has a nearly non-existent charging infrastructure and must invest heavily in chargers to sell the technology to consumers, and to stakeholders in key industries.
India is expected to be a growing auto market, where the ratio remains low—only
18 cars per 1,000 citizens compared to nearly 69 in China and 786 for the U.S. That data comes from a study by India policy think-tank NITI Aayog and the Colorado-based Rocky Mountain Institute.
Mahindra and Tata are betting on EVs taking off as consumers begin buying their first vehicles and convert over from two-wheelers to four-wheelers. Higher demand and production will lead to component costs going down and profits up for these automakers.
Tata has participated in trial runs of its electric buses, and is preparing to meet its obligation to the Energy Efficiency Services Limited agency. Tata sees vast opportunities selling electric cars to the government and electric trucks and buses for mass transportation.
Mahindra committed to ramping up EV production nearly tenfold to 5,000 units manufactured per month within the next two to three years.
This article was originally published on Oilprice.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
