UPDATE: On 7 March, the government officially announced a 15% import subsidy on lithium. The Ken had earlier reported a 5% subsidy rate, as told to us by a senior official in the know of FAME-II policy discussions.
2019 will be the year of the perfect electric storm.
This is the year that India might finally get the chance, in earnest, to ride on the path to electric mobility. After almost a year of policy negotiations between the Prime Minister’s Office and the Department of Heavy Industry (DHI), the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme, or FAME-II, was passed last week. We are at the cusp of a great revolution in electric mobility, claim industry leaders.
Prominent car manufacturers, including Hyundai, Mahindra, Tata, Audi and Nissan have advertised their intentions to launch electric vehicles in 2019. Original Equipment Manufacturers (OEMs) like Tata and Mahindra, who already sell a moderate number of units in the market, hope that favourable import policies and the increased focus on local research and development will boost manufacturing and lower costs.
Auto-adjacent industries in the supply chain, like battery and powertrain—how an EV connects the batteries, motor and transmission system—makers and companies building EV-charging infrastructure, also hope to see a boost in production and sales volumes. The infusion of funds, up to Rs 10,000 crore ($1.4 billion) from Rs 5,500 crore ($780 million) under FAME-I (passed in 2015), is significant.
But this storm could also leave a disaster in its wake. India’s capacity to engineer and produce electric vehicles at the promised scale, is as middling as it is scarce. To develop quality talent for the EV sector, at scale, is no trifling matter because the learning curve for Indian manufacturers, at this point, is perpendicular. “The technology within electric vehicles changes every six months. Auto manufacturers are used to doing 1-2% improvement on internal combustion [IC-engine] units year-on-year. But EV tech has to be understood and built from scratch. It’s very challenging for a workforce that hasn’t been exposed to this tech before because 60% of the electric powertrain is different from an IC-engine,” says Chetan Maini, co-founder and vice-chairman of SUN Mobility, and creator of the first Indian electric car, REVA, which he sold to Mahindra in 1999.
According to a 2018 report by the temp staffing company Teamlease, the EV industry is staring in the face of a huge talent drought. Engineers who can work and, more importantly, innovate on EVs are thin on the ground. Currently, around 1,000 engineers are employed in the EV divisions of various automakers. By 2021, the projected requirement of such engineers in India will be 15,000.
By 2040, 55% of all new car sales will be electric; and China is projected to lead these global sales.