The changing auto industry: Advent of electric vehicle

Abstract

Until the end of the 2oth century, petrol and diesel were the undisputed fuels for road transport. However, in the past 10 years, the need to find sustainable sources of energy to substitute fossil fuels has been gathering more and more importance. This change in attitude has been necessitated because of the resulting CO2 emissions and the ongoing emphasis given across the globe on reducing the impact of greenhouse gases on global warming. There have also been fears of the depleting fossil fuel reserves. Researchers have been trying to develop bio-fuels as a sustainable alternative to take care of such an eventuality. A decade later, it seems likely that road transport of the future will be fuelled by a matrix of electricity, bio-fuels, synthetic fuels and possibly hydrogen (the last most probably for captive fleets of larger vehicles, such as buses). The most interesting and promising area of stud that has evolved into an industry in the last 15 years is the Electric Vehicle (EV) segment. The study is aimed to understand the future roadmap for EV segment. Through the secondary research, it has been observed that to make a significant difference to CO2 emissions, electric drive systems would have to replace internal combustion engines in a large proportion of ‘family cars‘ and company cars’. This development could not be restricted to low-mileage niche markets. The report deals with the EV car market and its potential in Indian context but most of the research and the data gathered will also apply to small vans while some parts of discussion is relevant to Transit-size vehicles as well. This is done with the understanding that the future car market will have a substantial portion of small vehicles unlike the current market which is full with fuel guzzling SUVs et al. However, we also understand that the long distance Heavy Commercial Vehicles (HCVs) present a different set of challenges and hence, the study has not aimed at coupling them with the analysis of car segment. Present battery technology allows EVs a range of around 100 miles. According to a BCG report on battery technology, over the coming decade, other battery technologies will become available which could increase the range of an EV to several hundred miles. One of the limitations that were identified during the course of the project is the fact that in many residential areas, only a few homes have off-street parking where EVs could be recharged from domestic electricity supplies. Considering the lack of parking spaces in Indian cities, where millions of cars are parked on the street at night and, were they to be replaced by EVs, will necessitate a massive investment in infrastructure with a large behavioural impact. Users of petrol and diesel cars pay for the road infrastructure through road fund tax and fuel duty: EVs are exempt from both. While this is a valuable subsidy to accelerate the introduction of the new technology, by the time significant penetration of EVs has occurred, government will need to find alternative means of funding road infrastructure.