Electric Car: Bumpy ride or a smooth sail ahead

“Enhancing the quality of life is the ultimate objective and the driving force behind many of the
critical decisions we take. However, for many decisions, we as a community need to shift from
individualistic mindsets and take responsibility, concern for the environment is one such
decision. It is only then that we would see holistic improvement”

The Automotive industry of India is one of the largest in the world. It is the world's second largest
manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car
and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual
production of more than 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest
exporter of passenger cars, behind Japan, South Korea and Thailand.

As of 2009, India is home to 40 million passenger vehicles and more than 1.5 million cars were sold
in India in 2009 (an increase of 26%), making the country the second fastest growing automobile
market in the world. By 2050, the country is expected to top the world in car volumes with
approximately 611 million vehicles on the nation's roads. A major chunk of India's car
manufacturing industry is based in and around the city of Chennai (also known as "Detroit of
India"), with the Indian city accounting for 60 per cent of the country's automotive exports. Chakan
corridor near Pune is an upcoming vehicular production hub with General Motors, Volkswagen/
Skoda, Mahindra and Mahindra in the process of setting up or already set up facilities.

Rise in economic activity and population has led to a tremendous demand in the transport sector
especially in urban India. By 2020, India's population in cities is expected to grow five-fold to a
staggering 200 million while pollution is expected to grow by seven times. With this tremendous
growth has emerged a very critical issue of keeping air and noise pollution in urban areas under
control.

As a nation of keen minds, the answer lies in innovation, which has always been the force behind
powerful changes in our times. This has been recently proved at the Asian Wall Street Journal
awards. Out of the twelve finalists short-listed for the Asian Innovation Awards five of them were
Indians, recognized for their inventions that improve the quality of life or productivity. These
included an electric walking stick, modified pulley and energy efficient electric vehicles amongst
others.

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The most sustainable invention recognized for applying technology to a strong business model and
commercial potential has been the electric vehicles (EVs). EVs are the long-term solution to India's
urban pollution and planning problem.

The entry of electric vehicles (EVs) in India in the late ’90s introduced the concept of emission-free
and eco-friendly vehicles. With skyrocketing environmental challenges and global warming issues
concerning the use of conventional fuelled cars, electric cars emerged as a savior with more eco-
friendly features and lower maintenance cost. Reva Electric Car Company was the pioneer of EVs
in India.

The Indian market for electric cars is still nascent. Electric cars are expected to account for close to
5 per cent of the Indian car market, or 175,000 cars, by 2017. Auto majors such as Mahindra &
Mahindra, Tata Motors, Maruti Suzuki, Hyundai and Hero Electric are assessing the electric car
market. By 2020, about 20 million cars, or 5 per cent of automobiles, globally are expected to run
on electricity.

India also has the maximum market potential for EVs owing to an established auto component
infrastructure, low manufacturing and R&D costs, mechanical hardware availability, high urban
congestion and the presence of a large domestic market.

In the next couple of years, India’s electric car market is expected to witness increased competition
with companies like Renault-Nissan and Ford launching electric cars. To boost the concept and use
of EVs, the Indian government reduced the excise duty to 4% in the 2010-11 Budget. The industry
could significantly gain from rising exports by 2010 and with appropriate government support,
could transform the landscape of urban India by reducing pollution, improving public health,
creating employment opportunities and impacting society.

In spite of India being a hub for inventions of such technologies, EVs have not gained popularity
owing to lack of adequate and timely support from central and state governments. Although,
government has reduced the custom duty on three of the imported components in battery operated
vehicles to 10%, still the incentives seem too less for the price reduction of such vehicles. Other
initiatives, which need to be taken to make the EVs affordable, include measures like relaxation in
excise duty and VAT uniformity for the key inputs and components and also for the finished

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electric vehicle. In addition, in various countries, electric vehicles receive subsidies so as to promote
the technology and reduce emissions. Similar initiatives should be introduced in India.

Upcoming Electric Cars in India:

The Indian car market is growing rapidly. It has just overtaken Japan and emerged as the largest
small car market in the world. It is slowly becoming a hub for luxury cars as well. Moreover, in
near future the Indian car market will witness a slew of electric car launches. Prominent electric cars
displayed in Delhi Auto Expo, 2010, included:

REVA NXR and NXG : The Reva NXR and NXG are technologically a step ahead of the
customary battery operated REVA electric cars that we have here. General Motors was so
fascinated by their technology that it decided to sign an alliance with the car company to
build an electric version of the Spark.

Chevrolet Spark Electra: The Spark is marketed in India by General Motors through its Chevrolet
brand. Now this beleaguered car company has decided to exhibit the electric variant of the
Chevrolet Spark at the 2010 Delhi Auto Show. The Spark that we have in India presently
will be fitted to an electric motor replacing the petrol engine.

Tata Nano Electric and Hybrid: Tata Motors will be coming out with an electric version
of its most talked-about small car, the Nano, it will hit the market by 2012. A prototype of
the electric version of the Nano was displayed at the Auto Show.

Tata Indica Vista Electric: Tata Motors is also considering in bringing out an electric version of
the Indian Vista hatchback. The car is under development and testing in Norway. The Tata
Indica Vista Electric will be launched in India at the same time as it will be launched in the
markets of Europe.

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Hyundai i10 EV: Hyundai's flagship model i10 now comes in an electric version. In fact, if you
recall, it was showcased at the Frankfurt Motor Show. Hyundai introduced the electric
version of the popular Hyundai i10 at the Delhi Auto Expo. The i10 EV is an all-electric
zero-emission car. The Hyundai i10 EV is said to be unveiled in India by none other than
Hyundai's brand ambassador Shah Rukh Khan.

Bavina Cars India has announced it will build a $60m factory in Tamil Nadu state that will be
capable of producing 25,000 electric cars annually when completed in 2011 –12 the same year it
plans to launch its first vehicle for the subcontinent.

The Chennai-based company said earlier this week that it had received state approval to establish
the plant, which will manufacture Bavina's forthcoming Electro car for the Indian market

Mahindra and Reva have announced a collaboration to form a new company called Mahindra Reva
Electric Vehicle Company that will see Reva's electric power train technology put into Mahindra &
Mahindra vehicles. Mahindra will also take a 55.2-percent equity stake in Reva Electric Car
Company and has so far invested about $10 million in the new company.

Apparently, a lot of Mahindra vehicles – electric three-wheelers like the Bijlee and the Maxximo
mini-truck, and "other M&M vehicles" – could get the electric power train package. As for the NXR
(and the even more far away NXG), the announcement says, "Mahindra REVA will now have
access to Mahindra's vehicle development technology and distribution network, significantly
enhancing its ability to launch a state-of-the-art electric vehicle for global markets."

There are hundreds of advantages of using Electric Vehicles. They doesn’t burn fossil fuels to
generate power so they have zero emission and no pollution. They are virtually maintenance free as
they have no gears, no engine, no belt or chain drive, no problem of starting and many more

The problems which stand as walls to adopting this type of vehicle are many. Majority of these
vehicles are underpowered in performance. Charging of the batteries is inefficient and they are
heavy enough to drag the performance further down. The driving range per charge is low and if you
need to go a few kilometers off your regular track, you need to rethink if you would have enough
charge left to drive back home. The design of the vehicles are so toyish that you can’t have proud of
owning an EV.
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There are some other minor problems also which can be overcome as they become popular. These
problems include less availability of spare parts and good skilled technicians for maintenance
purpose. You need to have a magnifying glass to find the dealers of these vehicles. The price of the
vehicles is at such a high level that you can get a good petrol model vehicle at the same price.

A holistic approach involving the government, public and auto majors is needed to promote Electric
Vehicles in India. Appropriate government policies during the next five years and adequate support
from business houses and institutions, for instance, purchasing a fixed percentage of vehicles for
their fleets and offering subsidies and tax exemptions, will go a long way in promoting the industry
in India.

Finally, people have to become more informed about these technologies. The media must play its
role in educating the public about alternate fuel vehicles and their advantages especially in the wake
of spiraling prices of petroleum products and rising pollution levels caused by fossil fuels.
Furthermore, by 2020 alternate fuel vehicles will be the order of the day.

“People's mindset, therefore, has to change from being individualistic to becoming responsible
about the environment.”

Questions for discussions:

Devise a plan to popularize electric cars in India, how the market will be segmented, which
segments will be targeted, how the electric cars should be positioned, also design the marketing
communication plan covering the content, the media and others for selected segments (in case
market has more than one segment).