India Electric Vehicles – All about cost.

Its time will come.

• The characteristic of the Indian market that makes it such a poor market for Electrical Vehicles today, will ensure that when the time is right, India will quickly become a completely electric market.
• Data compiled by Bloomberg (see here) shows that while India has 150m drivers, only 8,000 electric vehicles have sold in the last 6 years.
• As it stands today this makes complete sense as:
  • First, Expensive: currently, electrical vehicles in India are really expensive.
  • Hyundai’s Kona sells for $35,000, 17.5x the annual average income.
  • The best-selling petrol vehicle currently sells for $4,000 meaning that the cost to drive one mile with an EV is much greater than for a petrol vehicle.
  • Consequently today there is a large disincentive to go electric in India.
  • Second, Charging: It is hard enough to find a place to charge a smartphone in India let alone an electrical vehicle.
  • This means that before any cost comparison can have any impact, this issue needs to be fixed and I have little doubt that this is going to take a very long time.
  • India claims to have electrified all 600,000 villages in India but a village is considered electrified if 10% of the households in one village have electricity.
  • To me, this looks like window dressing as I conclude that the infrastructure that has been put in place will probably need much more money spend on it before it can carry enough power for 100% of households let alone for charging vehicles.
  • It is worth noting that charging vehicles tends to take place at night when domestic demand is very low meaning that the incremental impact of them on the grid is much lower than one would naturally calculate.
• Despite India’s bold claims about having 100% electrification. Any vehicle driven into the countryside at the moment is likely to have to be towed home or become a very expensive paperweight.
• That being said, India’s price sensitivity is likely to mean that when the time is right, electrical vehicles will take off extremely quickly.
• This is because, all things being equal, electrical vehicles are likely to cost less than half the price of a petrol vehicle to drive one mile.
• This is mainly because an electric vehicle should be able to travel more than twice as many miles as a petrol vehicle before it needs to be replaced as well as having lower maintenance costs due to the fact that they have many fewer moving parts.
• Hence, I forecast that when electrical vehicles begin to sell in India for the same price as petrol vehicles and when they can be driven without fear of having nowhere to charge, then they will take off very rapidly.
• This remains a long-term forecast given the electrical infrastructure issues, but I think one the most interesting from an EV perspective.
• India is also likely to be one of the most challenging from an autonomous vehicle perspective given that its road network is chaotic, to say the least.
• This means that the data set from which computers can understand Indian roads is neither finite nor stable making the deep learning approaches used today unsuitable for Indian autonomous vehicles.
• Both EV and autonomy are going to take a long time to come to fruition, but I think that there will eventually be a great opportunity in India.