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Friday, January 22, 2021

India’s air pollution: Elon Musk’s electric cars is future, here’s how in 6 points

Are E-cars from Elon Musk's Tesla making foray into the India market?

India air pollution and Elon Musk, connected? The issue of air pollution in our country needs no further elaboration as generally, all conscious citizens of India know about it. Grey skies, thick smog, irritation in eyes and nose, breathing trouble and several other phrases we are familiar with. Albeit, Delhi can be cited as the air pollution capital of India! And we’re witnessing how deadly can it be coupled with the pathogen attack amid the Covid-19 crisis.

The background

Stubble burning, construction work, car-emitted carbon among several other reasons are primarily responsible for air pollution in India. Our population is 138 billion and counting. In a country with the third-largest road network in the world, the total number of vehicles in fiscal year 2017 stood at 253 million. The number has definitely risen in 2020 and more so because of Covid-19 crisis as people are avoiding public transport.

Quite naturally car-emitted pollution is always increasing across the country. Amid such a scenario, should India resort to electric cars? Is Elon Musk and his Tesla will paint new private transport picture of India? We shall discuss this in today’s article.

India’s air pollution: Elon Musk’s electric cars is future, here’s how in 6 points

1.When will Elon Musk bring Tesla to India?

Tesla CEO Elon Musk are focused on building out factories around the world to complement its Fremont, California, electric vehicle plant where the company started. One question more Tesla watchers have been asking about that global EV revolution is, when will India become a part of it?

The topic of an India entry for Tesla did not come up during Tesla’s earnings call. But recently Musk did Twitter-tease Tesla’s imminent foray into the Indian market. For the past few years, the billionaire auto and energy tycoon’s default Twitter response to Indian fans asking about Tesla’s India launch plans has been “soon” or “next year.” He said that in 2017, repeated it in 2018, then again in 2019 and more recently on Oct 2. Musk’s October tweeting assured Indian supporters the company would be in India “next year for sure” along with a “thanks for waiting” acknowledgment.

2. Elon Musk and his tweets about Tesla in India

Musk’s recent India tweet could hold the key to the automaker’s plans for the second-largest economy in Asia. In the last week of September, Reuters reported that NITI Aayog, a federal think tank chaired by Prime Minister Modi, shared a proposal for offering $4.6 billion in incentives to companies setting up advanced battery manufacturing facilities.

The proposal is currently being reviewed by the Indian government. Following this, Elon Musk tweeted about Tesla’s India foray next year, noted Tokyo-based Atsushi Kawahashisenior director, automotive, at J.D. Power. “If it [the NITI Aayog proposal] goes through, it will attract EV battery makers and manufacturers, including Tesla, who may consider not only selling cars, but also setting up their gigafactories in India,” Kawahashi said.

3. Will Tesla be a hit in India?

India’s potential as a lucrative market is undeniable. For Tesla, India represents a big opportunity. Just how big is difficult to determine. India has a large population and Musk wants to bring Tesla everywhere so people can stop using internal combustion engine vehicles and reduce carbon monoxide emissions.

Dan Ives, managing director at Wedbush Securities, said Musk has had a few false starts in the past, but contends India is and will remain a high priority for Tesla and its CEO in the coming years. “The demand picture has changed and now with Giga 3 build out in China, Berlin and Austin, India is next,” he said, pointing to EV demand and the population growth in India as indicative of a massive market. According to Ives’ projections, in five years India will represent 10% of overall demand for Tesla.

Kawahashi said balancing optimism about Tesla’s India prospects while tempering expectations is key. “While Tesla is likely to have a huge appeal among Indian car buyers, it will be up against formidable challenges,” he said. “The Indian car market is extremely price and value conscious, with about 70% of the sales below Rs. 1 million (about $14,000).”

4. Can India set up local manufacturing?

A great deal of Tesla’s India story could be driven by whether or not the company chooses to set up local manufacturing. With a large production base in neighboring China, and investments in multiple other factories in years to come, Tesla may be tempted to export some of its cars across the border to India to get things off the ground. That’s because it would get Musk tremendous support from the Indian government, which is critical to building a new market.

Moreover, recent military standoff between India and China has also made importing cars from China extremely unlikely. Current import duties and the Indian government’s decision to impose stricter rules for imports from China, India’s biggest source of imports, all but foreclose on that possibility.

Tesla CFO Zachary Kirkhorn said on the earnings call that the company is “prioritizing where in the world we send our production. And there’s different factors to that depending upon when different product changes are made, what the logistics routing looks like, different things going on in different markets. But we are in a position where we need to prioritize.” If the Indian government wanted to force a plant, Tesla would have to decide if they wanted to take the risk of insufficient volume for several years due to limited demand.

5. India’s roads fit for electric cars?

Tesla will have to contend with the usual speed bumps along the road. India’s notoriously lagging infrastructure, poor road conditions and other bottlenecks are not going to improve overnight. In fact, one frequent concern aired by Tesla’s Indian fans is that the battered roads and absence of clear lane markings could compromise Tesla’s autopilot capabilities.

Available EV charging stations and infrastructure in India also have some catching up to do. The Covid-19 economic downturn and struggling Indian economy could be another issue as government stimulus around the world has been influenced by the budget shortfalls and public health priorities. India recently displaced Germany to become the fourth-largest automobile market in the world, behind the U.S., China and Japan.

6.EV rules, transport minister’s take

One of the most tangible signs that support the theory of Tesla’s imminent expansion to India is the slew of favorable EV regulations and policy initiatives the Indian government has rolled out in recent times. Providing a monetary nudge towards EV adoption, the government recently unveiled significant income tax rebates for consumers who buy electric vehicles. In its most recent Goods And Services Tax (GST) Council meet, the government slashed the GST rate on electric vehicles from 12% to 5%, just the tax boost the auto industry needed to fuel EV sales. The Modi administration approved the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II, or FAME India Phase II, program. It has an allocation of Rs.100 billions ($1.4 billion) for a period of three years, ending in 2022, to accelerate EV adoption.

The program proposes setting up 2,700 charging stations across the country ensuring there is at least one charging station in a grid of 3 km by 3 km. Approvals have been granted for setting up 1,050 charging stations by 22 government and public sector entities in 65 cities, according to the NITI Aayog’s annual report. These policy moves suggest the government is supportive and anxious to bring Tesla to India.

Manufacturing is a huge priority for national and state EV policies, in line with the Make in India push. India is already a burgeoning auto manufacturing market that both private and government players want to support as the world shifts to EVs.

Gadkari’s views

Union Minister of Road Transport and Highways & MSME Nitin Gadkari, on Monday said the government is trying to create an ecosystem to accelerate the uptake of electric vehicles in the country.

Addressing a virtual conference ‘9th Edition of Auto Serve 2020‘Electric Mobility Conference 2020-Seizing Opportunities in New Normal, Gadkari said the government is planning to set up at least one electric vehicle charging kiosk at around 69,000 petrol pumps across the country. He said the government has taken a number of steps to promote electric vehicles. For eg, the reduction in GST to 5%, allowing delinking of battery cost of 2-3 wheelers from vehicle cost as it accounts for nearly 30% of the cost etc.

He stressed that India is poised to become a global automobile manufacturing hub in the next 5 years. This, he said, is possible as India’s auto industry has made significant strides in terms of development of different designs and models, robust R&D, huge market, stable government frame-work and bright & young engineering minds. He added India already is the largest manufacturer of two-wheelers in the world.

Some states already working for E-cars

Maharashtra, Karnataka, Delhi are already up for Tesla. The Maharashtra government has invited Elon Musk’s Tesla, the US electric-car maker, to the state. Earlier even the Karnataka state government offered them to set up a plant in the aforementioned state of India.

However, multiple infrastructural and policy gaps are there to be overcome. Also, a large section of people believe, Tesla’s electric cars will widen the gap between the rich and the poor in India, it will create various negative impacts on the tax system and in the country’s socio-economic level as well. Only time will tell which path India chooses. Elon Musk’s electric cars have huge potential not only to curb air pollution in India but also bring multifarious changes.

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