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Chinese, Indian EV manufacturers should travel the long and windy road together

2019-01-21

Source: Global Times    Published: 2019-1-20


While implementation-specific details may be missing from India's ambitious electric vehicle (EV) goal for 2030, its market potential still represents an opportunity for Chinese EV players as long as the Indian government's incentive policy is favorable enough.


According to media reports, Anil Srivastava, principal advisor at The National Institution for Transforming India under the Government of India, said recently that the nation welcomes Chinese EV players' investment in the Indian EV market.


In view of the gap between the EV markets of the two countries, the invitation for Chinese participation seems totally justified. China has already become the world's largest producer and seller of new-energy vehicles (NEVs), with its sales of new-energy passenger cars - most of which are EVs - reaching 1.26 million units in 2018. In India, sales of electric cars were estimated to total only 1,200 units and 2,000 units in 2018 and 2017, respectively.


As the two largest developing countries in the world, both China and India place great hope on the development of NEVs in their fight against air pollution. Last year, the Chinese government set the annual sales target of electric and plug-in cars at 7 million units by 2025, with NEVs accounting for 12 percent of passenger car sales by 2020 and 20 percent by 2025. By comparison, India's EV plan seems much more ambitious given what has been achieved to date. According to India's electric mobility vision, EV sales are projected to reach 30 percent of total auto sales in 2030, which will be 25.36 million EVs, Srivastava said at a forum recently.


From a technical point of view, technologies involving EV, especially EV batteries, are not yet mature, but India seems to have identified its NEV direction by developing pure EVs. If the world's EV technology could evolve to become mature and cost low enough for mass manufacturing and usage, then India at least has the technical basis for its 2030 electric mobility goal.


In China, although EVs currently account for the majority of its NEV market, the technical direction of China's NEV sector hasn't been officially determined. Industry experts still believe that it is too early to decide which energy technology should be used for China's NEV development, as pure electric may not necessarily be the best solution. Technically speaking, EVs, generally, cannot travel for a distance exceeding 500 kilometers, and EV batteries usually degrade in terms of charging capacity, over time.


As the world is still awaiting a revolutionary breakthrough for NEV technology, it is hard to tell at the current stage which nation's technology roadmap is more reasonable.


In addition to technical issues, India's 2030 electric mobility target also faces other key challenges. For instance, will its electricity supply grow fast enough to keep up with the growing demand for electricity from EVs? It is an undeniable fact that India's electricity supply has developed rapidly in the past few years and the country has been investing heavily in renewable energy. Nevertheless, it is worth noting that EVs use electricity, which comes from power plants. Although the Indian government has been promoting the use of solar energy or nuclear energy, most of the electricity generated in the country still uses fossil fuels like coal.


Meanwhile, infrastructure is another key precondition. Roads and charging facilities are both essential for India's EV goal, and it takes time to conduct such large scale construction.


In short, India's electric mobility target is indeed ambitious, but due to the lack of implementation details, it is still difficult to see how the grand plan will unfold in the coming years.


Nonetheless, despite uncertainties surrounding India's 2030 goal, its EV market remains attractive, given its huge market potential.


India and China are both countries with more than 1 billion population. Thanks in a large part to its demographic dividend, the Chinese economy has experienced rapid development and a fast consumption upgrade. Likewise, the Indian economy has also seen rapid growth, with its GDP gaining 7 to 8 percent annually. The huge gap between the rich and the poor is a striking feature of the Indian economy, while a small portion of its middle class represents a huge consumer market.


Moreover, at present, the Indian government is reportedly working on a new policy aiming to incentivize investments in EV manufacturing, batteries and smart charging.


In this sense, if the Indian government could offer a favorable incentivized industrial policy, there is still room for cooperation between the EV industries of China and India.


The article was compiled by Global Times reporter Wang Jiamei based on an interview with Liu Zongyi, a senior research fellow of Shanghai Institutes for International Studies, a visiting fellow of the Chongyang Institute for Financial Studies, Renmin University of China, and a distinguished fellow of the China (Kunming) South Asia & Southeast Asia Institute.

Key Words: China   India   manufacturers   Liu Zongyi  

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