Whether EVs can break the mainstream barrier in 2023 hinges on how the sector can capitalise on the ground laid in 2022. Here’s our recap of the biggest developments in the space.
The past year has mostly been a smooth ride for electric vehicles, barring minor bumps. Globally EV sales have risen substantially since 2020. In some parts of the world, EVs have begun outselling diesel cars. While the Russian-Ukraine conflict has led to a lithium scarcity and skyrocketing metal prices in the global market, countries like India are looking to carve out opportunities in the new energy landscape that is taking shape. The Indian government is keen on exploring domestic sources of lithium. A lithium refinery in Gujarat is also slated to come up.
On the adoption front, state governments in India provided strong signals. Several state governments released their EV policies to promote EV adoption and manufacturing in the country. However, the Indian market was shaken by multiple fire mishaps and as a result, the government introduced new safety, production and swapping standards in the industry. And lastly, technology is moving fast in the EV world. As Mercedes-Benz introduced its long-range “Vision EQXX” concept car earlier this year which has the longest range of any electric vehicle to date, EV makers around the globe are shifting to more efficient designs and compositions in a bid to dissolve any remaining anxieties regarding the battery performance and suitability.
EVs take centre stage, passenger cars sales grow substantially
An inflection point seems to have been breached in 2020. EV sales and adoption across the world have jumped higher in the years since. To talk figures, about 6.6 million units of passenger EVs were sold in 2021 globally, a 103% growth over sales figures in 2020. Pure battery electric vehicles made up about 70% of these sales, while around 30% came from plug-in hybrids. Not just that, EVs outsold diesel cars in 18 EU countries for the first time ever, with the former selling 176,000 battery cars, as opposed to 160,000 diesel cars. EVs are reported to be becoming so popular in the EU that Norway is expected to achieve 100% EV sales (new units sold) soon. The strong growth of EVs continued in 2022 with sales of plugin vehicles in the first half of 2022 registering a 62% growth over the first half of 2021. At the end of the year, EV sales are expected to reflect a 57% growth year-on-year. The plugin market now boasts of 16% share of the total automobile market, the majority of which are pure EVs.
The growing share of EVs is also impacting oil demand. While oil demand for road transport has continued to grow to 43.7 million barrels per day in 2021, EV adoption now helps avoid 1.5 million barrels of oil per day- about 3.3% of the total demand.
Turning the spotlight home, the Indian market also is seeing rapid growth in passenger electric vehicle sales. It is expected to reach about 50,000 units in the current fiscal year ending in March 2023 from just over 3,000 units three years ago.
Range anxiety in the past? Advances in battery tech inch closer to putting the nagging problem to rest
A big factor in rising EV sales is the growth in consumer confidence, particularly as batteries continue to navigate technological bottlenecks. One such breakthrough last year came as Mercedes-Benz introduced its long-range “Vision EQXX” concept car earlier this year. It has the longest range of any electric vehicle (EV) to date and can go more than 1,000 kilometres on a fully charged battery. Experts said that this Mercedes-Benz concept automobile is unquestionably the largest threat to Elon Musk’s Tesla in the EV market.
Fig 1: Mercedes-Benz long-range “Vision EQXX” that can drive up to 1,000 kms on full charge © Zigwheels
The business claims that the VISION EQXX’s lightweight design idea is complete, encompassing both the materials utilised and cutting-edge bionic structures that give a favourable power-to-weight ratio. The upper portion of the battery in the car is made of a sustainable carbon-fiber-sugar composite material that is also used in Formula 1. The rear floor is made utilising an aluminium casting method. By using an innovative design strategy, it was possible to reduce the weight of the component by up to 20%.
Technology is moving fast in the EV sector, with more companies preparing to use cylindrical battery cells. This new generation of batteries will use more nickel and silicon and less cobalt, leading to a 20% increase in energy density, 30% faster charging and a 30% longer range than previous generations. These batteries, therefore, become more cost-effective due to improvements in energy density.
Russia-Ukraine conflict inflates lithium prices; India looks to capitalise
Global energy insecurity took centre stage last year as a result of Russia’s war on Ukraine. The military conflict between the two countries has caused a meteoric rise in the price of Nickel, which is a key component of EV batteries. Acute global shortage of lithium across the world had prompted its prices to jump by as much as 500% in the past year. As a result, input prices for popular electric vehicles may go up by as much as $1000 in the short term. Russia is a key producer of nickel. Currently, the country is under immense global sanctions which has greatly constricted the supply of the metal. While the ground is fertile for EV producers, the Indian government is keen to allow lithium mining in the country. According to the government’s plan, eight minerals (including lithium) will be removed from the restricted list that private miners are forbidden to mine from. The government is considering changing the law in a bid to boost self-sufficiency with regards to green technologies.
Fig 2: India’s first lithium ion refinery in Gujarat © Indian Express
Meanwhile, India’s first lithium refinery is set to come up in Gujarat. The facility is expected to be set up by 2025-2026, the raw material for the plant, spodumene concentrate, will be imported from a number of countries and will be used to manufacture battery-grade lithium hydroxide for use in the cathodes of li-ion batteries and is likely to create 1,000 direct and indirect jobs.
Several state governments release EV friendly policies
In order to accelerate adoption and manufacturing, several Indian states released their EV policies this year including Chhattisgarh, Haryana, Uttar Pradesh and Himachal Pradesh. Haryana has cleared the provision of subsidies and exemptions up to ₹10 lakh as part of an early bird benefit transfer scheme. For manufacturers, the state is offering 100% reimbursement of stamp duty along with exemptions on electricity duty for 20 years, along with other perks. The Chhattisgarh government, meanwhile, has offered grants to cover 25% of the upfront costs of setting up manufacturing plants and machinery. The government has also promised the allocation of 500-1,000 acres of land to set up an EV manufacturing park. Consumers will be provided exemptions on registration fees and road taxes in a staggered fashion over the next five years.
Moving on to Uttar Pradesh, any electric car purchased and registered in the state will receive a full waiver of registration fees and road tax from the government. The incentive will start to be offered on the day that the state government formally announces the new EV policy. Along with other commercial vehicles, the EV programme would also provide electric bus discounts valued up to ₹ 20 lakh. ₹ 80 crore has been set aside by the state government as a subsidy for the purchase of new electric vehicles. Up to ₹ 1 lakh rupees in incentives would be given to other electric business cars. Himachal is reforming the transportation industry and enacting new EV regulations. The State Transportation Department will shortly introduce a fleet of electric vehicles, and the Transport Director has already been given the required directives.
As an exception, Goa became the first state in India to discontinue electric vehicle subsidies. The Department of New & Renewable Energy, Government of Goa, discontinued the subsidies starting July 31, 2022.
India lays down standards for battery production and swapping, looks into subsidy misuse
The country saw a spate of EV fires, where preliminary investigations revealed that the manufacturers were not using grade-A cells in their vehicles, even though they used them during the vehicles’ certification tests. Therefore, the government of India unveiled standards to ensure that the cells used in EV batteries measure up to a minimum operational quality. The standards will cover e2Ws first and e4Ws at a later stage, and will focus on the specifications for the cells’ connectors and sizes. The govt also released the first draft of the national battery swapping policy with an aim to promote the Battery-as-a-Service (BaaS) industry across India for faster uptake of EVs. The policy aimed to address important regulatory, financial and technical issues surrounding the country’s battery swapping ecosystem to “de-risk” it, but it would only support advanced chemistries that are used in batteries that are equivalent to, or are better than, EV batteries currently supported under FAME-II.
Fig 3: Several efforts have been made in 2022 to make EV batteries safer and ensure their recycling © Mercomm
Not merely for production, but the government also released new Battery Waste Management Rules, to set recycling targets for spent EV batteries. The Ministry of Environment, Forests and Climate Change notified the Battery Waste Management Rules, 2022 under the ambit of India’s Mission for Circular Economy. The rules, for the first time, specifically covered EV batteries. The rules introduce Extended Producer Responsibility for EV battery producers along with explicit functions and targets for various stakeholders.
The FAME-II scheme was also modified in order to eliminate loopholes in the ways that EV original equipment manufacturers availed the benefit of the incentives provided by the scheme, while importing all of their components from China and only assembling them in India. The government put the subsidies of Hero Electric and Okinawa on hold for allegedly claiming incentives for products not made in India.
First published on Carbon Copy on Jan 4, 2022