—- When I saw this news today, it suddenly reminded me of the numerous arguments that I had on the subject of electric vehicles (EV) with some of my closest friends over the last one year.
Thought of putting up a quick post so that I don’t miss “bola tha na” opportunity later on 😉
As always, keeping it simple and highlighting some key points (though not widely mentioned), continues to be the main theme of this post.
EVs will happen but time to conversion is a function of varied factors…
1. Supporting Charging infra and technology
It’s convenience of traditional fuel vs time taken to charge.
You can tank full your car in maximum 5 minutes whereas even a puny phone battery takes minimum one hour (with latest technologies) to charge. Plus you add the uncertainty associated with Indian traffic and now think for yourself – how comfortable are you to make a switch ?
Companies can set up fast charging stations but with current charging time (of minimum one hour), one can imagine how long the queues would be.
You can charge overnight, go through most of your days and still left stuck on some days. EVs in their current form need extreme discipline… as a human you know the answer !
To resolve this we need a significant technology breakthrough – the way you have seen in sci-fi movies
- Very-2 fast charge – closer to traditional fuel timings; or
- Self charging batteries – similar to what happens with current 12v batteries; or
- Extensive and quick battery replacement network
In today’s age of hyperloops and personal moon missions, I am more optimistic about the first two. Timing no one knows.2. Set off for govt taxes
One needs to also factor in how much revenues govt makes from fuel taxes. How will that get compensated from EVs?
In FY19, the Centre collected Rs 2.6-lakh crore by levying taxes on the petroleum products. A significant portion of this comes from the fuel used for running of vehicles. Besides, state governments also have revenue interests from fuel products. Even GST couldn’t happen so far because of state revenue implications.
The government to compensate for this loss would need to create a mix between higher upfront costs and the annual recurring taxes (something like property taxes). Again this is something that needs to be worked upon and needs time for wider acceptance by the regulators and the consumers.3. Why are global companies investing in fuel distribution infrastructure in India
Yes, it’s true. I am sure you would have read the following news –
- In August 2019, Reliance Industries and BP announced that they are setting up a joint venture to operate fuel retailing business, targeting expanding number of filling stations to 5,500 in five years and offer home delivery of fuel.
- Government is working on easing the fuel retailing norms – the potential beneficiaries could be foreign energy giants such as Saudi Aramco, Total and Trafigura.
Is this not counter intuitive? Why would these giants invest in a business with a remaining shelf life of 5-10 years?
Lot of trial and errors will keep on happening. The fact remains – the technology needs to stabilise and capital costs need to come down. A lot of this would depend upon what is trending globally.
We as a Country need to provide the right environment to incentivise the research and make a smooth switch.