Five Hurdles to Clear for India’s Plans for Electric Car Domination

September 1, 2012

It’s encour­ag­ing to see emerg­ing mar­ket­places such as India’s embrac­ing the promise of elec­tric vehi­cles.  Stun­ningly, they’re high on the civic agenda.  It’d be easy to give a pass to such a large and pop­u­lous coun­try if elec­tric vehi­cles weren’t high on its list of ini­tia­tives but they’re press­ing forward.

Here GigaOm’s Katie Fehren­bacher lists her five rea­sons why the Indian gov­ern­ment‘s $4B plan to get 6 mil­lion elec­tric and hybrid vehi­cles on its roads by 2020 faces a tough uphill battle.

The Indian gov­ern­ment has report­edly passed a $4.13 bil­lion plan to boost the pro­duc­tion of elec­tric and hybrid vehi­cles, with a goal to have 6 mil­lion green vehi­cles on its roads by 2020. Reuters reports that 4 to 5 mil­lion of these vehi­cles are expected to be elec­tric and hybrid two-​​wheelers (scoot­ers, com­muter cars, elec­tric bikes).

The procla­ma­tion could pro­vide a new mar­ket for all our elec­tric and hybrid vehicle-​​focused entre­pre­neurs look­ing to find new mar­kets. How­ever, there are at least 5 things I think you should know about this plan:

1). From 0 to 60:

India’s elec­tric car mar­ket is non-​​existent right now. The coun­try has a domes­tic elec­tric car maker Reva, which has strug­gled over the years, but which now has the sup­port of Indian con­glom­er­ate Mahin­dra & Mahin­dra, which bought the com­pany in 2010. Where are these vehi­cles going to come from? Prob­a­bly China, if the Chi­nese elec­tric car mar­ket kicks into gear any­time soon.

2). Lofty goal:

The Indian gov­ern­ment has long made lofty procla­ma­tions like this — Indi­ans call them aspi­ra­tional, not nec­es­sar­ily goals that have to be met on time. The country’s solar power goal is sim­i­larly eye-​​openingly high. In com­par­i­son, China has a sim­i­lar plan to boost elec­tric vehi­cle pro­duc­tion, but is only shoot­ing for 500,000 elec­tric and hybrid cars on its roads by 2015.

3). Totally dif­fer­ent vehi­cle buyer:

The Indian vehi­cle buyer fits a totally dif­fer­ent pro­file than the Amer­i­can, Euro­pean or Japan­ese elec­tric car buyer. The elec­tric car buyer in these devel­oped mar­kets is will­ing to pay a pre­mium for an elec­tric or hybrid car — which are gen­er­ally more expen­sive now than their gas coun­ter­parts — for the oppor­tu­nity to be at the fore­front of tech­nol­ogy and greener vehi­cles. Most Indi­ans are ultra price sen­si­tive and won’t pay extra costs for lux­ury or greener goods. There is a grow­ing Indian pop­u­la­tion that are look­ing to pay a good deal for vehi­cles, but a lot of those buy­ers want west­ern mod­els and brands like SUVs and clas­sic lux­ury cars. These are gen­er­al­iza­tions but you get the picture.

4). Two wheel­ers are a bright spot:

The Indian gov­ern­ment says a lot of these aspi­ra­tional vehi­cles will be two-​​wheelers, which could have more of a chance of sell­ing in India. But that will depend on the emer­gence and pop­u­lar­ity of an elec­tric scooter or motor­cy­cle being pro­duced at a very low cost, as two-​​wheeler buy­ers in India tend to be even more price sen­si­tive. Man­u­fac­tur­ers in China are work­ing on these now, so we’ll see how pop­u­lar these become in India.

5). Power grid problem:

If the recent black­outs are any indi­ca­tor, India has some real prob­lems with its power grid. If the coun­try adds mil­lions of vehi­cles plug­ging into the power grid, that’s going to add an even greater strain on it. If the Indian gov­ern­ment is seri­ous about plug­ging in vehi­cles to its grid, it needs to invest in the grid simul­ta­ne­ously, as well.