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.