The road toward building cost-effective EVs in India | Corrit Electric

The Indian automotive industry is all set to transition into building a green economy. Amidst

the rampantly growing concern over climate change, Electric vehicles have presented

themselves as a solution to numerous environmental problems like poor air quality, carbon

emissions, and the sustainable development of the economy. However, the journey towards

the successful adoption of EVs is not that easy. The most crucial factor that needs to be kept

in mind while strategizing the successful mass adoption of EVs is the cost-efficiency of EVs

in the Indian market. 

The domestic EV manufacturing industry heavily relies on imports of vital supply-chain

components, such as traction motors that house rare-earth permanent magnets. India's aim to

mass-scale shift to EVs by 2030 largely depends on the availability of these permanent

magnets and more such materials. For this revolutionary shift, India would require 12,000

tonnes of permanent magnets for the two-wheeler and four-wheeler segments alone. Though

India has deposits of the rare earth material used to make permanent magnets, due to the lack

of efficient technology, those RREs can't be processed. Thus, India exports these RREs to

Japan and is dependent on China for processed RREs to manufacture EVs in India. In

addition, the cost of the vehicle is a significant deterrent for consumers when it comes to

EVs, according to Data Labs' latest Electric Vehicle Market Outlook Report 2020. In India,

the average cost of an electric car is nearly three times that of comparable petrol or diesel-

powered vehicle. 

 

This problem can be addressed in two ways: by increasing manufacturing scale, hence

lowering the procurement cost of EV components, or incentivizing EV buyers to reduce the

overall cost of ownership. However, these two solutions would require time and proper

implementation to get a successful result. But the major issue that exponentially escalates the

EV cost in India is the high lithium-ion battery cost. As a result, the ecosystem's primary

focus must be on increasing EV battery manufacturing capacity and capability and adopting

models that rely on swapping rather than charging.

The increasing cost of EVs is not just troubling for the consumers but is also a significant

concern for manufacturers. This exponential increase in the EV cost will surely hamper

India's vision of being an EV hub. On the other hand, reduced battery costs can significantly

lower the cost of EVs, increasing their uptake in India's transportation and mobility systems.

Some strategies that can contribute to the cost reduction of EV batteries are:

1. Recover and recycle – E-waste can also be used to extract RREs to get permanent

magnets. The electronic components like computer hard disks etc., have magnets that

can be recycled and used as permanent magnets for electric vehicles. The surplus e-

waste could be used to tackle the scarcity of permanent magnets. India currently

recycles 95 per cent of its e-waste inefficiently. The Indian government should

streamline the process so that REE extraction from e-waste is efficient.

2. Aides and Subsidies – Structured government subsidies can also be a viable solution

for making a cost-effective EV manufacturing infrastructure. The government has

already initiated a lot of subsidies for EV manufacturers and consumers with a heavy

investment of around $100 million in the FAME (Faster Adoption and Manufacturing

of Hybrid and Electric Vehicles in India). However, high import duties on lithium and

permanent magnets essential to manufacturing EVs make the cost of electric vehicles

more expensive than they need to be. To tackle this hike, a more structured and

precise subsidy needs to be framed.

3. Domestic Manufacturing - India possesses the technical expertise required for REE

exploration, mining, and extraction. IREL has built a 10,000-tonne-per-year monazite

processing plant and can produce approximately 5,000 tonnes of RE oxides per year.

Because the technology to process RE metals is unavailable in India, these RE oxides

are currently exported. If India can obtain the technology, it will aid in the domestic

production of permanent magnets. Lithium import makes the batteries more costly,

resulting in expensive electric vehicles. Developing a local EV battery manufacturing

industry will have a far-reaching impact on EV adoption in India.

It's high time for India to expedite the availability of the necessary network infrastructure, as

well as technically superior, domestically manufactured chargers and components, in order to

reduce costs and expand consumer options. The total cost of ownership can be reduced and

brought on par with regular cars with the help of robust infrastructure and government

support, which is the biggest push that electric vehicles can hope for in the price-sensitive

Indian market.

Article authored by Mayur Misra, Director & CEO, Corrit Electric