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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

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