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Greening Indian auto industry
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Greening Indian auto industry

July 1, 2024 11:59 am

Porsche is the bastion of cars for petrolheads, and when they start making electric cars, it means that the world is changing. Electric vehicles are a lifestyle change, and the current focus is to improve people’s lives. European standards CAFE-3 and CAFE-4 are seeping into the Indian manufacturing system to curb pollution and carbon emissions.

The onus for a better world for our future generation is on us. The recognition of this aspect has seeped into the industrialists, developers and consumers in the past decade. Sustainability and green are part of every discussion, from government budgets to business seminars to school debates. Sustainable solutions are not in demand; they are in demand.

Manufacturing is leading the GDP with the transport industry in charge; thus, it has to be a beacon of sustainability. With greening an imperative condition, the Indian automotive industry is transforming with the government subsidy scheme under the National Electric Mobility Mission Plan (NEMMP). Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme brings prospects of sustainable transportation. The transition to EV and hybrid will solve the major problem of pollution that India struggles with.

Increasing consumer awareness to drive the demand for sustainable transportation options is vital, particularly for EVs in India. As the general public becomes more knowledgeable about the adverse environmental impacts of traditional internal combustion engine vehicles, there is a growing shift towards cleaner alternatives. The transportation sector in India, a significant contributor to pollution, especially in cities like New Delhi where two- and three-wheelers account for 50% of surface PM 2.5 levels, shows the urgent need for change. 

Moreover, with transportation comprising about one-fifth of India’s total energy use, the shift towards EVs is environmentally crucial and also aligns with the country’s energy consumption goals. The young and upwardly mobile population is increasingly adopting new technologies, further propelled by their improving socioeconomic status, which positions them better to afford EVs.

Challenges

The electric vehicle (EV) industry in India faces several anticipated challenges. Infrastructure remains a key concern, encompassing the need for a robust charging network to alleviate range anxiety among consumers. Additionally, the high upfront cost of EVs poses a challenge to widespread adoption despite decreasing battery prices. Regulatory uncertainties, like fluctuating incentives and policy frameworks, can impact investor confidence and hinder long-term planning for manufacturers. Ayush Lohia, CEO of Lohia Auto, shares that technological advancements and R&D efforts are crucial to addressing concerns about battery performance, charging times, and overall vehicle efficiency. Furthermore, consumer awareness and education initiatives are vital to dispel myths and misconceptions surrounding EVs. Collaboration among industry stakeholders, government bodies, and financial institutions is essential to surmount these challenges and foster sustainable growth in India’s EV sector.

CAFE norms

The Indian government has set the agenda to convert 30% of the fleet to be electrically powered. This transition is not easy to achieve, and the government is well aware of it. Thus, multiple policies and incentives are provided to promote EVs. With the incentives in lakhs, the buyers are faced with strict personal choices to navigate towards cheaper options. Sustainability is not everyone’s concern, but money is.

The government is thus taking care of the sustainability aspect and dealing it directly with the manufacturers rather than coaxing the buyers. The country’s energy efficiency and conservation agency has proposed to align the fuel efficiency standards of automakers with Europe’s new vehicle carbon emission norms. Indian automakers are expected to lower their carbon emissions in three years under the Corporate Average Fuel Economy (CAFE). CAFE requires automakers to calculate their carbon emissions for the entire fleet of vehicles. The norms mandate manufacturers to make fuel-efficient vehicles. Fuel efficiency and CO2 emissions of a car are closely linked. The CO2 output is directly proportional to the fuel consumed. The initial CAFE standards aimed to promote automotive innovation to reduce fuel consumption. Now, the goals also include creating domestic jobs and mitigating global warming.

As reported by The Economic Times, CAFE 3 norms will come into effect in April 2027. BEE has proposed 91.7 gm CO2/km and 70 gm CO2/km in CAFE 3 and 4 at WLTP (World Harmonised Light Vehicles Testing Procedure).

Adopting CAFÉ norms

Ashok Vashist, Founder and CEO of Wise Travel India Private Limited, shares that the new CAFE Phase 3 norms in India will drive innovation in the automotive industry toward sustainability, promote global harmonisation of vehicle testing standards, and create a cultural shift towards greener transportation practices. These changes will improve fuel efficiency, reduce emissions, and align with international standards.

CAFE norms require automakers to meet certain fleet-wide fuel efficiency targets. To meet the stringent CAFE 3 targets, automakers will invest in advanced technologies, switching to pure electric, plug-in hybrid vehicles. This could encourage battery technology and charging infrastructure innovations, benefiting the entire EV ecosystem. The widespread adoption of EVs, boosted by the new norms, will drive the development of a robust charging infrastructure network across the country. Aditya Singh Ratnu, Co-Founder and CEO of ZEVO, adds, “The increased widespread production of EVs could make electric vehicles more affordable for Indian consumers, and this, combined with existing government incentives and subsidies for EVs, could accelerate their mainstream adoption.”

Balancing emissions and affordability

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Many automakers are accelerating their electrification plans and developing affordable electric vehicles (EVs) for the Indian market. EVs help meet emission targets while offering long-term cost savings for consumers through lower operating costs. Government incentives and subsidies for EVs are further aiding affordability. Automakers are increasingly adopting hybrid powertrains, combining traditional engines with electric motors and batteries. This approach offers improved fuel efficiency and lower emissions from conventional vehicles while keeping them affordable.

Indian automaking behemoths have yet to accept the CAFE proposal due to the lack of clarity about how to lead it in the Indian context. The government has to present the rules to OEMs in consultation with the goal of India to reduce carbon emissions by 50 percent by 2030. The rules will ease the company’s personal targets to meet their ESG requirements and fulfil sustainability requirements, which is now a mandate for every business.

Impact in future

The proposed new CAFE emission norms set tough targets for automakers – limiting vehicles to just 91.7 grams of CO2 per km under CAFE III and an even stricter 70 grams under CAFE IV. Ravi Machani – Co-Founder of Tresa Motors, says, “Though challenging, it will push us to invest in greener technologies for more sustainable mobility options, despite issues like lack of infrastructure and potentially higher costs. However, we must also understand that this regulatory push is necessary for an eco-friendly future. Meeting the stringent Corporate Average Fuel Efficiency CAFE 3 and CAFE 4 norms poses significant challenges for automakers. These norms require a 30% reduction in carbon emissions over the next three years, pushing manufacturers to enhance fuel efficiency. We have to drastically increase the efficiency of our EVs while ensuring they remain affordable for buyers. Strategies for compliance include optimising technology, lightweight materials, and innovative designs to strike the right balance between emission reduction and affordability.”

Manufacturing vehicles as per the CAFÉ norms will put Indian manufacturers at par with international requirements and directly impact the import of Indian-manufactured vehicles. The demand is also proportional to the growth of tons of industries associated with the automotive sector.

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Quotes-

Ashok Vashist, Founder & CEO, Wise Travel India Private Limited

“Consumer awareness and industry-government collaborations will change India’s automotive landscape. Leveraging sustainable practices and policies like PLIs will drive innovation, enhance manufacturing, and foster a greener and competitive future.”

Ravi Machani, Co-Founder Investor, Tresa Motors

“Meeting the stringent CAFE norms poses significant challenges for automakers. However, investing in greener technologies will only optimise EVs’ efficiency and prompt the need to innovate new designs to balance emission reduction with affordability. This regulatory push by the government is essential for achieving an eco-friendly future.”

Aditya Singh Ratnu, Co-Founder and CEO of ZEVO

“Consumer awareness is a powerful catalyst in driving the demand for sustainable transportation options. As automakers strive to meet stringent CAFE 3 norms, they are investing heavily in electric and hybrid technologies, and this will develop a comprehensive EV ecosystem.”

Ayush Lohia, CEO, Lohia Auto

“Make in India and Atma Nirbhar Bharat initiatives are leading the shift towards self-reliance in the automotive industry. The government schemes like PLIs strengthen domestic capabilities and create a robust future for Indian automobile manufacturing.”

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