Component cost for EVs not a big issue, battery could be costly: Baba Kalyani, Bharat Forge
“With new technologies emerging, battery costs are also coming down.”
Are electrical vehicles a costly proposition?
First of all the number of components that you need in an electrical vehicle are significantly lower by scale of 10 than in normal vehicle. I do not see the component costing to be a fairly large issue. The problem is more to do with battery because when you talk about lithium ion, the rare earth metals that are used to make lithium ion whether it is cobalt or lithium, are not found in India and China has created huge capacities to make batteries.
Of course, the cost of batteries is coming down every year if you look at the cost per kilowatt hour. Many universities and research centres around the world are also researching a lot of new battery technologies. There is aluminium air. All kinds of things are happening. And then of course you have this classic solution of hydrogen which the auto industry has been working with for the last 30-40 years.
At the end of the day, that solution combined with something else is what going to prevail. The CEO of Toyota Motors talked about, electrical vehicles, electric hybrid vehicles, hydrogen electric vehicles. Things are going to evolve in that direction and clearly whenever there is a transformational change in an industry as large as the automotive industry, it generates huge opportunities. I would look at it that way.
But there is very interesting point also about the fact that components will massively go down in these EVs. From an industry perspective, how are you looking at the future of the Indian component makers? A lot of them have to drastically evolve to suit these needs of increasing EV demands and lot of them also have the risk of shutting down. As an industry insider, what are the challenges that you would like to address and how is the industry preparing?
We have are at 3.5 million four-wheelers. On a per capita basis, it is nothing. I would very normally assume that by 2030 which is the date everybody is talking about in terms of EVs, the number of four-wheelers will be somewhere in the region of 11-12 million. So it is going to be three or four times of what it is today. It is unlikely that even in 2030, the incremental lot of nine million or eight million four-wheelers are going to be all electric.
So you have the existing 3.5 million. Plus you are going to have a large portion of the new production which is going to be conventional and some 10-20-30% of that might become EVs as far as four-wheelers are concerned.
Now there are specific applications. Inter cities buses, that make short 100-150-200 kilometres trips every day, are classic examples of what should become EVs. Market forces will determine that because of the cost of diesel going up and everything else. It will be market forces and most people also have this sense of getting green. The issue that you are talking about will come mainly in the area of two-wheelers and three-wheelers because that will happen by legislation at some point in time -- maybe it is 2022 or 2025. That is for the government to decide. Beyond that date, you have to make only electric two-wheelers and a new industry will get born. The existing supply chain which is in that business will have to create a new supply chain for the EV business.