Hybrid – EV – Biofuel Transition

By Staff Report September 30, 2024 2:57 pm IST

Industry experts point out that the hybrid vehicle market in India is largely dominated by two major OEMs, compelling its broader acceptance despite the government’s strong push for electric vehicles (EVs). As the landscape evolves, the future appears poised to balance hybrids, EVs, and biofuels for sustainable transportation.

India’s goal for 2030 is to have 30% of new vehicle sales be electric vehicles (EVs). This goal is part of the EV30@30 initiative. It has all the attention of the present government, with the Minister of Road Transport and Highways of India, Nitin Gadkari, announcing the implication of penalties over the period for misusers. In the foreseeable future, more infrastructure is needed to go electric. Even 50% seems far-fetched by 2030 since the onset of work is not at the same pace as the target is. Mr Vinkesh Gulati, Vice President of the Automotive Skills Development Council, India, thinks the future is the co-existence of diesel vehicles, hybrids, and EVs. The customer is the king, and whatever the customer demands, manufacturers will supply it. The ratio of EVs will grow because, this time, the need is not merely from the customer’s end; it is the requirement of the environment.

Biofuels

Today, 88% of oil and 44% of CNG are imported. The government is trying to reduce or cut imports, and biofuels are a viable option in this transition. But, in parallel, biofuel cannot run the entire industry because we are an industry today with almost 5 million vehicle sales per year, and in 10 years, it will be crossing the 7 million mark. Puneet Gupta, Director, Forecasting (India & ASEAN markets), S&P Global Mobility, suggests that we need to be technology agnostic; biofuels give a great opportunity to mix ethanol into gasoline and reduce oil imports. Waste crops can be converted into fuel. India, with 1.4 billion people, has ample waste-generation opportunities. However, the government must adapt to various solutions like hybrid, CNG, or electrification. India’s unique selling point is that what sells in India may sell elsewhere. Biofuels are important for India as they provide income levels for those employed in the sector, and what sells globally may sell outside India. Therefore, India must be adaptable to the changing global market and focus on sustainable practices to ensure the country’s sustainability.

Hybrid domination

Hybrids are receiving numerous duty benefits, with states like UP announcing a 25% duty on the road tax, indicating a growing trend in hybrid vehicle pricing. Maruti and Toyota dominate the hybrid market, holding approximately 50% and 44% of the share, respectively. The aggressive marketing strategy and government incentives are a challenge for diverting consumer preferences.  

“Few state governments are focused on bringing the change, which can have a domino effect with other states following the same, although the central government has stayed neutral. Hybrid growth will further push the timeline of EV adoption. Players like Tata Motors have started getting into CNGs and are looking towards hybrids. OEMs are moving slowly compared to the available technology. Interestingly, the cost of EVs will come down with wider adoption, and the expense of diesel and gas-run vehicles will rise. If the Western world adopts electricity, production will be rampant,” shares Mr Gupta.  

Mr Gulati agrees, citing that hybrids are a game plan pushed by only two manufacturers—Maruti and Toyota. Honda has the technology but is not benefiting from it; Kia and Hyundai have not yet launched them in India, although the plans are on the books. 

Regional push

Nemin Vora, CEO of Odysse Electric, thinks that traditional ICE vehicles, such as two-wheelers, lack hybrid technology, making EVs the only practical solution. However, there is a push for hybrids in four-wheelers due to state governments providing subsidies and making hybrid fuels increasingly popular. Hybrids are promoted as much as electric vehicles. Manufacturers are split between hybrids and EVs, adopting distinct strategies for four-wheelers. Heavy and commercial vehicles are seeing a noticeable shift towards LNG and CNG as an alternative rather than electric. Varied segments in India have an alternative strategy for petrol and diesel vehicles. Hybrid growth is increasing, and if state subsidies are implemented, more people will adopt plug-in hybrids with service at the cost of electric cars.  

A larger charging infrastructure, including CNG or petrol pumps and electric charging stations, could make user adaptation faster and reduce range anxiety. This would eliminate the worry about the availability of chargers and benefit both users and component manufacturers. He further says, “As a user, the choice of vehicles changes. If someone travels more than 100 km/day, the vehicle used will differ from that typically used for inter-city travel. The standardisation will only be accepted if the services are equivalent.”

PM E-drive

The PM E-Drive aligns with previous EMPs, but we all know that subsidies are not lifelong. Subsidies were a stop-gap solution for investing money in infrastructure and ecosystems. The PM E-vehicle scheme is a hybrid solution, requiring manufacturers to invest and build their infrastructure. Mr Vora believes reduction was bound to happen, but it was rather drastic. Since inception, the subsidy cut has come down from 40 to 20%, and now it has been reduced to a 10,000-rupee cap with the EMPs. Although the reductions were phased out, manufacturers knew what was coming. We now have a roadmap as manufacturers and can plan our journey and our entire manufacturing ecosystem in that manner. Mr Gupta says that assistance is coming from the PLI scheme, and thus, the reduction in the new scheme will continue. The entire ecosystem is now benefitting everyone, from customers to manufacturers.  

The subsidies were positioned to reduce two-wheelers and three-wheelers, initially added in frame one. They then shifted to commercial vehicles. The government has strategically removed cars, and two-wheelers are expected to fade out with commercial vehicles’ gradual addition gradually. The government is focused on public transport to address environmental pollution issues, a significant concern. The support they are receiving is commendable, as it will benefit India and the global market. The PLI initiative is a promising step towards addressing these issues.

Foreign investments

The development of electric vehicles primarily began as a start-up culture. Conglomerates worldwide now want to work on green energy; thus, an inflow of funds is expected. Most of the top 500 companies are working to invest, and the investment is focused on organisations working towards greener things. This is the approach towards entire manufacturing. Tata and Mahindra have received investments for their EV front, and following this, they have set up different divisions for EVs.  

Mr Vora reminisces about the significant influx of funds poured into the automotive and EV segment in 2021. Since it was new, many invested in EVs because they wanted to be there. However, since the industry is more mature than it was two years ago, they realise there must be a roadmap for EV players to achieve profitability over the next three to five years. Also, AI is seeing a lot of fund investment. There are issues with the new funds for automotive, except for those players who already have a set market. The existing investors are adding more money, but new investors are being very cautious concerning the OEM side of the automotive EV space. Again, we are seeing investment coming into the mobility side. The micro-mobility segment is growing by leaps and bounds. Quick commerce and fast fashion are growing. The requirement for last-mile delivery and micro-mobility is scaling tremendously; thus, micro-mobility players deploy many vehicles.

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Quote:

Vinkesh Gulati, Vice President, Automotive Skills Development Council, India.

“The future of mobility is electric with rising environmental needs and customer demand. Manufacturers are scaling up production as EVs are expected to become the primary choice for everyone.”

Puneet Gupta, Director, Forecasting (India & ASEAN markets), S&P Global Mobility.

“Biofuels offer a unique opportunity for India to reduce its oil imports and generate wealth from waste. However, they cannot power the entire industry. We must remain technology agnostic, embracing a mix of biofuels, CNG, hybrids, and electrification to meet growing automotive demands.”

Abhinav Gurkhoo, Head, Vertical Market Management, Rittal Pvt Ltd.

“A dependable 24/7 charging network and proper upkeep are necessary for wider EV adoption. Standardisation and cost-cutting innovations like ‘battery on rent’ will make EVs more accessible to consumers.”

Nemin Vora, CEO, Odysse Electric.

“The EV industry has matured, and now investors are looking for profitability rather than just being part of the space. While the focus has shifted towards green fuels and the micro-mobility segment, increasing demand for last-mile delivery drives funding in this area.”