Registered with the Registrar of Newspapers for India under R.N.I 53640/91
Vol. XXXII No. 5, June 16-30, 2022
Tamil Nadu has wisely taken the initiative to build on the many foundation blocks. How this is sustained and nurtured will determine if Tamil Nadu and the “Detroit of the East” will emerge a powerhouse in EVs for India and a new world rushing to embrace a cleaner mobility format.
Almost two decades ago, I had been inducted into a Council constituted by the Governor of Vastra Gotaland in Sweden, aimed at planning that province’s economic and industrial development for the next two decades. While its capital city of Goteborg was already home to Volvo, Saab, Ericsson, SKF, Astra Zeneca, Skanska and many more, the province was looking to sustain prosperity for the future. Their admiring gaze drifted to the Boston corridor in Massachusetts and the Bay area of California. The key learning was that to achieve their goals, the building blocks must include (a) an eco-system grounded by solid educational institutions, (b) buttressed by an open social environment conducive to attracting young families, (c) a deep and trained labour pool, (d) infrastructure capacity to allow efficient industry and commerce and (e) the ability to welcome sources of capital.
As most economists would agree, these building blocks have global applicability. So, when Chennai, the ‘Detroit of the East,” plans its own development trajectory in an environment when the auto industry is being transformed by electrification, it is essential to study the alignment of the building blocks to support the desired course. Fortunately, there is much to encourage, even as the road ahead is long and arduous. India’s national priority towards electrified mobility is governed by the need to address our commitments to CO2 reduction. Tamil Nadu can aspire to the pole position as the country embarks on this course.
Even as the first faltering efforts in building EVs in India started with kits, often of sub-standard quality imported from China, our national policy has fortunately dissuaded the settling of a trading mindset. It has encouraged a more wholesome industrial policy starting with knowledge acquisition and skill development. Madras (IIT-M), including its Research Park, has emerged as a reliable and and productive crucible capable of delivering, in equal measure, talent and entrepreneurship. Timely focus on the EV topic and the establishment of the Centre for Battery Engineering and Electric Vehicles has led to a steady flow of successful start-ups. Ather India’s much admired EV scooter start-up, is now expanding its capacity in Hosur as a part of a package of investment amounting to Rs. 650 crore. A more recent alumnus, Grinntech (a Chennai-based start-up), is developing a range of high-technology Lithium-Ion batteries and their own proprietary battery management systems (BMS) and manufacturing capacity with an investment plan of Rs. 100 Crore.
The auto industry depends on scale. Viable economics will only result from a large manufacturing scale, especially when this involves the production of battery cells. India’s national policy on Advanced Chemistry Cell production calls for the creation of 50 GWh of domestic capacity by 2030 – to set this figure in context, it is almost half of all global capacity in 2021. The policy favours manufacturers of contemporary or advanced technology cells, a high degree of localisation and a minimum of 1-5 GWh in each facility. In line with this policy. Lucas TVS. one of Chennai’s long-standing corporate citizens, will embark on the production of a highly patented Semi-SolidTM Lithium-Ion cell design in a new factory in a Chennai suburb. Production is expected to commence in 2023 and grow to an annual output of almost 10 GWh. Speaking on the technological advantages of their cells, T.K. Balaji stressed that “Lucas-TVS believes in investing in next generation technologies.”
Alongside cells and batteries, Tamil Nadu’s impressive auto component sector also adds to the state’s momentum for EVs. Groups like TVS, Amalgamations (including the latter’s Simpson Ltd) and UCAL are developing a range of critical systems, including motors, motor controllers, DC-DC converters, electric coolant pumps, electric vacuum pumps, etc. More recently, Chennai-based BFIH Ltd (a Foxconn Group company) will leverage their manufacturing base to expand into EV components like battery controllers, motor-controllers and display clusters.
While battery cells and battery packs are critical to developing the EV industry in India, any national industry gains significance only when it is capable of integrating large complex products. Furthermore, India’s policy perhaps understandably favours the induction of EVs at either end of the industry – namely for small 2-wheelers and 3-wheelers and large buses. The sector will depend on subsidies during the nascent stages and there is a stronger case for subsidising a “common man’s” transport or public transit authorities.
Ola-Electric has attracted considerable attention investing in a large integrated manufacturing facility in Krishnagiri in western Tamil Nadu. Other less publicised firms are also taking impressive steps to scale up. Ampere originated as a start-up in Coimbatore and, post-acquisition by Greaves Cotton, has significantly ramped up an investment with a new 2-wheeler plant in Ranipet with an annual capacity to reach 1 million units. The cumulative assets in EV 2-wheelers are buoyed by sales data. In February 2022, sales had grown five-fold compared to the previous year.
Beyond 2-wheelers, Greaves Cotton, a powerhouse for small commercial vehicles, also plans to develop and manufacture a range of EV 3-wheelers suited for last-mile delivery applications and for low-cost people transport. Nagesh Basavanahalli, Vice-Chairman of Greaves Cotton, observed that “Greaves Electric Mobility is proud that more than 70 per cent of the workforce are women. Through our DEEP programme, we are also imparting reskilling training opportunities to the underprivileged, ensuring promising employment opportunities in the future.”
Another prominent corporate citizen of Chennai, the Murugappa Group, will also address the emerging maket for EV 3-wheelers through their arm, Tube Investments, with an initial investment of Rs. 350 crore.
India’s commitment to Co2 reduction goals depends on migrating public transit in cities to electric. Chennai headquartered Ashok Leyland has been active in planning its incorporation of EVs with the establishment of its subsidy, Switch Mobility. With a significant market share among Indian city transit operators, Ashok Leyland has leveraged its UK operations and is developing a range of electric buses employing ultra-modern technology to meet Indian and global demands. Mahesh Babu, CEO of Switch-Mobility India, has confirmed plans to “invest close to 100 million USD in Tamil Nadu on technology development and manufacturing facility.” In addition, picking up from its very successful LCV, the Dost, Switch Mobility will also develop 2-3.5 T electric LCVs, the e-Dost, and e-Bada Dost to allow fleet operators and commerce giants the option of EVs for urban deliveries.
Finally, the benefits of EV technologies cannot be re-alised until they are deployed in personal and transport fleets. After an initial pilot of running two Ashok-Leyland EV buses in Chennai since 2019, the state government has sanctioned Rs. 3,850 crore to the Transport Department, including a loan of Rs. 450 crore offered by the German Development Bank (KfW).
It is also essential that suitable EV charging infrastructure deployment goes hand in hand with the growing sales. Already, standards for EV chargers ideal for the different classes of EVs have been developed through sponsorship by NITI-Aayog. As these standards facilitate common infrastructure across the country, we may anticipate lower costs arising from scale and higher local content. A unique, low-cost smart-phone enabled EV charge-point piloted by NITI-Aayog has demonstrated the possibility of significantly slashing prices to allow affordable charging for 2-wheelers and 3-wheelers at apartments, workplaces, public facilities and even food-and shopping malls. – (Courtesy: Industrial Economist, March-April, 2022.)