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Auto Industry on Sustainable Path

Auto Industry on Sustainable Path

Government of India has envisioned a path towards building green India with industries across all segments adopting measures to reduce carbon-di-oxide (CO2) emissions, auto industry is seen taking efforts in terms of its new product development, efficient motors. It is even taking efforts to make manufacturing and supply chain greener. In this article, Pushkar Oak takes a close look at some sustainable initiatives in Indian automotive industry and plans for sustainable future.

A clear roadmap with stringent timelines and a definite plan for environmental-friendly cars, along with OEMs, was a good start that led India on the path of making mobility greener with electric vehicles and other green variants with FAME programme. Many in the Indian automotive industry have recalibrated their sustainability strategy. With stricter emission norms, lack of infrastructure such as charging stations and cleaner fuels, and the uncertainty of mainstream consumer demand for electric and hybrid vehicles, create several challenges for the Indian industry, as it identifies its environment impact strategy in the face of continued pressure to make a change.

Current market

In the last decade the regulatory developments, including the ban on the sale of BS-III compliant vehicles, which has now come to ban on sale of BS-IV vehicle with new BS-VI emission standards as on April 2020. These have compelled the automotive industry to shift its focus on other alternative options like hydrogen, electric and hybrids have paved way for overcoming challenges and to build trust among the consumers.

The government has pushed electric vehicles (EVs) to mainstream in just over a decade. Against this constantly shifting backdrop, an ecosystem of interconnected partners, it is crucial for the auto industry to curb its impact on the environment. Slowly and gradually auto component suppliers are considering electric vehicles as their market. As of now 2-wheelers and 3-wheelers have found success. In the last two years, the cost of ownership of an EV has gone down considerably. This also breaks anxiety on the consumer’s side as the prebuilt notions are tackled with ‘experience centers’ which is a test-drive arena.

As per the Amitabh Kant, CEO, NITI Aayog, the government has plans to build cell manufacturing factories in PPP model. These factories will manufacture fuel cells for EVs. But before moving to that the government is concerned with imports of Lithium from China. As India lacks Lithium reserves, government is working with OEMs and its agencies like DRDO to come up with innovative element that can replace Lithium use. This will do away with India’s dependency on the Chinese Lithium imports.

This ecosystem will represent a new value chain with OEMs, the government, suppliers, service providers, vehicle users, mobility providers and financial services playing key roles. Such an ecosystem will
also foster innovation in technology,
and the business and operating models for a more sustainable future of the
auto industry.

Ecosystem Partnerships

The NITI Aayog and Union Ministry of Heavy Industries’ ambitious plan for all-electric cars and public transport by 2030 makes the role of the government even more crucial in building an enabling ecosystem.

The government’s policies and infrastructure investments will bolster OEM confidence to invest in environment-friendly technology. The friendly trade policies for EFC components/ technologies will also go a long way in achieving the dream of going all-electric by 2030. Temporary tax/ duties relaxation for manufacturing plants to be set up in India will
also go hand-in-hand with the ‘Make in India’ initiative.

Apart from creating a stable and supportive regulatory environment,
the government will also need to
address several other hurdles such as the paucity of talent, the slow pace of infrastructure development and the need for incubating R&D and promoting an innovation culture.

Building support

A clear roadmap with stringent timelines and the setting up council for environmental-friendly cars, along with OEMs, could be a good place to start. Co-development of environmental-friendly technology with OEMs will help accelerate innovation and prepare India to be technology ready by 2030. The government can also look at setting up specialised institutions and implementing skill development initiatives to bridge the talent and manpower gaps.

Fuel refineries must be upgraded to produce superior fuel as per the emission norms. The supply chain competitiveness needed an enhancement to ensure the superior fuel is available across India. Fuel pumps, in turn, will need to be upgraded, too. The government must also plan for building the infrastructure for charging stations, perhaps as part of its ‘Smart City’ push.

Innovation will be the key driver towards making India a pioneer in environment-friendly technology for cars. As huge investments will be required to develop in-house capability of developing hybrid and battery technology, OEMs are looking towards joint ventures with equipment suppliers and manufacturers.

Needs overhaul

In order to achieve sustainable production, the auto industry in India have taken some fruitful initiatives in the last five years. Be it in the form of reusing water, solar roofs and even some operations or some plants running on the renewable energy agreements. The auto industry OEMs have collaborated with both upstream and downstream auto component companies to create green technologies through open innovation platforms. Cross sector partnerships will also be essential. For example, OEMs could collaborate with alternative energy companies to set up charging stations for electric vehicles. Almost every major automaker has launched an EV in the market, while vehicles that run on alternative fuel technologies like hydrogen and biomass energies is an area yet to be explored by the automakers. This is mostly due to the government push towards EV on a larger scale with policy, finance and subsidies and tax reforms.

Vinit Bansal, Founder and MD, EV Motors, believes, “Currently, it is the EVs that have received government’s attentions which is great. With host of initiatives with FAME I and now with FAME II, we see that many EV manufacturers have come forward. All top-notch automakers have already entered the market with many collaborating with smaller innovators across the nation. Though, small and relatively new companies which were into component manufacturing are foraying into the world of EV which is a positive sign.”

“We also see that apart from
EVs there is lesser focus on the other mobility options, one of them is hydrogen powered fuel. Hydrogen powered and liquid nitrogen-powered technologies have already been launched cross the globe and are yet to be well-explored by India. Indian industry may see slow but gradual focus on technologies that will increase efficiency of LPG and CNG-powered engines, development on newer fuel technology and exploring more alternatives
will be key in the years to come,” believes Bansal.

Speaking about the effect of EV push, he observed, “We may not see a big change in reducing the emissions even after EVs are rampant on the Indian roads but we will have to upgrade our power generations with renewable sources upto 40 per cent which will be of help to bring down emissions in a considerable way.”

Anil Kumar MR, MD & Regional President-Indian operations, SEG Automotive, points out, “The move towards sustainability is lauded by all industries. The intentions are right but the push is not. The EV push by government will burden government power distribution and private electricity distributors. Indian government, if had given more focus on the development alternative fuel technologies or vehicles driven by alternative fuels like gas, hydrogen or biomass etc. These initiatives would have worked better in the long term.”

“Government believes that EV will bring in clean fuel but it will demand more electricity. With more electricity there is no room for sustainability as 80 per cent of India’s electricity needs are sufficed by coal-based power generation plants while just 20 per cent comes from the renewable source,” Kumar adds.

The government’s solar energy push can also be leveraged in enabling the development of charging infrastructure. Recently, ISRO demonstrated a solar hybrid electric car, which used solar energy to charge the lithium-ion battery on the go.

The existing dealer workshops
will not only have to invest in digital technology and infrastructure, but
also upgrade their existing manpower with the technical skills to service cars of the future.

Market Positioning

The availability of the green automotive in India is expected to increase soon in next three years. The ecosystem is active and marketing efforts will play a huge role in creating consumer demand towards environment-friendly cars. The absence of a mass demand for cleaner cars offers a clear opportunity to invest early on and build a position as future-ready car manufacturers – primed and top of mind for consumers when the opportunity makes its way.

The primary positioning is being based in the connected-car. This would be a sustainable model as it allows user to gain control over the car’s performance. It would be easy to use the data gathered from connected cars and apply advanced analytics to identify usage trends that feed into a longer-term EV strategy.

Take for example, a service that provides traffic-related information – allowing drivers to optimising driving time and routes, helping increase fuel efficiency – Smart Cars like these will have a strong appeal for the new generation, and make a better sell than just electric vehicles.

OEMs will need to create new value propositions for consumers. As in the West, car companies here too may have to reconsider the customer value proposition in terms of access to mobility rather than vehicle ownership.

As cities get congested and people get used to the convenience of the Uber and Ola cab services, OEMs are looking at ‘pay-as-you-go’ or leasing/car sharing services. Tighter regulations and the urgency to solve the air pollution crisis are making it necessary for the auto industry, the government, startups, telecommunication service providers, and a host of other stakeholder to come together as an innovative ecosystem with new technologies and new ways to do business.

Involvement from all partners will drive the future. OEMs must seize this opportunity to build the right innovation architecture to help them compete in a crowded market, while also effectively meeting regulations.

Sustainable initiatives

Sustainability across the whole supply chain in the auto sector will be significant to bring in the change. Some key contributors can be automation and track-and-trace technology as they will save on the delays in the chain and will also bring in efficiency of the supply chain from raw material to final delivery and will also revolutionise on-the-go alerts and updates like service details, keeping the customers connected with the company all the time.

Apart from these above initiatives the manufacturers are deploying solar roofs, which is a commendable move by the government due to the reduced duty. Solar power will also help to power charging stations. Automakers like Hyundai, Tata, Volkswagen have already expressed their interests for the same. Moving ahead half of the auto cluster belt with some major players in Chakan, Pune and Gurugram, Delhi NCR have deployed Solar Roofs. The capacities of which are very less compared to the requirement. Companies like Schneider Electric, a solutions company for automation and power management products, is working on automation optimisation for automakers with solar roofs. This technology will enable the automakers to effectively utilise and channelise their power usage.

In a nutshell, automakers are investing and are keen to build sustainable technologies but they need to be economically viable and should help auto sector to grow. Many automakers are working on engine efficiency, fuel efficiency, reducing weight, and are installing many other initiatives to manufacture using renewable power.

We see that apart from EVs there is lesser focus on the other
mobility options, one of them is hydrogen powered fuel.
Hydrogen powered and liquid nitrogen-powered technologies
have already been launched. Indian industry may see slow but
gradual focus on technologies that will increase efficiency of
LPG and CNG-powered engines, development on newer fuel
technology and exploring more alternatives will be key in the
years to come,” believes Bansal.

Vinit Bansal, Founder and MD, EV Motors

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