• Electric vehicles (EVs) are key for the decarbonisation.
• In India, which faces serious air pollution issues, the transition to EVs is critical.
• However, there is a risk in the supply chain risk for India as most of the EV manufacturing parts are concentrated in China and India doesn’t have good relations with China.

Need of electric vehicle

COP27 in Egypt has renewed the world’s focus on climate change due to below reasons:

• No tailpipe emission- EVs do not leave any carbon footprints.
• Low cost of maintenance- EV does not required any engine oil change or any filter change with very little to no maintenance for electronic motor and batteries and batteries of any EV last for years.
• Low operating cost - EVs run at less cost per kilometre than a fuel-powered vehicle. 
• Electric Vehicles are easy to drive and quiet
• Convenience of charging at home

Environmental advantages over traditional vehicles-

• Lower emission compared to petrol or diesel vehicles.
• Fully electric vehicles have zero tailpipe emissions, but even when electricity production is taken into account, petrol or diesel vehicles emit 3 times more carbon dioxide than the average EV. 
• EVs can convert 60% of the electrical energy from the grid to power the wheels, compared to 17%-21% in petrol or diesel cars
• EVs have the silent functioning capability as there is no engine. No engine means no noise.

Key benefits of FAME-II in EVs

• Vehicles from different segments will receive subsidy.
• Citizens can avail eco-friendly public transportation.
• This scheme will allow individuals to reap the benefits of renewable energy sources through charging systems.
• The establishment of charging stations in close proximity further encourages individuals to opt for electric vehicles.

Stages of EVs and their sources

• According to a recent report by the International Energy Association, every part of the EV supply chain is highly concentrated, mostly in China.
• The first stage of the supply chain is the key minerals required for batteries, namely lithium, nickel, cobalt and graphite.
• In graphite, China has an 80 % share of global mining output.
• In cobalt, Democratic Republic of Congo mines two-thirds of the global supply and Chinese companies control a big share of that country’s mining.
• Lithium and nickel are concentrated in Australia and Indonesia.
• Australia mines over 50 %of the world’s lithium and Indonesia mines 35 % of global nickel. 
• The next stage of the supply chain is the processing of ore/mineral concentrate into metal.
• Over 60 % of lithium processing, over 70 % of cobalt processing, 80 % of graphite processing and about 40 % of nickel processing takes place in China.
• The next stage is cell components.
• China produces two-thirds of global anodes and three-fourths of cathodes.
• The other producing countries are South Korea and Japan.
• The next stage is battery cell where China has a 70 % share.
• Final stage in EVs:
• China has a share of around 50 % in global production.
• Europe is second with 25 %.
• US producing only 10 % of vehicles and containing just 7 % of battery production capacity.
• India’s share in the global EV production is very less (not in top 10).

Concerns for India in lagging behind of EVs supply chain

• According to a report by Bloomberg’s New Energy Fund (NEF) 2021:
• China is the biggest spender ($750 billion) on climate/energy transition.
• 90 % of this invest went into renewable energy and electric transport.
• India was in 7^th place with $14 billion invested.
• One of the reasons why India is behind in EV production is that most of the climate investment went to renewable energy projects instead of EV manufacturing.
• 40 % of Chinese and US spending was on EVs while more than 95 % of India’s spending is on renewable energy.
• In India, EVs have not received sufficient investment.
• India has been slow at acquiring overseas mines of critical minerals. 

Initiatives taken by Indian government

• KABIL – (Khanij Bidesh India Ltd.), a Joint venture between three minerals and metals PSUs, is tasked with the job of identifying and acquiring overseas mines.
• Income tax benefits, interest subventions, scrapping incentives.
• PLI (production linked incentive) scheme to enhance manufacturing sector of RVs in india.
• FAME-II (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) scheme- Demand for technology, Pilot Projects, Technology development, Infrastructure for Charging. 

Shortcomings in government initiatives

• Adverse economic constraints in which PSUs operate as compared with their Chinese counterparts
• Red tapism from policy-making to policy implementation.
• Policy design stage: faultiness in design.
• Most of the time there would be a gap in the vision and implementation of the scheme.
• Lack of taking into consideration of ground realities results in partial success.

Looking ahead

• Liberalise exploration policies domestically and Benchmark them with global best practices.
• Invite global investors to find and mine in India. 
• Make new supply alliances similar to Supply Chain Resilience Initiative with other countries to strengthen EV supply chain
• There is a need to invest much more in R&D with public private partnership.
• The start-up ecosystem must be leveraged because it is more likely to be innovative than legacy firms.

At any rate, it is too risky and expensive for India to be dependent on imports across the energy transition board, particularly EVs after our experience in oil. India should focus on developing required ecosystem for EVs manufacture and supply chain and enhance its already existing schemes.