Green Mobility To Drive Demand For Electronics

By Sudeshna Das is director at ComConnect Consulting

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The growth of the Indian electric vehicles market is likely to drive the demand for various electronic components and products.

Continuous regulatory pressures to curtail the environmental ill-effects associated with internal combustion engines, coupled with availability of advanced technologies for electric power trains and storage systems (batteries and the like) have enhanced the demand for electric vehicles (EVs).

Large-scale adoption of EVs is seen as vital in cutting down carbon emissions that drive climate change, and in dealing with urban air pollution—the latter being directly linked to many premature deaths every year. Globally, sales of EVs have witnesses phenomenal growth—287,000 units in the quarter that ended in September 2017, which is 63 per cent higher than the same quarter a year ago, and up by 23 per cent from the second quarter—according to a report by Bloomberg New Energy Finance.

According to ReportBuyer, the global EV market is growing at a compound annual growth rate (CAGR) of 21.27 per cent for the forecast period of 2017-2026. It is driven by growing concerns about the emissions of CO2 and other greenhouse gases, availability of low-cost lithium-ion batteries and various government initiatives that are encouraging the use of EVs.

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International Energy Agency (IEA) forecasts that the number of EVs on the road around the world will hit 125 million by 2030. IEA also mentions that the world’s fleet of EVs grew 54 per cent to about 3.1 million in 2017.

Global electric vehicle sales, year on year (Source: Bloomberg)
Fig. 1: Global electric vehicle sales, year on year (Source: Bloomberg)

The Indian scenario

The Indian automobile industry is one of the largest and fastest growing auto markets (Fig. 2) in the world. It accounts for 7.1 per cent of the country’s gross domestic product (GDP). The market is estimated to grow at around 10 to 15 per cent per annum, to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. The Indian auto sector also accounts for a significant share of the country’s manufacturing facilities, which is expected to increase to 25 per cent by 2022, from 15 per cent in 2017.

A majority of India’s auto industry is driven by vehicles running on fossil fuels. However, with increasing environmental concerns, the country has taken baby steps towards transforming its auto market in to a more sustainable model—one running on renewable fuels.

According to a study by ASSOCHAM, conducted along with global advisory services firm Ernst and Young, the Indian EV industry accounts for less than one per cent of total vehicle sales, and is dominated by two-wheelers (95 per cent).

India’s EV industry is at a nascent stage in comparison with other international markets, including the US, China and Europe. China leads, accounting for nearly 50 per cent share of the global EV market in 2016. Currently, India’s share of the global EV market is an insignificant 0.1 per cent. However, a sea of change is anticipated for India’s EV industry with a major thrust given by the government.

According to a study by Persistence Research, the Indian EV market is expected to expand at a CAGR of 77 per cent in terms of value during the period 2017-2025. Market players are focusing on expanding their presence in India, where the EV industry is growing at a rapid rate. Key players operating in the market are focussing on entering into tie-ups with local vendors, distributors and aftermarket companies to promote their products.

It is expected to create lucrative opportunities for EV manufacturers as well as vehicle component makers in the near future. Owing to this fact, huge investments are already being planned by many key vendors in the Indian market. The passenger car segment is predicted to be the most attractive segment during the forecast period.

Indian automotive market at a glance
Fig. 2: Indian automotive market at a glance

Linchpin policies

On account of pressing environmental concerns, governments across the world are putting regulatory pressures on gasoline vehicle makers, thereby increasing their prices. Governments are also taking initiatives to promote the sale of EVs.

In India too, the government has made a string of announcements that are set to change the landscape of the domestic auto industry. Chief among the announcements are the immediate shift towards Bharat Stage VI emission norms and the planned shift towards only EVs in the longer term. Stricter emission norms, reducing battery prices and increasing consumer awareness are continually driving EV adoption.

The government had initially set a deadline of 2030 by when it planned to remove all fossil fuel-based vehicles from Indian roads. However, a recent announcement has done away with the specific target year; though, it remains aligned with the shift towards EVs, in principle. Individual states have begun to formulate their own EV policies, with Karnataka and Maharashtra leading the pack.

The government of India notified FAME India Scheme [Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India] for implementation with effect from April 1, 2015, with the objective to support hybrid/electric vehicles market development and manufacturing ecosystem. The scheme has four focus areas: technology development, demand creation, pilot projects and charging infrastructure.

Phase I of the scheme was implemented for a period of two years, that is, FY 2015-16 and FY 2016-17 commencing from April 1, 2015. FAME scheme targets the production of ~ 7 million EVs by 2020. Like China, India is also planning to spend largely on subsidising local companies, pushing them to the forefront of electric mobility technologies. FAME India scheme is weighted more towards consumer incentives rather than incentivising local R&D. This makes sense, since the country stands to gain from the technological advances already made globally.

To balance foreign investments and promote domestic industry, the government has also taken several steps, like increasing customs duty on 53 auto components, for complete knock down (CKD) components for cars and commercial vehicles as also on commercial vehicles themselves, providing added protection to the domestic industry and encouraging investors to set up facilities in the country, rather than import goods.

India’s EV sales increased 37.5 per cent to 22,000 units during FY 2015-16, and is poised to rise further on the back of cheaper energy storage costs. To keep up with the growing demand, several automakers have started investing heavily in various segments of the industry during the last few months. For example, Mahindra and Mahindra Ltd has partnered with Uber for deploying its electric sedan e-Verito and its hatchback e2o Plus in New Delhi and Hyderabad. The industry attracted foreign direct investments worth US$ 17.91 billion during the period April 2000 – September 2017, according to the data released by Department of Industrial Policy and Promotion (DIPP).

The Centre also boosted demand for EVs by planning to replace its own fleet of vehicles with EVs. Energy Efficiency Services Ltd (EESL), which is a joint venture of public sector undertakings (PSUs) under the power ministry, has floated a global tender for 10,000 EVs to replace the government’s fleet.

Four-wheeled electric vehicles to cost less than four-wheeled petrol-fuelled vehicles by 2026 (Source: Bloomberg)
Fig. 3: Four-wheeled electric vehicles to cost less than four-wheeled petrol-fuelled vehicles by 2026 (Source: Bloomberg)

Challenges to be addressed

Though the automobile landscape is changing, there are still major barriers to the adoption of EVs. Major roadblocks include high prices, inadequate charging infrastructure, limited range that vehicles can run on a single charge and limited available options.

Price. While EVs have a much lower running cost due to cheaper fuel, upfront cost is significantly higher than their petrol counterparts. However, this is set to change as the cost of one expensive component, the battery, is expected to drop over time. Research from Bloomberg New Energy Finance indicates that battery costs (that currently account for about half the cost of EVs) will fall by about 77 per cent between 2016 and 2030, and EVs will cost less than petrol-fuelled vehicles by 2026 (Fig. 3).

A panel headed by cabinet secretary P.K. Sinha has recommended commercial use of ISRO’s lithium-ion battery technology under Make In India initiative for EVs, Livemint reported. Presently, lithium-ion batteries are not manufactured in India on a commercial basis, and the country has to depend on imports from Japan or China.

Charging infrastructure. For consumers to consider purchasing EVs, charging infrastructure needs to be developed in line with the current infrastructure of fuel pumps. Charging infrastructure typically includes both private and public charging stations. It is a vital part of the entire EV ecosystem. In fact, besides the upfront cost of the vehicle, availability of user-friendly charging infrastructure is the biggest factor that determines the success of a country’s EV plan.

India currently has nearly 56,000 traditional fuel stations compared to just 222 community EV charging stations. Not only is developing the charging infrastructure ecosystem (in both urban and remote areas) imperative for EV adoption, charging stations need to be connected to the relevant electricity source—preferably from renewable sources such as wind or solar. Related policies also need to be revisited to assess whether charging stations will be regarded as electricity providers and, hence, governed by Electricity Act.

EESL has invited a bid for 2000 EV chargers for the second phase of its EV programme, which will see the roll out of 9500 EVs across different states.

Range. This refers to the distance an EV can run without requiring a recharge. EVs available in the market today have a relatively low range and are more suited for just city use. To realise their full potential akin to petrol vehicles, battery capacity needs significant improvements. However, with continued breakthroughs in battery research, EVs with a higher range are increasingly being developed.

While there are EVs in the market with a range as high as 400km to 500km, these largely fall in the high price segment. Cars within the more affordable segment typically average 200km to 300km per charge. Three new products being planned for launch by Mahindra in the next couple of years will probably have ranges of 200km to 350km.

Opportunity for the electronics industry

EVs are being designed with two motors per car (instead of one), which means requirement of many more motor controllers. Each vehicle has a charger and a battery management system onboard, both using power electronics. Moreover, EVs have electronic suspension, which means a bigger market for power electronic devices and components, including power management semiconductors and the like.

Major electronic components of EV systems include microcontrollers (MCUs), analogue gate drivers, power metal-oxide-semiconductor field-effect transistors (MOSFETs) and insulated-gate bipolar transistors (IGBTs), rectifiers, EEPROM memories, protection devices, voltage regulators and integrated circuits (ICs) for power management and battery monitoring systems.

Within the EV market, solutions to optimise power efficiency, ranging from high-power modules, MCUs and power semiconductors to sensors and discrete components are in high demand.

First area is the main inverter, which controls the electric motor to determine driving behaviour and captures kinetic energy released through regenerative braking, feeding recovered energy back to the battery.

Second is the DC-to-DC converter module, which supplies the 12V power system from the high-voltage battery.

Then comes the auxiliary inverter/converter, which supplies power on demand to systems such as air-conditioner, electronic power steering system, oil pump and cooling pump.
Fourth area is the battery management system, which controls the battery state during charging and discharging, to enable the longest possible battery life.

Fifth is the onboard charger unit, which allows the battery to be charged from a standard power outlet.

Complete solutions for EVs like for electric traction and energy recovery, power steering, automated manual transmission, cooling system, pumps and power management are also in demand.

Innovative automotive applications like intelligent power switches for anti-lock brake systems, micro-electromechanical systems (MEMS), inertial sensors for automotive airbags and telematics microprocessors also see demand.

Wheels are another area of interest. Electrical wheels generate electricity, while hybrids may have thermo-electrics on exhaust systems and turbines, generating useful kilowatt-level power. Hence, its management will require electronics.

Power trains for EVs on land, water and air are evolving rapidly. By far, the biggest market will be for vehicles on land, particularly on-road and mainly for cars, followed by buses.

Moving forward

The desire for a longer driving range between charges, faster battery charging times, increasing electronics integration for infotainment, safety and security, and other applications may drive advances in areas beyond just power management, thus increasing the total electronics content in EVs.

For example, suspension will no longer be mechanical but an electrical active suspension generating electricity and using it, in part to manage itself, will deliver a far better ride and fuel economy. This, in turn, will involve more electronic components and devices.

Moreover, car entertainment systems with near-field communications (NFC) technology, vehicle access, in-vehicle networks and features related to secure connected mobility will enhance the electronics content in EVs. Therefore car-to-car communication, car-to-infrastructure communication, remote car management and broadcast reception solutions will be in demand.

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