Time Bomb Ticking
Kindly click here, here and here to access the Christian Aid report titled Counting The Cost 2022: A year of climate breakdown, published in December 2022.
The key findings of the report titled Global EV Outlook 2022: Securing supplies for an electric future, produced by International Energy Agency and others, are as follows (please click here and here to access):
Electric car sales continue to break records, but mineral supply constraints are looming
• In Brazil, India and Indonesia, fewer than 0.5 percent of car sales are electric. However, EV sales doubled in a number of regions in 2021 – including in India – which could pave the way for quicker market uptake by 2030 if supporting investments and policies are in place.
• In India, Tata’s Nexon BEV SUV was the bestselling model – accounting for two-thirds of EV sales – and most other offerings were SUVs as well.
• In India, nearly 3,00,000 electric two/three-wheelers were sold in 2021.
• Ola Electric unit is one of the world’s largest electric two/three-wheeler factory being built in India.
• Zomato, a food delivery service in India, has committed to more than 1,60,000 EVs.
• State-owned Convergence Energy Services Limited aims to procure more than 5 500 electric buses as a part of its Grand Challenge Initiative. The initiative has been launched in five major cities across India, with a goal of expanding to nine cities. The initiative aims to aggregate demand, facilitate procurement and standardise the process across major cities. The tender is planned to be between INR 35 – 55 billion (USD 475 million-USD 744 million), pulling funding from the FAME II scheme, acting as one of the largest tenders of this kind in the world. The date of bus deployment has not been publicised.
• India, in 2021, extended its main EV demand stimulating FAME II policy to 2024. It also increased subsidies for electric two-wheelers and made budgetary commitments for battery swapping policies and the development of EV manufacturing and battery supply capacity.
• The European Union, India and Japan are increasing subsidies for EVs, in some cases as part of post-COVID19 recovery packages.
• India continues to move slowly on EV deployment compared with its other decarbonisation initiatives, e.g. its ambitious Intended Nationally Determined Contribution of 175 gigawatts (GW) of renewable energy capacity by 2022). Yet, India has been showing increasing promise with recent policy developments, such as the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles II (FAME II) scheme which was extended by the government from 2022 to the end of March 2024. The scheme was revised to include a 50 percent increase in purchase incentives for electric two-wheelers to Indian rupees (INR) 15,000 (USD 203) per kilowatt-hour (kWh) of battery capacity. Additionally, the limit on this incentive was relaxed from covering up to 20 percent of the purchase cost of a two-wheeler to 40 percent. The Ministry of Heavy Industries contracted with state-owned Energy Efficiency Services Limited to procure 300 000 electric threewheelers to spur government-led demand aggregation following the FAME II extension.
• India had a little more than 1 million EVs on the road at the end of 2021, most of which were electric two/three-wheelers that account for less than 0.5 percent of all vehicles. FAME II is about halfway through its expected programme life, yet has funded only around 10 percent of its target sales volumes. The recent FAME II modification may help address barriers to uptake by reducing upfront purchase cost and sparking innovation to provide broader EV model availability. The electrification of two-wheelers in India is seen as an opportunity to cost effectively electrify at scale, as it is the largest two-wheeler market in the world.
• Nineteen states in India offer some form of policy support for EVs, such as purchase incentives, exemptions from road taxes, and subsidies for investment in battery manufacturing and related components. The states of Assam, Goa and Maharashtra recently introduced EV targets, policies and incentives. New Delhi, the capital, hosts the most ambitious EV targets in the country.
• To date, the FAME II programme has provided subsidies (INR 10 billion, USD 135 million) to develop almost 2 900 charging stations across 25 states. In late 2021, the National Highways Authority of India set an objective to install EV charging stations every 40-60 km along national highways, covering 35 000- 40 000 km of highways by 2023.
• In January 2022, the Ministry of Power revised its guidelines and standards for EV charging infrastructure. The revisions include: easing provisions for EV owners to charge at home/office using existing electricity connections; a revenue-sharing model related to land use to make charging stations more economical; guidance on providing affordable tariffs; timelines for connectivity of charging stations to the grid; and a fixed ceiling on service charges for electricity.
• India’s national government budget announcement for 2022-2023, includes provisions for a battery swapping policy that aims to provide “batteries or energy as a service”. In April 2022, the government (led by NITI Aayog) released a draft proposal of the policy which is open to comments from stakeholders until June. Key elements include: technical and operational requirements for interoperability, safety and performance between EVs, batteries and EVSE; development of unique identification numbers for batteries and swapping stations; testing and certification standards for battery swapping components; open and flexible mandate to enable different battery-as-a-service business models; expanding existing demand-side fiscal support measures (such as FAME II) to include battery swapping; preferential electricity tariffs for public battery swapping stations; and developing standards for the re-use and repurposing of end-of-life EV batteries. The proposed policy is to be rolled out in phases. It will first focus on metropolitan cities with a population larger than four million in the first two years, followed by all major cities and state capitals by the third year.
• India has placed an emphasis on electrifying two-wheelers, as evidenced by the 50 percent increase in purchase incentives for twowheelers in the modifications to the FAME II scheme and local policies such as in Delhi. The sales share of electric two/threewheelers increases from 2 percent in 2021 to almost 50 percent in 2030 in the Stated Policies Scenario and further to 60 percent in the Announced Pledges Scenario. The rate of electrification of buses and LDVs is lower, reaching 6 percent and 12 percent in 2030 in the Stated Policies Scenario, respectively. In the Announced Pledges electric buses attain around 25 percent sales share and LDVs about 30 percent sales share in 2030, reflecting India signing on to the COP26 declaration to transition to 100 percent zero emissions LDV sales by 2040.
• EV sales share across all modes (including two/three-wheelers) in India is above 30 percent in 2030 in the Stated Policies Scenario (just over 10 percent excluding two/three-wheelers). In the Announced Pledges Scenario, EV sales shares in India scale up to almost 45 percent in 2030 across all road vehicle modes (30 percent excluding two/three-wheelers).
• India aims to install charging stations every 40–60 km along its highways.
EV battery supply chains and industrial policy
• India’s Production Linked Incentives scheme has a strategic focus on advanced automotive technology and components (including EV) and advanced chemistry cell battery (ACC) sectors. The automotive and auto components sector was allocated close to INR 259 billion (USD 3.5 billion). With an aim to build capacity of 50 GWh, the ACC sector was allocated INR 181 billion (USD 243 million). Subsidies are to be provided over a span of five years based on performance metrics such as energy density (ACC only), battery cycle life (ACC only) and number of units sold or components manufactured in India.
• A request for proposals was launched in January 2022 for both schemes, with the government to award contracts by March 2022. For the ACC scheme, bids totalled 130 GWh, close to three times the amount of the manufacturing capacity to be awarded . A total of 95 applicants were approved. Final recipients include both large auto manufacturers and OEMs as well as small and medium enterprises in the industry. For the advanced automotive technology and auto components scheme applications totalled a proposed INR 450 billion (USD 6.1 billion) for all vehicle categories, and were submitted by both incumbant automotive OEMs and new market entrants.
• The battery durability standard was adopted by many countries/regions that committed to transpose it into their national legislation. They are Australia, Canada, China, European Union, India, Japan, Korea, Malaysia, Norway, Russian Federation, South Africa, Tunisia, United Kingdom and United States. In the European Union, the provisions are expected to be part of the forthcoming Euro 7/VII legislation.
• Several studies, e.g. Brazil, Thailand and India, have been conducted on the impact of electromobility on transmission system level peak load. These studies show that in terms of bulk energy, the impact of EVs expected by 2030 is within the existing generation margins. At the distribution level, the grids in these countries are faced with continuously increasing loads (mostly from appliances), thus grid upgrades are required irrespective of EV loads. However, studies looking at the specific distribution grid impact of EVs remain scarce.
Other main findings:
• Sales of electric cars (including fully electric and plug-in hybrids) doubled in 2021 to a new record of 6.6 million, with more now sold each week than in the whole of 2012, according to the latest edition of the annual Global Electric Vehicle Outlook.
• Despite strains along global supply chains, sales kept rising strongly into 2022, with 2 million electric cars sold worldwide in the first quarter, up by three-quarters from the same period a year earlier. The number of electric cars on the world’s roads by the end of 2021 was about 16.5 million, triple the amount in 2018.
• In China, electric car sales nearly tripled in 2021 to 3.3 million, accounting for about half of the global total. Sales also grew strongly in Europe (increasing by 65 percent to 2.3 million) and the United States (more than doubling to 630 000). Chinese electric cars are typically smaller than in other markets. Alongside lower manufacturing costs, this has significantly reduced the price gap with traditional cars.
• The median price of an electric car in China was only 10 percent more than that of conventional offerings, compared with 45 percent to 50 percent on average in other major markets. By contrast, electric car sales are lagging in most emerging and developing economies where only a few models are often available and at prices that are unaffordable for mass-market consumers.
• A growing number of countries have ambitious vehicle electrification targets for the coming decades, and many carmakers have plans to electrify their fleets that go beyond policy targets. Five times more electric car models were available globally in 2021 than in 2015, and the number of available models reached 450 by the end of 2021.
• The greatest obstacles to continued strong EV sales are soaring prices for some critical minerals essential for battery manufacturing, as well as supply chain disruptions caused by Russia’s attack on Ukraine and by continued Covid-19 lockdowns in some parts of China. In the longer term, greater efforts are needed to roll out enough charging infrastructure to service the expected growth in electric car sales.
• Prices for lithium, a crucial mineral for car batteries, were over seven times higher in May 2022 than at the start of 2021, and prices for cobalt and nickel also rose. All else being equal, the cost of battery packs could increase by 15 percent if these prices stay around current levels, which would reverse several years of declines. Russia’s invasion of Ukraine has created further pressures, since Russia supplies 20 percent of global battery-grade nickel.
• Governments in Europe and in the United States have promoted industrial policies aimed at domestic development of EV supply chains, as more than half of all lithium, cobalt and graphite processing and refining capacity is located in China. In addition, China produces three-quarters of all lithium-ion batteries and has 70 percent of the production capacity for cathodes and 85 percent for anodes, both of which are essential components of batteries. More than half of all electric cars in 2021 were assembled in China, and the country is poised to maintain its manufacturing dominance.
• While nearly 10 percent of all cars sold worldwide in 2021 were electric, the figure for global truck sales was just 0.3 percent. This share would need to increase to around 10 percent by 2030 in a scenario aligned with the climate pledges and targets announced to date by countries worldwide – and to 25 percent by 2030 in the IEA’s Net Zero Emissions by 2050 Scenario. Electric trucks have so far been substantially deployed only in China, thanks to strong government support. But other countries have announced plans for heavy truck electrification, and manufacturers are widening their choice of models. Long-range trucks require high-power charges that are currently expensive and often require grid upgrades.