What colour is your EV Economy?

India has become the third-largest light-vehicle market in the world, led by a strong recovery in demand for personal mobility and last-mile deliveries after Covid

India has pledged to achieve net-zero emissions by 2070 and has prioritised clean energy and climate change mitigation during its G20 presidency. B20 is a key platform that represents the interests of G20 businesses, promoting exchange of ideas, and fuelling innovation. The B20 India Chair, N. Chandrasekaran said, “The B20 India 2023 dialogue will take place under the theme of ‘RAISE’, an acronym for Responsible, Accelerated, Innovative, Sustainable & Equitable Businesses.” The automotive industry offers a fertile ground for exploring RAISE ideas.

India has become the third-largest light-vehicle market in the world in 2022, led by a strong recovery in demand for personal mobility and last-mile deliveries after Covid-19. India’s automotive Industry is worth over $222 billion and contributes 8% of the country’s total export and accounts for 7.1% of India’s GDP (49% of manufacturing GDP). The EV market is expected to grow at a CAGR of 49% between 2022 and 2030 and hit 10 million-unit annual sales by 2030. The EV industry will create 50 million direct and indirect jobs by 2030. From the lens of the mobility industry, one can visualise sustainable economic models for EV growth in various colours.

Infographic | Budget allocation for FAME scheme since 2015

Green economy, based on electric mobility, is built by addressing the ecological threats that arise during the design, manufacturing, use and disposal of EVs. At one end of the EV value chain, we focus on improving the mining and processing of critical materials (lithium, cobalt, manganese etc for batteries, rare earth for motor magnets, high strength steel and aluminium for the vehicle body etc) and at the other end we explore ways for responsible recycling and reuse of batteries and electronics components at the end of life (EOL). And during the operational life of EVs, we look at generating electricity from renewable sources to power the EVs. We also explore technologies to lightweight the EVs and thereby improve the range (without using a bigger battery). As green technologies scale, their cost disadvantage is projected to decline according to a recent World Economic Forum – BCG study. For example, TCO (total cost of operation) parity for commercial battery electric vehicles in the US is currently expected in 2036. It will likely be achieved earlier in Europe but is expected later in China and India, but regardless of location, the overall trend is the same: cost premiums are declining rapidly

Blue economy, in the words of Gunter Pauli, does not recycle, it regenerates! It is an economic model that does not produce emissions or waste but creates jobs, social cohesion and does not cost more. In the Indian context, the blue economy is also a sustainable ocean-based economy, aiming to foster economic and social progress, while maintaining the health of our oceans and coasts. India has a coastline of nearly 7,500 Kms – can we mine the deep sea beds for some of the critical minerals that the rapidly growing EV production would demand?. Polymetallic nodules, which contain nickel, cobalt, iron, and manganese that grow over millions of years on the seafloor, are often discovered at 4-5km in water depth. In 1987, India was granted exclusive rights to explore polymetallic nodules in the Central Indian Ocean Basin (CIOB). A blue economy strategy is critical to mitigating the supply risks of critical materials for EVs.

Orange economy, also known as the creative economy, is based on sparking innovation to create sustainable alternatives. The creative economy includes all the sectors whose goods and services are based on intellectual property (IP). India can become a global hub for electric mobility by building a strong IP on EV technologies. By protecting this IP in various geographies, Indian auto OEMs will be able to take their EVs to global markets. India has a strong IP ecosystem and has been a R&D hub for many multinational companies (MNCs). India has been globally recognised for its excellence in software technology and the emergence of software defined vehicles (SDVs) opens-up new opportunities for leadership in innovation and IP.

Red economy is a by-product of Fordism, that favours mass production and considers environmental resources to be unlimited. The core business is based on low production costs that rely on a globalised economy. We have to challenge the assumptions that resources are unlimited and mass production is the only way to lower costs, which are at the heart of the red economy.

The manufacturing of a typical car may consume 2000–4000 litres of water. When we calculate an EV’s water footprint, we should also include the mining, extraction and disposal of the materials used in the EV’s lithium-ion batteries. However, we need to recognise that resources like water, energy, critical minerals are not unlimited and encourage innovations that significantly reduce the consumption of these resources. Tesla’s Gigafactory is designed to be a net-zero energy factory. Indian automotive OEMs have used recycling of effluent, rain water harvesting, “dry wash” etc to achieve as high as 45% reduction.

When we build a vibrant economy based on electric mobility, it is important to consider the merits and weaknesses of these economic models and create a hybrid model that is built on the strengths of various models.

(The writer is a vice president at Mahindra & Mahindra. He is a member of the B20 India task force for driving technology, innovation and R&D.)

The views expressed in this article are his own.