How India’s electric car ambitions could take off

As US President Donald Trump has declared that his country would withdraw from the Paris Agreement on climate change, it remains to be seen whether other US allies would follow suit.

Now, however, at least one thing is certain: the US is swimming against the tide as countries across the Eurasian continent are eagerly jumping on the clean energy bandwagon.

In particular, emerging economies are spearheading the rapid growth of the renewable energy industry around the world. Apart from China, which has already vowed to promote a green economy, another major emerging market, India, is also working aggressively to become a new energy power of the 21st century.

In fact, India has been highly ambitious in promoting clean energy. Recently, the Indian government has taken one giant step forward by announcing that vehicles powered by gasoline or diesel will be completely banned by 2030 across the country, and by that time only electric cars will be available on the domestic market.

And India didn't just put forward that plan to wow the rest of the world; there are indeed compelling domestic reasons for the Indian government to press ahead with new energy development: India is not only the second most populous country on earth, but is also one of the most polluted ones. And industrial pollution in India is getting so serious that it has already become a political issue that could threaten social stability if not handled properly and decisively.

According to a recent report published by Greenpeace, air pollution results in an average of one million premature deaths in India each year. And air in the city of New Delhi has become so heavily polluted that it is causing the same degree of damage to the human lungs as smoking 10 cigarettes a day.

It is indeed hardly an overstatement to say that the degree to which the Indian government is able to clean up its country's environment will, to a significant extent, determine whether voters, particularly middle class voters, will continue to support Prime Minister Narendra Modi and his government.

And through years of government efforts, India's plan to develop the renewable energy industry on a national scale doesn't just exist on paper; it has already begun. For example, solar energy has now become so popular in certain parts of the country that it has actually become cheaper than fossil fuels.

Last year, the Indian government announced that it was going to build a gigantic solar power plant in Kamuthi that will occupy an area of 10 square kilometers. Once completed, it will become the largest solar power plant in the world and turn India into the third largest solar energy market.

If things play out in the way New Delhi has hoped, the manufacturing sector will be increasingly relying on solar energy in the days ahead, and so will the auto industry, thereby gradually reducing the percentage of fossil fuels in the total energy consumption of the country.

However, despite the fact that the Modi administration is determined to press ahead with its ambitious 2030 electric car program, there are concerns among Indians over whether the authorities have time and resources to build enough charging stations in every corner of the country in order to meet rising demand over the next decade.

Besides, there are still a lot of technological hurdles to clear in order to achieve the full marketization of solar energy. Given that, many Indians are skeptical about Modi's plan.

Yet, some foreign investors, such as global electric car giant Tesla, have already cast their confidence vote in India's 2030 electric car program. Elon Musk, founder and chief executive of Tesla, said he is seriously considering setting up production plants in India.

As we can see, Modi's electric car program is actually both environmentally and politically motivated.

However, there is also a diplomatic side to it: by formulating a comprehensive and visionary national energy strategy that looks beyond fossil fuels, New Delhi hopes that in the future, traditional western energy powers and the powerful vested interests in the global oil and coal industry will no longer be able to pull India's strings.

This article appeared in the Hong Kong Economic Journal on June 29

Translation by Alan Lee

[Chinese version 中文版]

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