The Indian car market is significantly different from those in other large countries. We are growing at 8-10 per cent annually while other markets, including China, have plateaued. With car penetration of 24 per thousand compared to 500 per thousand in Europe, the potential for growth is large. The nature of our infrastructure in cities has led to the market being dominated by small cars not exceeding four metres. Government policy also supports small cars because they have lower fuel consumption and emission. The large production volume of small cars enables India to export a large number of such cars.
India's two-wheeler population is estimated to be 150 million with sales in 2017/18 at around 20 million. Two-wheelers consume about 62 per cent of total petrol with the rest going to cars. No other country uses two-wheelers to this extent for personal transportation. As annual sale volumes double and treble, technology should lead to reduction and eventual elimination of imported oil for transportation. Many countries are moving to electric vehicles, or EV, to achieve this.
The Indian government seems to have gone for the EV option as well. This decision assumes that the cost of batteries in EVs will decline to half its present cost in a few years. However, there is no certainty this will happen, and it would be prudent to have a Plan B. The nature of the Indian automobile market indicates we should not rely on one technology but consider alternatives too.
Small cars in India have an ex-factory price of under `5 lakh. Electrifying such cars would more than double their price, making them unaffordable to most buyers. If battery prices halve, the price of small EVs would certainly come down, but may not still be affordable to many new buyers. Another alternative is, therefore, necessary.
Many small car users do not have the space to park their vehicles and use the roadside. As they may not be able to charge their cars at home (unlike users of bigger cars who would have charging facilities at home), the infrastructure to enable them to charge cars has to be created. The logistics of building a network of charging facilities for millions of cars is a challenge. In addition, there is the question of laying the distribution system to carry additional power for charging cars.
One alternative is natural gas. It is already being used successfully in cars and has been accepted by consumers despite inadequacies in filling infrastructure. Small cars using natural gas are quite affordable. India has reserves of natural gas that can support its use by a large percentage of small cars. Natural gas production can be enhanced by using biomass. Technology for this exists, and gas is being produced in small quantities. The infrastructure for taking gas to more cities will have to be created. It should be easier than building an infrastructure for charging batteries.
The use of ethanol and methanol is another alternative. Even now, small amounts are being mixed with petrol. It could be possible to mix larger quantities if manufacturers are given the time to modify engines. Ethanol and methanol can also be produced locally from biomass and thus constitute sustainable fuels.
The bigger challenge is to reduce import dependency on oil as cars do not pollute to the extent many people believe. According to an IIT-Kanpur study, in Delhi, where car density is about 7.5 times the national average, only 2 per cent of PM 2.5 comes from cars. All other pollutants are within limits. It is estimated that cars would account for 1-2 per cent of the CO2 emission in the country. Clearly, pollution from cars is not a significant problem.
In conclusion, India should move to a system where customers can choose between CNG-operated cars, EVs, hybrids and cars using ethanol and methanol. There should be no insistence on any one technology as better results are likely when there is a mix of technologies.